TMI Blog2007 (9) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... . 44,11,999 in his Income-tax return for which he has also filed a report in form No. 10CCB audited by the auditor. The Assessing Officer observed that the said deduction is not allowable and the explanation of the assessee in this regard as per reply dated 22-2-2005 was that : The assessee is manufacturing and exporting unit duly registered under SSI by District Industrial Centre, Sikar. The unit has also started production before 31-3-2002, hence duly eligible to claim deduction under section 80-IB. The unit is situated in the backward area Sikar District which category B district where deduction under section 80-IB is allowable for 100 per cent of the profit for first five years and 25 per cent after 5 years and upto 10 years. Hence deduction under section 80-IB may be allowed on the basis of the genuity and substance of the case. And in a further reply dated 28-2-2002, it has been further stated by the assessee that : We are also enclosing SSI permanent registration showing production on 7-4-2000, hence we are eligible 100 per cent exempted. The assessee is manufacturing and exporting unit duly registered under SSI by District Industrial Centre, Sikar. The unit has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred during this year on the construction of new factory building etc., at Rukansar, totalling to Rs. 48,85,072 as evident from the chart of fixed assets (PB 38). Further heavy investment in the purchases and installation of new plant and machinery totalling to Rs. 5,38,354 have been made right since inception of the new partnership firm i.e., from assessment year 1999-2000 onward as would appear from the year-wise details (PB 56) and the copies of various bills and vouchers (PB 57-106A) which were submitted before the authorities below. These apart for the first time, a new power connection was also taken from the State Government (PB 47-55). Further the assessee was also granted registration by the District Industrial Centre (DIC), Sikar, as is evident from the certificate dated 22-6-2000 and duplicate issued on 18-8-2000 (PB 46) showing commencement of production on 7-4-2000. Even the production obtained now, was qualitatively much better and having more life. Further the learned CIT(A) has heavily relied upon a decision of Kerala State Cashew Development Corpn. and reproduced the headnote at p. 11 of his order. He submitted that in the same very decision, it is held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n alternate claim does not mean that main claim is not strong. On the contrary, CBDT long back directed its officers to help an appellant making a claim, to which it is entitled [refer Circular No. 14(XL-35) of 1955 dated 11-4-1955]. It is also necessary to clarify here that the note referred to by the learned CIT(A) at p. 10 para 5.3 was not given by the chartered accountant who audited the accounts of the assessee but it was a note given by the assessee itself on the computation of total income (PB 45). Such a note was given with a view to safeguard the right of the assessee to make as many claims, to which it is entitled under other provisions of the Act. Therefore, to say that the report by the auditor was prepared on a guesswork is not at all desirable. Thus it is amply clear on facts read with various case law that the new industrial undertaking set up by the assessee is not a case of splitting up reconstitution and therefore, deduction under section 80-IB may be allowed at the rate of 100 per cent in this very year [refer written submission before learned CIT(A) p. 8-11]. Also this is very clear from section 80-IB(14)(c)(i) itself. A bare reading suggests that initial assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of law and facts on record and hence partly sustained addition may be deleted in full. 10. The brief facts of the case are that the assessee has declared a turnover of Rs. 2,99,09,187 and a gross profit of Rs. 80,87,133 (81,25,416 - 98,283) at a GP rate of 26.83 per cent as compared to gross profit of Rs. 62,81,685 (62,94,485-12,800) at a GP rate of 27.13 per cent on a total turnover of Rs. 2,31,54,327 in the immediately preceding year. The assessee has not maintained the stock register and day-to-day register for raw material and finished and semi-finished goods. The Assessing Officer rejected the books of account invoking the provisions of s. 145(3) of the Act and applied a GP rate of 28.52 per cent which was declared by the assessee in the assessment year 2000-01 on the declared turnover during the impugned year, thus making a trading addition of Rs. 5,02.967. The learned CIT(A) confirmed the applicability of provisions of section 145(3) of the Act and the learned CIT(A) observed that the assessee including the direct income has maintained a GP rate of 2.7.16 per cent as compared to 27.18 per cent in the immediately preceding year and the GP rate of 28.52 per cent for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from business and deduction under section 80HHC can be allowed accordingly. Alternatively benefit of netting be directed. 13. The brief facts of the case are that the assessee has declared interest on bank FDR at Rs. 1,10,617 which was treated as business income by the assessee. The Assessing Officer treated the same as income from other sources in view of decisions of various Courts of law as under : (1) CIT v. Manglam Cement Ltd. [1996] 217 ITR 369 (Raj.); (2) CIT v. Rajasthan Land Development Corpn. [1995] 211 ITR 597 (Raj.) and various other decisions of the Tribunal Jaipur Bench. 14. The learned CIT(A) confirmed the action of the Assessing Officer. 15. We have perused the facts of the case. In view of consistent decisions of this Bench and the decisions relied upon by the authorities below, we concur with the views of the learned CIT(A) who has rightly treated the interest on FDR as income from other sources. Thus ground No. 5 of the assessee is dismissed. 16. In ground No. 6, the assessee is aggrieved that the learned CIT(A) has erred in confirming the disallowance of Rs. 21,067 made by the Assessing Officer on account of telephone expenses. 17. In ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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