TMI Blog2013 (8) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB of the Act were duly satisfied in the initial year - It is also required for the A.O. to point out to the assessee as to what exactly is the documentary evidence required to establish its case if the documentary evidence produced by the assessee is found to be not satisfactory by him – Matter remitted to the file of the A.O. with a direction to decide the same afresh after giving the assessee proper opportunity of being heard. Disallowance made u/s 36(1)(va) on account of deposit of employees contribution to PF/ESTC made beyond the due date – Held that:- Relying upon the decision of Hon'ble Kerala High Court in the case of Commissioner of Income-tax v. South India Corporation Ltd. [1999 (10) TMI 44 - KERALA High Court] and that of Hon'ble Madras High Court in the case of Commissioner of Income-tax v. Shri Ganapathy Mills Company Ltd. [1999 (2) TMI 26 - MADRAS High Court], it was held that due date of payment under the relevant Act is inclusive of the grace period allowed under the said Act – Decided against the Revenue. Explanation to Section 43(1) of the Income Tax Act - Disallowance on account of interest attributable to the borrowed funds utilized for acquiring the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in respect of profits derived from Karaikal Unit which was purchased as going concern from M/s EID Parry (India) Ltd. on 2-3-2000. Since the said unit was established by EID Parry Ltd. in the year 1996, it was claimed to be eligible for deduction u/s 80IB of the Act in the year under consideration i.e 2004-05 being 9th year of operation. As per the direction given by the ld. CIT u/s 263 of the Act, the A.O. proceeded to examine the eligibility of Karaikal Unit for deduction u/s 80IB of the Act. In this regard, he made certain enquiries to which the assessee replied as under:- "(i) The year in which the unit was established. The unit at Karaikal started the commercial production during March, 1996. (ii) Whether the unit was eligible for a beneficial provision of the Income- tax Act uls.801B. We don't know whether the unit at Karaikal was eligible for 801B deduction or not. However, no 801B deduction has been claimed with regard to Karaikal Unit by EID Parry (India) Ltd. (iii) Whether any claim u/s.8OlB was made by the unit prior to the purchase by the M/s. H R Johnson (India) Ltd. We confirm that no 801B deduction has been claimed by us in respect of the Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the A.O. for his examination and comments by the ld. CIT(A). The A.O. submitted the remand report to the ld. CIT(A) offering his comments as under:- "(i) The assessee in the revised return of income has claimed deduction u/s. 8013 of Rs. 4, 18,04,4001- being 30% of Rs. 13,93,48,000!-. This claim is in respect of Karaikal Unit at Pondicherry. This unit is purchased as going concern by the assessee company from M/s EID Parry Ltd. on 02.03.2000. The said unit is said to hove been established in 1996. The assessee submitted that is 9th year for claiming deduction u/s. 80I but the assessee has mode claim first time for this assessment year. As per the information available on record, the deduction claimed by the assessee u/s. 8018 pertains to the Karaikal Unit, which has not been set up by the assessee on its own but was purchased by the assessee from EID Parry ltd. However, no concrete evidence as to how the unit is eligible for deduction u/s. 80IB, whether any deduction u/s 80IB has been claimed by EID Parry (India) Ltd. have been submitted. Further, in response to letter issued by this office, M/s. EID Parry (India) ltd. submitted that the unit at Karaikal Unit was started in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry (India) Ltd. In this connection, it is submitted that during the course of assessment proceedings, sufficient opportunities were given to the assessee to furnish supporting evidence in respect of claim of deduction u/s. 80IB vide letters/notices dated 12.08.2009 and 06.11.2009. The assessee, instead of merely stating that it has satisfied all the conditions of section 80IB, no documentary evidence as such has been furnished by the assessee. It is pertinent to brought on record that even M/s Parry (India) Ltd. has not furnished the certificates under consideration which have been filed by the assessee during the appellate proceedings, though it has been given opportunity vide this office letter dated 08. 10.2009. The assessee has also not brought anything on record to prove that it was prevented by sufficient cause from producing these documents during the assessment proceedings. In view of these facts, the documents now filed by the assessee are not liable to be admitted. Without prejudice to the above, the certificates filed by the assessee have no authenticity and evidentiary value since as required under sec. 8OIA(7) read with Sec. 80IB(13), M/s EID Parry (India) Ltd., sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down u/s. 80IB that - (i) it should not be formed by splitting up or reconstruction is fulfilled by the appellant company and (ii) it is not formed by the transfer of machinery, new business because it has taken over as a running concern. The other conditions relating to claiming of depreciation has also been fulfilled by this unit. The arguments of the Assessing Officer that as per provisions of section 80IB deduction is liable to the amalgamated company only is not correct interpretation of the provision because it is not mentioned anywhere that the deduction is not allowable to the company who has purchased it as a running concern. The Assessing Officer has placed reliance on the decision of Hon'ble Madras High Court in case of A.G.S. Tiber Chemical Industries (P) Ltd. vs. CIT and M/s. Khorday Industries (P) Ltd. supra are distinguishable to the facts of this case as, clarified by the appellant in his submissions stated above. The other arguments of the AO that the appellant has not submitted necessary evidences to prove that it had fulfilled the conditions specified in section 80IB(3). The appellant has submitted that it has not claimed deduction u/s. 80IB(3) hence not applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets purchased and installed in Karaikal Unit were the new assets. He submitted that no deduction was claimed in respect of the said unit u/s 80IB of the Act in the earlier years because there were continuing losses. He contended that whatever enquiries made by the A.O. in relation to the assessee's claim for deduction u/s 80IB of the Act were duly replied by the assessee furnishing the relevant details and documents but still the claim of the assessee for deduction u/s 80IB of the Act for want of documentary evidence without even pointing out what evidence exactly was required by him from the assessee to establish the claim for deduction u/s 80IB of the Act. He submitted that the assessee is ready to satisfy the A.O. as regards its claim for deduction u/s 80IB of the Act in respect of Karaikal Unit by producing the relevant documentary evidence, if required, provided the A.O. specifically points out as the evidence required by him for this purpose. 9. We have considered the rival submissions and also perused the relevant material available on record. It is not in dispute that the Karaikal Unit in respect of which the impugned deduction u/s 80IB of the Act is claimed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butable to amounting utilized for acquiring office premises ignoring the provisions as per Explanation to Section 43(1) wherein it stipulates that interest expenses incurred for acquisition of asset after putting the same to use shall not only form part of the actual cost of the assets." 11. We have heard the arguments of both the sides and also perused the relevant material available on record. As regards ground No. 1, the ld. representatives of both the sides have agreed that the issue involved therein relating to assessee's claim for deduction u/s 80IB of the Act in respect of Karaikal Unit is similar to the one involved in A.Y. 2004-05 which has been decided by us in the foregoing portion of this order. As the material facts relevant to this issue as involved in the year under consideration as well as the arguments of both the sides are similar, we follow our conclusion drawn in A.Y. 2004-05 and restore this issue relating to assessee's claim for deduction u/s 80IB of the Act in respect of Karaikal Unit to the file of the A.O. for deciding the same afresh as per the same direction as given in A.Y. 2004-05. Ground No. 1 of Revenue's appeal is accordingly treated as allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration, interest attributable to the same was not allowable as a revenue expenditure. Accordingly, such interest attributable amounting to Rs. 1.39 crores was disallowed by the A.O. and the same amount was capitalized by him towards the cost of capital asset. 15. Before the ld. CIT(A), it was contended on behalf of the assessee that as per Explanation 8 to section 43 of the Act, when the asset had been put to use, then interest payable afterwards could not be capitalized. It was contended that the reverse, however, was not true and it was not necessary that if the said asset was not put to use, then interest should be capitalized. It was contended that the allowability of interest expenditure is governed by section 36(1)(iii) which gives clear cut guidelines that any amount of interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business for any period beginning from the date on which the capital was borrowed for acquisition of asset till the date on which such asset first put to use cannot be allowed as deduction. It was contended that the office premises in the assessee's case was acquired for the purpose of its ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
