TMI Blog2014 (11) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on need not be owned by the assessee - When the assessee-corporation has set up these godowns in as many as in 73 towns and at different places in those towns, it is entitled for relief u/s 80IB(11A) of the Act in respect of each such new undertaking set up by it. The assessee had collected rentals for storing food grains and had engaged outsiders to transport the food grains - the assessee had been carrying on similar business would not disentitle the assessee from claiming relief u/s 80IB(11A) - deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings – Relying upon as held by the Apex Court in the cases of Textile Machinery Corporation Ltd v CIT [1977 (1) TMI 3 - SUPREME Court] – thus, the assessee is entitled to deduction u/s 80IB(11A), in respect of income derived from the new undertakings, warehouses, set up and operated from 1.4.2001 for storage, handling and transportation of food grains – the order of the CIT(A) is set aside and the matter is remitted back to the AO for verifying the claim of the assessee - Decided in favour of Assessee. Claim of deduction of deferred revenue expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to the aforesaid issue are, the assessee a state government undertaking is in the business of providing storage facilities for agricultural products. For this purpose, it takes on lease godowns from private parties and lets them to FCI for storage of agricultural products. For the AY under dispute, assessee filed its return of income on 30/09/2008 declaring total income of ₹ 15,39,11,020 after claiming deduction of an amount of ₹ 2,31,24,709 u/s 80IB of the Act. Initially the return was processed u/s 143(1) and a refund of ₹ 5,08,56,890 was issued to the assessee. Subsequently, on verification of record the AO noticed that due to some technical mistake while processing the return u/s 143(1) the income was adopted at ₹ 13,29,40,273/-, which resulted in underassessment/escapement of assessment of income to the extent of ₹ 2,09,69,750/-. Further, it was noticed by the AO that for the AY under consideration assessee had claimed deduction of ₹ 2,31,24,709 u/s 80IB of the Act. Whereas on verification of earlier records, it was noticed by the AO that assessee's claim of deduction u/s 80IB(11A) has been consistently rejected by the department by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new activity such as handling and transportation were undertaken by the assessee on its own from 01/04/2001. The AO was of the view that the intention of legislature in introducing section 80IB(11A) is to encourage the persons to come forward for creating facilities for bringing the food grains from remote places without much loss of quantity of the commodities by adopting modern handling and storage. As the assessee was not engaged in integrated activity of storage, handling and transportation, the conditions of section 80IB(11A) are not satisfied. He further noted that the assessee has not maintained separate books of account so far as new undertaking is concerned and has computed the eligible deduction on estimate basis. He observed that the assessee has not filed valid form 10CCB also. Accordingly, the AO came to hold that the assessee being not eligible to claim deduction u/s 80IB(11A), the deduction claimed of ₹ 4,04,20,767 has to be disallowed and added to the returned income. Being aggrieved of such addition, the assessee preferred appeal before the CIT(A). 5. The CIT(A) also sustained the addition basically for the reason that the assessee has not started its ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of construction of godowns started in the year 2002. Each unit is an undertaking because food-grains are stored and handled and transported thereto and therefrom. It may be noted at this juncture that there is no restriction in S.80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains. The godowns where this business is to be carried on need not be owned by the assessee. When the assessee-corporation has set up these godowns in as many as in 73 towns and at different places in those towns, it is very much entitled for relief under S.80IB(11A) of the Act in respect of each such new undertaking set up by it. It appears from the impugned orders that the lower authorities have proceeded as if the assessee's claim for relief under S.80IB(11A) is in respect of existing godowns, and not merely in respect of the new ones started after 2001. It is so because the period of five years was sought to be counted from the year of incorporation of the assessee, viz. 1958; and also observing that no new activity was taken up after 2001. Since each new godown is an undertaking in itself, ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness would not disentitle the assessee from claiming relief u/s 80IB(11A), in respect of the new warehouses put to use after the introduction of sec 80IB(11A) i.e on or after 1.4.2001. The assessee has furnished in the paper-book list of new Godowns, which have been put to use by the assessee after 1.4.2001. It is well settled that deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings, as held by the Apex Court in the cases of Textile Machinery Corporation Ltd v CIT 107 ITR 195 SC and CIT v Indian Aluminium Company Ltd (108 ITR 367). The number of new godowns operated by the Assessee after 1.4.2001 clearly shows that there was substantial expansion of the assessee's business of handling, storing and transportation of food grains, which obviously could have been done only be undertaking new warehousing facilities year after year even after 2001. In respect of these new warehouses, each of which constitutes an eligible undertaking, assessee is separately entitled for deduction under S.80IB(11A) of the Act. In our opinion therefore, the assessee is entitled to deduction u/s 80IB(11A), in respect of income d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of facts that in the returns filed, it had added back the amount debited to the profit loss account of ₹ 9,63,302/- and claimed the actual expenditure incurred of ₹ 35,33,240/-. However, the AO has allowed only the amount of deferred revenue expenditure debited to the profit and loss account and not the actual expenditure. During the course of appellate proceedings the appellant has not made any written submissions on this issue. Hence, this ground of appeal is dismissed. 10. We have considered the submissions of the parties and perused the order of the CIT(A) on this issue. It is the contention of the ld. AR before us, assessee from the earlier assessment years has been following the same method of accounting in respect of expenditure incurred for LDP covers by claiming the actual expenditure incurred. The department also never disallowed such claim in preceding assessment years. The ld. AR submitted, CIT(A) was not correct in dismissing the ground without considering it on merit. As can be seen, the CIT(A) has dismissed the ground raised by the assessee merely because the assessee has not referred to it in the written submissions filed before her. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to challenge the decision of the CIT(A) is, against the order passed by the Tribunal an appeal has been preferred by the Department before the Hon'ble High Court. In our view, filing of an appeal before the Hon'ble High Court against the order of the Tribunal by itself would not make the Tribunal's order either ineffective or inoperative unless it is set aside or reversed by the Hon'ble high Court. In the aforesaid circumstances, the CIT(A) in our view was correct in following the decision of the Tribunal delivered in assessee's own case as it is binding upon her. We therefore do not find any infirmity in the order of the CIT(A). Accordingly, we uphold the same by dismissing the grounds raised by the department. 16. In the result, appeal of the revenue is dismissed. ITA No.673/Hyd/14 for AY 2009-10 by the assessee 17. The only issue in the aforesaid appeal of the assessee is in respect of disallowance of deduction claimed u/s 80IB(11A) of the Act. This issue is identical to the issue decided by us in Assessee's appeal in ITA No. 672/Hyd/12 (supra). Following our decision therein we set aside the order of the CIT(A) and remit the matter back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
