TMI Blog2015 (3) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaking and therefore in our considered opinion, the burden cast on the assessee has not been discharged. The findings recorded by the Tribunal that appellant was not entitled to the deduction under Section 80IB on the surrendered amount though utilized for the business of the appellant have not been shown to be illegal or perverse in any manner. - Decided against the assessee. - ITA No.440 of 2010 (O&M) - - - Dated:- 8-8-2013 - MR. AJAY KUMAR MITTAL AND MR. JASPAL SINGH, JJ. For the Appellant : Mr. H.O. Arora, Advocate For the Respondent : Mr. Rajesh Katoch, Advocate JUDGEMENT Ajay Kumar Mittal, J. 1. The assessee has preferred this appeal under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 16.9.2009 Annexure A.3 passed by the Income Tax Appellate Tribunal, 'A' Bench Chandigarh in ITA No.653(CHANDI) 2005 for the assessment year 2002-03, claiming following substantial questions of law:- I. Whether, on the facts and circumstances of the case, the ITAT was justified in law in holding that appellant was not entitled to the deduction under Section 80IB on the surrendered amount though utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer vide order dated 27.10.2004, Annexure A.3 disallowed the deduction under Section 80IB of the Act by relying upon the judgment of the Apex Court in CIT v. Sterling Foods, (1999) 237 ITR 579 holding that according to Section 80IB, deduction is available on profits and gains derived from the business of an industrial undertaking. Aggrieved by the order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 28.1.2005, Annexure A.2, the CIT(A) allowed the appeal. Not satisfied with the order, the revenue filed appeal before the Tribunal relying upon the judgment of this Court in National Legguard Works v. CIT and another, (2007) 288 ITR 18 wherein it was held that in case of amount surrendered, the burden was on the assessee to prove that the amount represented profits on which deduction was permissible under Chapter VI-A. The Tribunal vide order dated 16.9.2009, Annexure A.3 allowed the appeal and set aside the order passed by the CIT(A). Hence the present appeal by the assessee. 3. Learned counsel for the appellant-assessee submitted that the surrendered amount of ` 1.20 crores was part and parcel of busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of industrial undertaking only as the expression 'derived from' finds a place in the Section. In order to appreciate the import of the expression 'derived from', a reference may be made to the judgment of the Hon'ble Supreme Court in the case of Cambay Electric Supply Industrial Co. Limited v. CIT, 113 ITR 84 (SC) wherein the difference in the expressions 'attributable to' and 'derived from' was considered. The Hon'ble Supreme Court observed that the expression 'derived from' wherever used, intends to cover only the receipt from the actual conduct of the business of specified nature, whereas the expression 'attributable to' has a wider import and would cover receipts from sources other than the actual conduct of the business of the specified nature. Similar proposition has been upheld by the Hon'ble Supreme Court again in the case of Sterling Foods, 237 ITR 579 (SC). To the similar effect is the judgment of the Hon'ble Jurisdictional High Court in the case of M/s Liberty India, 293 ITR 520 (P H). From the aforesaid, it is safe to deduce that in order to entitle an assessee to deduction under section 80IB, there must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee to prove that the surrendered income was derived from the Industrial undertaking. In this case, the learned counsel for the assessee reiterated the submission made before the CIT(Appeals) that at the time of surrender, the assessee has clearly indicated that the amount surrendered is a part and parcel of the business activities and is in addition to the normal business income. In our view, the said stand of the assessee does not demonstrate that the burden cast on the assessee stands discharged. The learned counsel has further submitted that the assessee's industrial undertaking was the only source of income and there is no other manufacturing activity and therefore, there was nothing to establish that the income in question was not derived from the industrial undertaking. 8. We have considered the said plea of the assessee and find that the same only entails a presumption that the additional amount surrendered represented income derived from the industrial undertaking. As observed earlier, in terms of the decision of the Hon'ble Jurisdictional High Court, there cannot be a presumption that surrendered income is eligible for Section 80IB benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the industrial undertaking has to be direct and not indirect or incidental or based on any circumstantial evidence. Moreover, in view of the authoritative pronouncement of the Hon'ble Jurisdictional High Court in the case of National Legguard Works (supra), the issue in question is required to be held against the assessee. 7. The contention of the learned counsel for the appellant that the income was assessed under the head business , is not born out from the record. A perusal of the assessment order shows that it nowhere suggests that the Assessing Officer had taken surrendered Income under the head business or profession . Moreover, nothing had been produced by the assessee to show that the surrendered income was derived from the industrial undertaking. Onus was upon the assessee to show that the income on which deduction had been claimed under Section 80IB under Chapter VI-A of the Act, was infact derived from the industrial undertaking. 8. From the perusal of the findings as noticed above, the Tribunal had come to the conclusion that onus upon the assessee was not discharged. In such a situation, it could not be said that the Tribunal had erred in holding that dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The Tribunal had specifically recorded that the assessee had failed to show that the amount which was invested in the excess stock and was surrendered at the time of survey was derived from industrial undertaking. In the absence of any such finding or nexus established by the assessee, the Tribunal had rightly declined the claim of deduction under Section 80 IB of the Act in respect of excess income surrendered during survey on account of excess stock which was not reflected in the regular books of accounts. Learned counsel for the assessee was unable to show any perversity or illegality in the findings which may warrant interference by this Court. Similar view was recorded in National Legguard Works's case (supra) :- 7. We are unable to accept this submission. Deduction under Section 80HHC of the Act is available only on showing fulfilment of conditions specified therein and there could be no presumption that surrender made on account of unexplained stocks represented export income. The assessee was unable to give any explanation. There could be no presumption that additional amount surrendered represented income from exports. Deduction under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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