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2015 (8) TMI 360 - ITAT MUMBAI

2015 (8) TMI 360 - ITAT MUMBAI - TMI - Deduction u/s 80 IB - OEPB licenses utilized during the year for duty free import of raw materials - Focus market incentive - Held that:- Assessee’s claim for deduction under section 80IB in relation to incomes by way of DEPB investments and focus market incentives the decision of in the case of Liberty India vs. CIT, [2009 (8) TMI 63 - SUPREME COURT] covers the controversy in favour of the Revenue.

Deduction under section 80IB in relation to su .....

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for purchase of investment and SEBI filing fees for open offer for investments in shares of M/s. Uniflex Cables Ltd. be reduced from the total disallowance worked out by the AO. Consequently, we set aside the matter to the file of AO, who shall allow appropriate relief to the assessee on this aspect. - Decided in favour of assessee by way of remand.

Exemption u/s 54G denied - additional evidence submitted - Held that:- On the basis of the material submitted, the assessee does not inte .....

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avowed object of Rule 29 of the Appellate Tribunal Rules would be sub-served if the additional evidences are admitted in order to appropriately adjudicate assessee’s claim for deduction under section 54G of the Act. We hold so.

So however, since the aforesaid evidences/material was not before the lower authorities, it would be in the fitness of things that the issues relating to assessee’s claim for deduction under section 54G of the Act is restored back to the file of AO, who shall .....

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e assessment year 2008-09, with reference to the assessment order dated 29/09/2010 passed in terms of section 143(3) of the Income Tax Act, 1961(the Act). 2. In this appeal the assessee has raised the following Grounds of appeal:- 1. Deduction u/s 80 IB. a) On facts and circumstance of the case and in law, the learned CIT(A) erred in denying deduction of ₹ 5,67,09,436 u/s 80-IB in respect of OEPB licenses utilized during the year for duty free import of raw materials. He failed to apprecia .....

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sundry income of ₹ 1,86,7781- without appreciating that it is derived from industrial undertaking. 2. Disallowance u/s 14A. 2.1) On the facts and circumstances of the case and in law, the learned CIT(A) erred in not appreciating that resort cannot be made to Rule 80(1)(b) since the learned AO has failed to provide any cogent reasons for not accepting the disallowance of ₹ 19,64,974/- already made by the appellant and further disallowing ₹ 26,22,666 which is the amount of entir .....

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ghts of land ₹ 304,000,000. CIT(A) also failed to appreciate that the Trade Investments of ₹ 40.44 Lacs were for business and not for earning tax free dividend income. Thus disallowance of interest expense u/s 14A being bad-in-law needs to be deleted. 2.3) Without prejudice to the above and without admitting, on the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming that Rule 8D(2)(ii) are applicable to the appellant without appreciating that the a .....

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wance made by the learned AO being bad-in-law needs to be deleted. b) Without prejudice to the above and without admitting, on facts and circumstance of the case and in law, the learned CIT(A) erred in denying exemption u/s 54G of ₹ 2,06,56,184/- incurred prior to 28.9.2006 (i.e prior to 1 year before date of transfer of land which was 29/09/2007) without appreciating that shifting of the industrial undertaking completed on 1/11/2006. Thus since the shifting of industrial undertaking took .....

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ry is considered as part of 'factory building'. Accordingly, the disallowance made by the learned AO being bad-in-law must be deleted. 4. Long Term Capital gain u/s.50B on slump sale of Polymer Division. The learned CIT(A) erred in confirming reduction of ₹ 13,24,41,682/- from the net worth of the undertaking at Valia while calculating long term capital gains u/s 50B. There is no mandate available to the learned AO to adjust the net worth of the unit sold u/s 50B. Thus the said red .....

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ion 115JB of the Act was arrived at ₹ 108,49,03,670/-. The return of income filed by the assessee was subject to a scrutiny assessment, wherein certain disallowances were made, which were carried in appeal before Ld. CIT(A) who has dismissed the appeal of the assessee. Not being satisfied with the order of Ld. CIT(A), the assessee is in further appeal before us on the aforestated Grounds of appeal. 4. In so far as ground of appeal Nos.1(a) & (b) are concerned, the same relate to assess .....

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he decision of the Hon ble Supreme Court in the case of Liberty India vs. CIT, 317 ITR 78(SC) covers the controversy in favour of the Revenue. 5. By way of Ground of appeal No.1(c), the claim of the assessee for deduction under section 80IB of the Act is in relation to sundry income of ₹ 1,86,778/-. On this aspect also, the Ld. Representative of the assessee fairly conceded that the said income has been rightly held to be not derived from the industrial undertaking and accordingly the deni .....

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n of income amounting to ₹ 19,64,974/- out of interest paid for purchase of investment and SEBI filing fees for open offer for investments in shares of M/s. Uniflex Cables Ltd. be reduced from the total disallowance worked out by the AO. In this context the Ld. Representative of the assessee referred to page-1 of the Paper Book, wherein a copy of computation of income has been placed. In the said computation of income, an amount of ₹ 7,53,425/- representing interest paid to YES Bank .....

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2.3 in relation to the disallowance under section 14A of the Act are herebydismissed. 8. The last ground in this appeal is with regard to denial of exemption claimed by the assessee under section 54G of the Act of ₹ 13,24,41,682/- on account of shifting expenses of High Styrine Rubber (HSR) Unit against the long term capital gain earned on sale of development rights of the land of Special Oil Refinery (SOR Unit) at Mahul. The SOR unit of the assessee was situated at Mahul comprising of ma .....

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sion at Valia. On the strength of the provisions of section54G of the Act, assessee claimed deduction of ₹ 13,24,41,682/-, representing expenditure incurred in the course of or in the consequence of shifting such industrial undertaking, from the long term capital gains earned on the sale of land at Mahul. The claim for deduction under section 54G of the Act has been denied to the assessee by the AO as well as Ld. CIT(A) and the same is being agitated before us by way of Ground No.3. 9. At .....

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firmation of Surat Goods Transport Pvt. Ltd. relating to Transport of Machinery from SOR Mahul division to Polymer division, Valia 2. Details of machineries shifted from SOR Mahul division to Polymer division, Valia. 3. Confirmation of Gayatri Construction in relation to modification/ construction of factory building at Valia. 4. Certificate of Shri Kaushik Patel, B.E. Chemical, relating to physical verification of machinery installed at newly constructed factory building at Valia. 5. Production .....

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has been rejected on various grounds, the principal ground being that the assessee could not prove shifting of plant and machinery from Mahul to Valia on the basis of any evidence. It is noted from the orders of the authorities below that various points raised in order to reject the assessee s claim can be summarized as follows: (i) that assessee did not produce any evidence to show the shifting of the industrial undertaking from Mahul to Valia; (ii) that assessee did not produce details of tran .....

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s evidences were furnished before the AO including the copies of work order issued in favour of M/s.M. Mech Engineers Pvt. Ltd. for executing work for dismantling of the assets at Mahul and its installation at Valia. Further, confirmation from the said concern were also furnished certifying commissioning of the related work on the machineries transferred from Mahul. Ld. Representative for the assessee also explained that a copy of the ledger account of freight expenses incurred on shifting of &# .....

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bove and explained its relevance and the reasons why the same is being produced as additional evidence at this stage. On this basis, it is prayed that the admission of additional evidence would not prejudice the Revenue and rather it is a relevant material to dispose of the appeal of the assessee in accordance with the law. 10. On the other hand, Ld. DR appearing for the Revenue has contended that the lower authorities have appropriately appreciated the material and evidence that was sought to b .....

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in the circumstances prescribed therein. One of the aspects is that where the Tribunal requires any document to be produced or any witness to be examined to enable it to pass an order or for any other substantial cause, then the Tribunal for reasons to be, recorded, may permit admission of such additional evidence. In this context, reference was made to the judgment of Hon ble Gauhati High Court in the case of Jeypore Timber and Veneer Mills (P) Ltd. vs. CIT, 137 ITR 415 (Gau) to point out that .....

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nds of the assessee. In our considered opinion, in the matters of admission of additional evidence, the test to be applied is the furtherance of cause of substantial justice and not technical considerations. It is in this back ground, we may now examine the efficacy of assessee s plea for admission of the aforestated additional evidence, which were hither to not before the lower authorities. 11.1 As observed earlier, the sum and substance of the dispute arises from the claim of deduction under s .....

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ime of assessment proceedings it was difficult to seek and ensure the cooperation from the concerned transporter, as Mahul unit has since been closed down. The assessee was under the bonafide belief that since transportation was effected by an independent party and payments were made through cheques, it would be sufficient to prove the transportation of machinery. However, since the claim was rejected, the assessee was compelled to seek certificate from the transporter, which would corroborate t .....

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s and modifications in the factory building at Valia. The said concern had also constructed adjoining factory building HSR unit and warehouse etc. As per the appellant, such confirmation would establish the construction and modification of the building at Valia. It was explained that during the course of proceedings before the lower authorities, the aforesaid concern could not be contacted for obtaining confirmation but nevertheless the payments were made through cheques. It was contended that t .....

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corroborate the stand of the assessee. 11.4 At item Nos.5,6 & 7 are the additional evidences in the shape of the production details of the SOR in Valia unit from financial years 2004-05 to 2007-08, which would show the details of excisable products manufactured by the assessee. As per the assessee, the aforesaid records would demonstrate carrying on production at Valia unit from November 2006 and also for the financial year 2006-07 and 2007-08, which would corroborate assessee s assertions t .....

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