GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (9) TMI 1183 - ITAT AHMEDABAD

2015 (9) TMI 1183 - ITAT AHMEDABAD - TMI - Disallowance of claim of deduction u/s 80IB - Held that:- Central Sales-tax assessment order is a quasi judicial order which cannot be ignored and in case we believe the story of Revenue authorities it will amount to disbelieve the Central Sales-tax Act which is not permissible because the order of is of a quasi judicial body. It should not be contradicted by other quasi judicial body under the Income-tax Act. In the facts and circumstances the Assessin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vernment authorities in their statutory capacities after due verification in the form of SSI Registration Certificate, Exemption Certificate from VAT department, Test report from electricity department, Order of assessment under Central Sales-tax Act. The Assessing Officer was not justified to disbelieve the same on the basis of surmises and conjectures. In view of the above factual and legal discussion the assessee is held to be eligible for deduction under section 80IB. Assessing Officer is di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Assessing Officer with direction to adjudicate the issue afresh, after providing reasonable opportunity to the assessee of being heard. Since we restore this issue on technical ground, we refrain from commenting on merit on the issue. - Decided in favour of assessee for statistical purposes.

Disallowance of rent expenses and freight expenses - non-deduction of TDS u/s 40(a)(ia) and consequent claim of 80IB of same was also disallowed - Held that:- In the interest of justice the Ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

passed by the CIT(A) for assessment year 2007-08. The following grounds have been raised by the assessee in this appeal :- 1. The ld. CIT(A) has grievously erred in law and on facts in confirming the action of the ld. AO in disallowing the claim of deduction u/s 80IB of the Act for ₹ 1,03,91,856/-. 2. The ld. CIT(A) has grievously erred in law and on facts in confirming the action of the ld. AO in holding that the deduction u/s 80IB of the Act was claimed without manufacturing by the appel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the ld. AO amounting to ₹ 1,26,000/- on the ground of non-deduction of TDS u/s 40(a)(ia) of the Act. The ld. CIT(A) has further erred in law and on facts in not allowing the deduction u/s 80IB of the Act to the extent of the said disallowance of rent expenses since the eligible business income of the appellant would increase to the extent of the said disallowance. 6. The ld. CIT(A) has erred in law and on facts in upholding the disallowance of freight expenses made by the ld. AO amount .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

time of hearing of the appeal. 2. The assessee is engaged in the business of manufacturing of electric control panels. During the course of assessment proceedings, the Assessing Officer found that as per form No.10CCB under rule 18BBB the assessee claimed to have started commercial production from March, 2004. The manufacturing unit of the assessee is situated in the backward area of Dadra & Nagar Haveli and claimed to be eligible for deduction u/s 80IB of the Act @ 100% for initial 5 years .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otice which is reproduced below :- On perusal of the such details and more particularly the information and evidences in support of the claim for deduction u/s 80IB of the Act, amounting to ₹ 1,03,91,856/-, the following salient points have emerged, (a) Claim of Deduction u/s. 80IB (1) The date of commencement of commercial production as per the audit report has been shown as 31/03/2004. (2) One sale bill of one control panel unit worth ₹ 5, 44,600/- and sold to M/s. Orack Exports Ho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f power and further, how the manufacturing of the entire control panel unit could have been affected on such date. (5) It needs to be appreciated that a control panel unit worth ₹ 5, 44,600/-is not small product and same is bound to involve substantial amount of manufacturing, assembling, finishing and testing work involved. Neither it is possible to do so nor does any evidence submitted during the assessment proceedings substantively proves that it was done. At the outset it needs to be c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deduction u/s 80IB has to be examined qua the year of commencement and which was not subjected to examined ever before, it was incumbent upon the undersigned to conduct such verification in the year under consideration. It was in view of these facts that the claim u/s 80IB was verified not only in the context of the fulfillment of the four conditions laid out in subsection (2) of section 80IB but also in the context of subsection (3) of section 80IB. On such verification the facts as contained i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r connection is the letter of release of LT. Power. Such letter is found to have been issued only on 31/03/2004 which is clearly mentioned in the said document. There is no reference to any provisional release of power in such letter nor is their any separate document to show that power was released provisionally. The letter of release further clearly states that subject to the fulfillment of various conditions and also subject to the completion of various formalities including signing of agreem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ear from the above discussion that there was neither a provisional power connection nor a permanent power connection with the assessee on the day of 31.3.2004. It would not require any major effort or imagination to examine the possibility of the conditions & formalities contained in the letter of release being fulfilled after the assessee was handed over the letter some time during the office working hours of 31.03.2004. It would also need little imagination to examine whether subsequent to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

orded as NIL for the entire period of March 2004 to July, 2004. This fact would sufficiently invalidate the opening contention of the assessee. As regards the question whether the manufacture of the control panel has been done within such a short period of time, the elaborate description given by the assessee and list of machinery involved contains eleven different processes by eleven different machineries. By the assessee s own admission, seven machineries can only be operated by power, whereas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion itself deserves rejection because the welding of the sheets is part of the very initial process of manufacture, without which no manufacture could even begin. Of course, there is no possibility of welding machines being operated without power. Further, if only for the sake of this contention is considered, then, another aspect of this case is that as per the power bill, not a single unit was consumed at least up to July 2004. This fact alone proves that none of the mandatory processes invol .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or even cosmetic processes of manufacturing activity carried out, for allowance of the deduction. Even while following the much misused maxim of liberal interpretation, a line needs to be drawn at some point where the so called liberal interpretation is brought to an end and real facts take over. In the light of the above facts and circumstances, the contentions of the assessee are hereby rejected. It is held that the manufacturing activity or production of articles or things in the instant case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) Difference in opening balance Rs.3,35,855/- (ii) Purchases not credited by the A Rs.2,44,635/- 2. Prakash Industrial Services P. Ltd. (i) Difference in opening balance Rs.4,83,499/- (ii) Purchases not credited by the A Rs.1,74,000/- (iii) Purchases credited by the A but Not debited by party Rs.253,275/- Total - Rs.14,91,264/- Verification of details reveal that the assessee has not furnished any evidence in respect of deduction of TDS on expenses of rent of ₹ 1,26,000/- and freight of &# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd being aggrieved is in further appeal before the Tribunal. 4. The ld. Authorized Representative vehemently argued that the assessee was eligible for claiming deduction as per the provisions of section 80IB. Accordingly he submitted that the CIT(A) has wrongly confirmed the disallowance. The impugned order may be set aside. 5. On the other hand, the ld. Departmental Representative supported the orders of authorities below. He submitted that the CIT(A) was justified in confirming the action of A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fully going through the material on record, we find that assessee was engaged in the business of manufacturing of electric control panels. The unit started manufacturing from March, 2004. The stand of the assessee has been that assessee is a small scale industrial registered unit and assessee started working for manufacturing of control panels and received provisional SSI registration certificate as early as on 05.03.2004. The Assessing Officer has not doubted authenticity of SSI Registration ce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hird argument of assessee is that VAT Department has certified that the assessee has manufactured the goods which were sold for the first time on 31.03.2004 and accordingly given exemption upto 31.03.2017. The Assessing Officer has not doubted authenticity of certificate of exemption issued by VAT Department of Dadra & Nagar Haveli being an independent government authority. Exemption certificate No. ADM/DNH/EXEMPT/CST/2009/2568 dated 6/1/2009 placed on page 72 of the Paper Book. Once sale ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

starts from March 2004 and energy charges stated therein is ₹ 1015/- coupled with taxes. In this regard the Assessing Officer has stated ₹ 1,015/- is minimum charges and no energy charges was there in bill as amount of ₹ 1,015/- is stated as energy charges and minimum charges is stated as NIL. In this regard the Assessing Officer has filed another bill from concerned electricity department pertaining to March, 2004 to July, 2004 according to which consumption of electricity is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee because energy consumption has been shown as 8 units. Coming to the other bill assessee has placed reliance on the bill dated 11.11.2004 placed at page 70 of the Paper Book filed by the assessee when energy charges have been claimed to be ₹ 1015/-. Meter hire charges have been claimed to be ₹ 17/- which shows that energy has been consumed and this bill is pertaining to March, 2004 to September, 2004. This electric meter was installed on 29.3.2004. It shows that the unit of the ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Act. For the sake of convenience we reproduce the observations of CIT(A) as under :- 6.1.2 The above table shows that the 7 machineries in the entire process can only be operated by power whereas the other four can be optionally hand operated also. The manufacturing of the control panel will require certain amount of electricity as per the manufacturing process submitted by the appellant. But on the perusal of the first electricity bill submitted by the appellant (page 122 of the paper b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

py of the energy charges bill vide page No.76 of the Paper Book, which clearly shows the energy charges of ₹ 1053 including energy charges, meter hire charges of ₹ 17/- along with delayed payment charges. This bill is claimed to have been filed before the authorities below, so they are not justified in disallowing and confirming the claim of assessee. Apart from this assessee has filed all records relating to machinery purchase bill, which is claimed to have been purchased on 14.3.20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is placed on page 85 of the Paper Book. The CIT(A) issued notice to the purchaser and the purchaser has confirmed the same, but the CIT(A) remained silent on the same. This is indicative that the claim of the assessee in subsequent proceedings is also justified and there is nothing on record that assessee has not sold its product on 31.3.2004 and sales-tax was NIL as per exemption certificate. It is further strengthened by the Assessment Order under Central Sales-tax as placed on pages 93 to 95 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

venue authorities it will amount to disbelieve the Central Sales-tax Act which is not permissible because the order of is of a quasi judicial body. It should not be contradicted by other quasi judicial body under the Income-tax Act. In the facts and circumstances the Assessing Officer summoned the purchaser of good and the purchaser confirmed the purchase of goods. In response to the compliance placed at page 96 of the Paper Book the Assessing Officer was not justified in keeping silent on the i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nder Central Sales-tax Act. The Assessing Officer was not justified to disbelieve the same on the basis of surmises and conjectures. In view of the above factual and legal discussion the assessee is held to be eligible for deduction of ₹ 1,03,91,856/- under section 80IB. Assessing Officer is directed accordingly. 7. The next ground of appeal is regarding upholding the addition made by the Assessing Officer to the tune of ₹ 14,91,264/- on the ground of differences in balances of sundr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

all the differences, ignoring the fact that in fact some of the differences would have negative effect on the income of the assessee. The CIT(A) observed that the assessee failed to provide any evidences such as confirmatory letters from the sundry creditors and the reconciliation statement from the two creditors in support of its contention. In absence of any supporting documents, the submissions made by the assessee are only self-serving documents not supported by any evidences. Thus the CIT( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

orders of authorities below. 7.3 We have considered the rival submissions and carefully gone through the material on record. It is undisputed that this document was filed by the assessee as claimed and as evident from the details. This certificate was placed before the authorities below and in such situation it is not proper on the part of both the authorities below to negate the claim of assessee. In the interest of justice, we think it just and proper to restore the matter to the file of Asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Income-tax Act, 1961 and consequent claim of 80IB of same was also disallowed. 8.1 The ld. Authorized Representative submitted that the authorities below have not considered the material placed before them and appreciated the facts. They have wrongly denied the claim of assessee. Therefore, it was submitted that the material/evidences may kindly be considered properly and necessary relief under provisions of section 80IB of the Act be granted to the assessee on amount disallowed u/s 40(a)(i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

High Court in the case of CIT vs. Sahjanand Associates (supra) submitted that the claim of assessee u/s 80IB should be allowed on these two disallowances u/s 40(a)(ia). On the other hand ld. Departmental Representative simply relied on the orders of the authorities below. 8.3 After considering the rival submissions and going through the material on record, we find that in the case of CIT vs. Sahjanand Associates an identical issue has been decided by the Hon ble Gujarat High Court by observing a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Commissioner of Income-tax vs. Radhe Developers reported in (2012) 341 ITR 403 (Guj). In this respect, no interference is called for. 4. With respect to the Tribunal s view that if there is disallowance of expenses under section 40(a)(ia) of the Income Tax Act, then such additional income would also qualify for deduction under section 80IB(10) of the Income-tax Act, we do not fully concur. It may be that certain expenditure may be disallowed on the ground that tax deductible at source at the ti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version