TMI Blog2016 (4) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not submit the relevant details at the time return filing for the deduction under section 80IB of the Act on the presumption that the return of income was filed declaring loss. So there was no point to claim the deduction under section 80IB of the Act. However when the AO framed the assessment under section 143(3) of the Act at positive income then the assessee raised the issue of said deduction. However the same was disallowed by the AO in the absence of sufficient documents in support of the claim under section 80IB of the Act. In the instant case the order of the AO was reversed by the ld. CIT(A) and we upheld the order of the ld. CIT(A). So as a result the loss claimed by the assessee has been restored. Therefore in the event of the loss return filed by the assessee, the question for claiming the deduction under section 80IB of the Act does not arise. Accordingly in our considered view the issue of 80IB of the Act becomes irrelevant for the year under consideration. Therefore we are not adjudicating the same in the light of the provisions of the Act. Hence, we decide this effective ground against Revenue. - ITA No.887/Kol /2013 - - - Dated:- 18-3-2016 - Shri N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case in holding the method adopted by the AO for working out the profit as erroneous and prejudicial to the interest of Revenue. 2.1 Facts in brief are that the assessee is a Private Ltd. company and engaged in the business of growing tea leaf and manufacturing tea. In the instant case the assessee is having income from the two sources of the business. Source- 1 1) Growing and manufacturing of tea. As per rule 8 of Income Tax Rules 1962 40% income from such activity chargeable to tax. Source- 2 2) Manufacturing of tea from the tea leaves purchased from outside. The rule 8 of Income Tax Rules 1962 is not applicable to the income from this activity so 100% income from such activity is chargeable to tax. In the present case, assessee has incurred numerous expenses which are directly attributable to the above sources and some of them are not directly attributable to the above sources of income. The assessee has not maintained separate books of accounts in respect of tea manufactured from leaves grown by the assessee and in respect of tea manufactured out of leaves purchased from outside. It is important to ascertain the actual income from the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that the above expenses stand incidental to both as required for manufacturing activity per se irrespective of the source of leaf. The assessee specifically submitted that for growing tea leaves and manufacturing tea out of grown leaves and purchased leaves, labour and staffs are required to be hired and hence ancillary expenses need to be incurred too. Thus, on the basis of the above analogy, it can be said that the AO had erred in opinion that employment cost amounting to ₹ 97,37,480/- was incurred by assessee for only earning composite income and not 100% taxable income. Regarding administrative expenses an organization incurs expenses indirectly related to a specific function such as manufacturing/production or sales. These expenses are related to the organization as a whole as opposed to an individual department. Thus, it stands clear that these expenses are actually incidental indispensable for facilitating the workability of all the departments in an organization. An inference of the above in the facts of the concerned case implies that these administrative expenses had to be actually borne by the assessee for the year under consideration in order to facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own garden but also from tea leaves bought from outside. With regard to depreciation I hold that the Ld AR is correct in stating that only a few assets are directly incidental for growing tea leaves e.g. tea plantation, kuchha wells, garden shade, irrigation spare and parts, tractor, pump sets etc., The rest of the assets are used by the assessee not only for manufacturing and sale of tea from tea leaves grown in own garden but also from tea leaves bought from outside. To be specific, tools implements, trough house, pump set, plant machinery, factory building, generator, road development for plant, electrical installations etc. are such assets which are used by the assessee in the manufacture of tea not only from its own gown leaves but also from tea leaves bought from outside. It is equally true that cycle, motor vehicles, trailer etc. are used for transiting finished products from the factory premises to the auction centers and also for bringing raw materials e.g. bought tea leaves to the factory premises. Assets like computer, airconditioner, fire extinguisher, office appliances, type writer are very much needed for official work at factory premises and Corporate Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Ld. CIT(A) and this ground of Revenue s appeal is dismissed. 5. Next issue raised by Revenue is that Ld. CIT(A) erred in giving relief u/s. 80IB of the Act. 5.1 The AO during the course of assessment proceedings observed from the tax audit report that assessee is eligible for deduction u/s. 80IB of the Act. But the assessee failed to furnish the supporting documents for claiming deduction u/s. 80IB of the Act. Therefore, AO has disallowed the claim of assessee u/s 80IB of the Act. 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A). Before Ld. CIT(A) assessee submitted that return of income was filed declaring the loss, therefore no deduction u/s. 80IB of the Act was claimed. However, the assessment has been framed u/s. 143(3) of the Act at a total income of ₹ 23,32,260/-. Therefore, the deduction u/s. 80IB of the Act was claimed. Accordingly, Ld. CIT(A) deleted the addition made by AO by observing as under:- I have carefully examined and considered the submissions of the Ld AR and also perused the assessment order. I have also perused the remand reports submitted by the Ld. AO. After careful consideration I hold that the L AO was no justified in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligibility criteria for claiming deduction u/s. 80IB of the Act in his remand reports. Keeping in view the above facts I hold that the assessee is eligible for deduction u/s 80IB of the Act depending upon the final computation of positive profits and gains of business. Therefore, this ground of appeal of the assessee is treated as allowed . Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 7. We have heard rival contentions and perused the materials available on record. From the facts we find that the assessee did not submit the relevant details at the time return filing for the deduction under section 80IB of the Act on the presumption that the return of income was filed declaring loss. So there was no point to claim the deduction under section 80IB of the Act. However when the AO framed the assessment under section 143(3) of the Act at positive income then the assessee raised the issue of said deduction. However the same was disallowed by the AO in the absence of sufficient documents in support of the claim under section 80IB of the Act. In the instant case the order of the AO was reversed by the ld. CIT(A) and we upheld the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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