TMI Blog2011 (12) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... erves to be deleted as it has been made merely on surmises and conjectures without any strong basis. 3. That the Learned Commissioner of Income Tax (appeals), Chandigarh is unjustified in upholding the order of the Ld. Assessing Officer in making the addition of ₹ 1,39,79,214/- on account of excise duty refund. This addition is highly uncalled for and deserves to be deleted as the excise duty refund has a direct nexus with the manufacturing activity and is elilgible for deduction u/s 80iB of the I.T. Act, 1961. This has been held by the Hon'ble Delhi High Court in the case of CIT Vs. Dharam Pal Prem Chand Ltd. (221 CTR 133), which has also been upheld by the Hon'ble Supreme Court. 3. The assessee has also raised additional grounds of appeal which are as under: 1. That the amount of Excise Duty refund of ₹ 1,39,79,214/- received by the appellant, in pursuance to the incentives announced and sanctioned vide Government of India, ministry of Commerce and Industry (Department of Industrial Policy and Promotion) s Office Memorandum No.1(13) 2000-NRE dated 14-06-2002 and Central Excise Notification Nos.56 and 57 dated 14-11-2002 and other Notifications is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he narration of the vouchers, but the nature of the expenditure was definitely business expenditure. Our attention was drawn to the details furnished in Paper Book No.2 at page 1 and also the supporting evidence filed thereafter at page 2 onwards. 8. The learned D.R. for the Revenue pointed out that the assessee has failed to furnish complete evidence in respect of the said expenditure and consequently the disallowance made in the case of is to be upheld. 9. We have heard the rival contentions and perused the record. The assessee during the year under consideration had incurred total expenditure of ₹ 6,32,080/- out of which the expenditure incurred through the partner Shri Uday Kairon was ₹ 2,42,270/-, which included expenses of ₹ 1,29,775/- incurred on foreign tour to Chine for attending the conference and exhibition. The balance expenses incurred by different branches for sales promotion totaled to ₹ 3,89,810/-. The Assessing Officer during the course of assessment proceedings, had held the expenses incurred by Shri Uday Kairon, partner, to be personal in nature and disallowed ₹ 3,33,754/-. The Assessing Officer though had treated the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 ITR 218 (SC)]. Reliance of the assessee on the ratio laid down by the Hon'ble Delhi High Court in CIT Vs. Dharam Pal Prem Chand [317 ITR 353 (Del)] was found to be distinguishable on facts of the case. The CIT (Appeals) upheld the order of the Assessing Officer. 11. The assessee is in appeal against the order of the CIT (Appeals). The learned A.R. for the assessee has raised two folds objections to the addition upheld by the CIT (Appeals). In the first limb of arguments of the learned A.R. for the assessee is that the first issue to be addressed is that the excise duty refund has a direct nexus with the manufacturing activities carried on by the assessee and the same is eligible for deduction under section 80-IB of the Act. In this regard the learned A.R. for the assessee placed reliance on the under-mentioned decisions: a) CIT Vs. Dharam Pal Prem Chand[317 ITR 353 (Del)] b) SLP dismissed in the case of CIT Vs. Dharam Pal Prem Chand [SLP (Civil) No.24055/2009 dated of decision 28.2.2010]. c) CIT Vs. Meghalya Steel Ltd. [241 CTR (Gau) 384] d) G.K. Aluminium Co.Vs. ITO [ITA No.3303/Del/2010 date of order 29.4.2011] e) Addl.CIT The Total packaging Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the said excise duty refund is a capital receipt and hence not includible as income of the assessee. The additional ground of appeal No.1 being purely legal is admitted for adjudication. 16. First we take up additional ground of appeal raised by the assessee. The assessee had set up manufacturing unit and started commercial production at Samba, which is backward area of State of Jammu Kashmir. The assessee had claimed deduction under section 80IB of the Act on the profits earned from the Samba manufacturing unit and as the assessee was found to have fulfilled all conditions laid down under section 80IB of the Act, the said deduction was allowed by the Assessing Officer. However, the Assessing Officer held that a sum of ₹ 139.80 lacs being excise duty refund received by the assessee was not eligible for the said deduction under section 80IB of the Act, as the same was not derived from the industrial undertaking. Similar issue of receipt of excise duty refund arose before the Hon'ble Jammu Kashmir High Court in bunch of appeals with lead order in M/s Shree Balaji Alloys Others Vs. CIT in ITA No.2 of 2010 Others. The Hon'ble Court vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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