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I.T.O., Ward-1 (2) , Kolkata Versus M/s. S.K.J. Coke Industries Ltd.

2016 (6) TMI 1085 - ITAT KOLKATA

Withdrawal of deduction u/s 80IC on transport charges & transport subsidy - whether a mistake apparent from record in terms of section 154 - Held that:- If transportation charges are excluded from the business profits on which the deduction u/s 80IC of the Act is to be allowed then the corresponding expenses will also have to be excluded in which case profits of the business will get reduced to the extent of difference between the transportation charges received by the assessee namely ₹ 8, .....

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ived or the net transport charges received are highly debatable issues which cannot be resolved in the proceedings u/s 154 of the Act. The CIT(A) has taken note of this principle has followed the decision of the Hon’ble Supreme Court in the case of M/s. Mepco Industries Limited vs CIT [2009 (11) TMI 24 - SUPREME COURT ] wherein the principle that debatable issues cannot be the subject matter of proceedings u/s 154 of the Act has been reiterated. In the light of the judicial pronouncements referr .....

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e against the order dated 30.04.2013 of CIT(A)- I, Kolkata, relating to AYr. 2005-06. 2. The grounds of appeal raised by the revenue read as follows :- That on the facts and circumstances of the case the Ld. CIT(A) was not justified in holding that withdrawal of deduction u/s 80IC on transport charges & transport subsidy of ₹ 8,70,91,329/- & ₹ 10,22,96,544/- respectively cannot be considered as mistake apparent from record in terms of section 154 and cannot be rectified u/s 1 .....

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in sub-section (2), there shall, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as is specified in sub-section (3) of 80IC of the Act. In the return of income filed for A.Y.2005-06 the assessee claimed deduction a sum of ₹ 11,88,67,798/- as deduction u/s 80IC of the Act. An order of assessment u/s 143(3) was passed by the AO on 31.12.2007 in which the AO reduced the claim of the assessee for deduction u/s 80IC of the Act by a sum of S .....

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e CIT(A), who by an order dated 06.09.2010 held that deduction u/s 80IC of the Act should be allowed without excluding the interest expenditure as was done by the AO. 4. The AO thereafter issued notice u/s 154 of the Act, proposing to modify the deduction already allowed u/s 80IC of the Act by excluding two items of income which were included in the profits of the business on which deduction u/s 80IC of the Act was claimed by the assessee and allowed by the AO in the proceedings u/s 143(3) of th .....

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lowing the decision in the case of CIT vs. Andaman Timber Industries Ltd. [2000] 242 ITR 204 (Cal) & CIT Vs, Meghalaya Steels Ltd. [2011] 332 ITR 91 (Gau), where it has been decided specifically that transport subsidy is not eligible for deduction u/s 80HH or 80IB. 5. The AO thereafter passed an order u/s 154 dated 30.03.2012 excluding the transport charges of finished goods and transport subsidy from the profits derived by an enterprise and revised the deduction u/s 80IC of the Act accordin .....

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ndertaking from the business of manufacture used in section 801C(1) would also include subsidies received by an Assessee such as transport subsidy. In Assessee s own case for AY - 2003-04 and 2004-05 the Hon'ble ITAT, Kolkata Bench vide order dated 14.07.2006 accepted the contention of the assessee regarding eligibility of transport charges and subsidy as part of business receipts and eligible for deduction under 80IC and the Hon'ble Kolkata High Court also vide order dated 02.04.2007 he .....

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te of the argument of the Assessee that as per the decision of Hon'ble Supreme court in the case of M/s Mepco Industries Ltd.dtd.19.11.2009 decision on debatable point of view cannot be treated as mistake apparent from the record. Keeping in view all the above facts and circumstances, the CIT(A) held that the order of AO dated 31.03.2012 for withdrawal of deduction under 80IC on transport charges and transport subsidy cannot be considered as mistake apparent from record in terms of section 1 .....

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er brought to our notice the decision of the Hon ble Supreme Court in the case of CIT vs Meghalaya Steel Ltd.Civil No.7622 of 2014 judgment dated 09.03.2016 wherein the Hon ble Supreme Court considered the question as to whether identical transport subsidy is eligible for deduction u/s 80IC of the Act. The Hon ble Supreme Court held that transport subsidy had to be recorded as part of the eligible business u/s 80IC of the Act has to be allowed. In view of the aforesaid decision we are of the vie .....

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