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2016 (7) TMI 572 - ITAT AHMEDABAD

2016 (7) TMI 572 - ITAT AHMEDABAD - TMI - Deduction under section 80JJA - profits and gains from business of collecting and processing of bio-degradable waste - Held that:- Reasons for disallowing the claim of the assessee is identical, as was considered in the Asstt.Year 2006-07. The ld.AO re-appreciated the certificate issued by SGS India Pvt.Ltd. and its correspondence. In the light of fresh assessment order, if we examine the assessment orders passed in these two years, then, it would reveal .....

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Shri N. K. Billaiya, Accountant Member For the Revenue : Shri Jamesh Kurian, Sr. DR For the Assessee : Shri M.J. Shah, AR ORDER Per Rajpal Yadav, Judicial Member The present two appeals are directed at the instance of the Revenue against the orders of the ld.CIT(A)-V, Surat dated 27.1.2011 and 17.10.2011 passed in the Asstt.Year 2007-08 and 2008-09 respectively. 2. The grounds of appeal taken by the Revenue are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 .....

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ith five partners. It has filed its return of income on 20.10.2007 and 30.9.2008 for the Asstt.Years 2007-08 and 2008-09 respectively. It has declared NIL income in both the assessment years after claiming deduction of ₹ 2,06,02,468/- and ₹ 1,29,16,846/- under section 80JJA of the Income Tax Act for the respective assessment years. The cases of the assessee were selected for scrutiny assessment in both the years and notices under section 143(2) were issued on 17.7.2008 and 25.9.2009 .....

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stt.Year 2008-09 also he made reference to higher rate of GP and how the purchases could not be substantiated by the assessee with confirmation from co-dung sellers. Ultimately, the ld.AO has rejected books of accounts of the assessee. However, he accepted the computation of profit made by the assessee. The ld.AO, thereafter observed that SGS India Pvt. Ltd., a company authorized to issue certificate about the organic products, that concern has withdrawn certificate from the assessee, and theref .....

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. The dispute travelled upto the Tribunal, and the Tribunal has set aside the issue to the file of the AO. In pursuance to the Tribunal s order, the AO has passed a fresh assessment order on 1.3.2015. The ld.AO has allowed the claim of the assessee. He placed on record copy of the assessment order. On the strength of this assessment order, he contended that department cannot take a contradictory stand on an identical issue. On one hand, the department is challenging the order of the CIT(A) on th .....

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the ld.CIT(A) has recorded almost identical finding in both the years. For the facility of reference, we take note of the finding recorded by the ld.CIT(A) in the Asstt.Year 2007-08. It reads as under: Decision: 6. I have gone through the Assessment Order and the submissions of the appellant. The actions of the A.O. of rejecting the book results u/sec. 145(3) of the Income-tax Act and of rejecting the claim of assessee for deduction u/s. 80JJA of the Act cannot be upheld due to following reasons .....

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and hence same are rejected u/sec. 145(3) of the Income-tax Act." The above remarks are very general in nature and the A. O. has really failed to point out any serious discrepancy or defect in the books of accounts of the assessee which would necessitate the rejection of the books of accounts and the book results. The fact that out of the ten parties from whom the assessee purchased cow dung during the year, two parties could not be located during the course of assessment proceedings or tha .....

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epted the book profits shown by the assessee. Since the A. O. has accepted the book results of the assessee as correct, he is not justified in claiming that the sales transactions shown by the assesee are fictitious in nature since the profits would not be generated unless the sales are made. If the book profits are accepted and found to be correct, the corresponding sales are also I required to be accepted as correct. Though the A. O. referred to the issues I of reconfirmation of purchases and .....

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the book results shows that the A.O. was not clear what he wanted to do. The acceptance of book results shown by the assessee renders A.O.'s own action of rejection of books of accounts and the book results untenable and as such, the action of the A. O. of rejecting the books of accounts and the book results cannot be approved and accordingly this ground of appeal is allowed. (ii) The assessee claimed deduction u/sec. 80JJA of the Income-tax Act. The A. O. has rejected the books of accounts .....

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uction u/sec. 80JJA of the Act appears to be totally misconceived. In the said letter itself it is clearly stated that the product manufactured by the assessee can be approved as organic inputs for use in organic farming. Again while the A. 0. has rejected the claim for deduction u/sec. 80JJA of the Act, he has accepted the business profits shown by the assessee to be correct without pointing out as to if the assessee has not carried on the business of manufacture and sale of organic manure, the .....

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challans, sales bills, transport receipts, delivery challans, etc. for vermin compost sold and delivered are fictitious and not acceptable as evidences, In fact, the assessee also sold the vermin compost to the Joint Director of Agriculture, Udupi District, Udupi, Karnataka which is a government authority. In respect of such sales of 180 tonnes of vermin compost to the said government authority of Karnataka State, the assessee produced the letter of the said government authority placing order wi .....

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price for said organic manure sold by the assessee to the said government authority. In view of the above, it clearly gets established that the assessee during the year manufactured and sold organic manure from the biodegradable waste and as such, profits from such business do qualify for deduction u/sec. 80JJA of the Act. In view of above facts, I am of the opinion that the assessee's claim of deduction u/sec. 80JJA of the Income-tax Act appears to be genuine and should be allowed. Accordi .....

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f the AO reads as under: (D) Regarding claim of the deduction u/s. 80JJA of the I.T. Act- Regarding the claim of deduction u/s. 80JJA of the I.T. Act, assessee contended that the letter/certificate from the SGS India Pvt. Ltd has never been produced by it. Further, it was stated that the copies of annexure I and II of letter dated 21.12.2009 of SGS India Pvt. Ltd have not been provided. The assessee furnished a copy of letter dated 26.07.2006 of SGS India Pvt. Ltd to prove that it manufacture or .....

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process compost production and this certificate is nothing but the annexure-I which assessee stated that same not provided. The validity period of this was from 04.03.2006 to 03.03.2007. It was further mentioned in this certificate as under - "The validity of the certificate solely depends on the organization's continued compliance to indicated the standards which is subject to annual surveillance inspection." From the above contents of the certificate it is clear that there were .....

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ssee vide submission letter dated 29.12.2009 furnished the copy of letter dated 25.07.2006 of the SGS India Pvt.Ltd. at Page No.76. This letter is addressed to Mr. Pravin D. Mangukiya, who is one of the partner of assessee firm. In this letter, assessee was specifically requested to surrender the certificate issued because, during the annual review of the company, assessee failed to comply with the corrective action requests made by this certified company. Further, the SGS India Pvt. Ltd, in ref .....

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nic. We had further requested to discontinue usage of organic certification logo (SGS Organic logo and India Organic logo) and/or refrain from displaying associated references to any stationery, packaging, advertising materials and/or vehicles and products and inform us accordingly. So far we have not received any intimation from your end about compliance. We have no option but to cancel the certificate issued, with immediate affect. As stated earlier, please return the original certificate issu .....

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t. Ltd given to the assessee, itself explains that the annexure-I and II are issued on assessee by the SGS India Pvt.Ltd. and same was available with assessee and therefore not provided. Further, despite of warnings vide letters dated 25.07.2006 and 21.03.2007 from the SGS India Pvt. Ltd, assessee has not taken care of the same and has not surrendered certificate which shows that assessee has followed the norms. Therefore, in view of the above discussion, since assessee has not carried out its a .....

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