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2016 (9) TMI 752 - ITAT DELHI

2016 (9) TMI 752 - ITAT DELHI - TMI - Admissible deduction u/s 80IC - AO has reduced the deduction on the ground that out of the 3 exempted and 3 non-exempted units owned by the assessee in different states the maximum N.P. rate for a taxable unit was 6.90% while that for an exempted unit the minimum NP rate was 13.4% - WHETHER the gap between the profits of the taxable units and non exempted units "appears" to be unrealistic? - - Held that:- The assessee has produced all the books of accou .....

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if the cost of raw material was excluded, the GP rate in all the units would remain the same. The fact that the exempted unit at Haridwar has shown a loss has not been referred to by the AO. Therefore, it is clear that no profit has been diverted to this unit. It was further noted that there has been no investigation or specific exercise to show that the amount claimed as deduction u/s 80-IC was wrong. We find considerable cogency in the finding of the Ld. CIT(A) that there is no ground for dis .....

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. ORDER PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned order dated 10/2/2014 passed by the Ld. Commissioner of Income Tax (Appeals), Rohtak on the following grounds:- 1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and in facts by reducing the deduction u/s 80lC amounting to ₹ 10,04,37,872/- by Assessing Officer by invoking the provisions of section 80IC(7) r. w .s. 801A( 10) of the I.T. Act as according to the AO it .....

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and in profit and loss account was furnished during assessment proceedings; the Ld CIT(A) deleted the said addition. without appreciating the facts of the case mentioned in details in assessment order. 2. That the appellant craves for the permission to add, delete or amend the ground of appeal before or at the time of hearing of appeal. 2. The facts in brief are that the assessee has filed its Return of income showing total income of ₹ 5,34,49,511/- claiming deduction of ₹ 21,36,05,4 .....

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es attended the proceedings. AO observed that owing to the close connection between the exempted units and the taxable units as also the concern related to the assessee firm, the course of business between them is so arranged that the business transacted between them produce to the exempted units of the assessee firm more than the ordinary profits which might reasonably be expected to arise. Provisions of section 80IC(7) read with section 80IA(10) of the Act were invoked and the deduction admiss .....

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and allowed the appeal of the assessee. 4. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal. 5. At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that Appeal of the Revenue may be allowed. 6. On the contrary, Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A) and stated that in the assessment years 2005-06 and 2009-10 in assess .....

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issue in dispute by considering the submissions of the assessee and adjudicated the issue as under:- I have examined the facts on record and the submissions made by the assessee. The AO has reduced the deduction admissible u/s. 80 IC of the IT Act by ₹ 10,04,37,557/- on the ground that out of the 3 exempted and 3 non-exempted units owned by the assessee in different states the maximum N.P. rate for a taxable unit was 6.90% while that for an exempted unit the minimum NP rate was 13.4%. The .....

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mitted during the assessment proceedings. However, the appellant has produced all the books of accounts and vouchers before the AO during the assessment proceedings. In fact, no show cause query was issued by the AO on this account during the assessment proceedings. The AO has not considered the fact that the units in exempted zones are mainly engaged in manufacturing on job work basis where there is either negligible or no input cost of raw material involved. If the sales were made using their .....

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ing claim for job work expenses for the eligibility u/ s 80-IC as the same is allowable as per the decision of my. Ld. Predecessor in appeal no. 467 /RTK/2011-12 for the AY 2009-10. In view of the above, the reduction of claim u/s. 80-ICI by ₹ 10,04,37,872/- is deleted and the ground of appeal is allowed. 7.1 After going through the findings of the Ld. CIT(A), as aforesaid, we are of the view that the AO has reduced the deduction admissible u/s. 80 IC of the IT Act by ₹ 10,04,37,557/ .....

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pect of purchases and job work expenses made with related concerns or units of the assessee's firms. Taking all these factors into account the AO has stated that no evidence in respect of manufacturing, trading and P&L a/c have been submitted during the assessment proceedings. However, the assessee has produced all the books of accounts and vouchers before the AO during the assessment proceedings. In fact, no show cause query was issued by the AO on this account during the assessment pro .....

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as not been referred to by the AO. Therefore, it is clear that no profit has been diverted to this unit. It was further noted that there has been no investigation or specific exercise to show that the amount claimed as deduction u/s 80-IC was wrong. We find considerable cogency in the finding of the Ld. CIT(A) that there is no ground for disallowing claim for job work expenses for the eligibility u/s 80-IC as the same is allowable as per the decision of his Predecessor in appeal no. 467 /RTK/201 .....

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