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2016 (11) TMI 116 - ITAT JAIPUR

2016 (11) TMI 116 - ITAT JAIPUR - TMI - MAT applicability - Held that:- Section 115JB is applicable to the assessee company and therefore, the ground of the assessee is required to be dismissed and we accordingly dismiss this ground in respect of all the appeals. See Amin Merchant Versus Chairman, Central Board of Excise & Revenue & Others [2016 (7) TMI 1063 - SUPREME COURT] - Deduction U/s 80-IC - sale of scrap - Held that:- Both the provisions apply and operates in different fields. Wherea .....

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ase of 80HHC if the sale scrap is made a part of the turnover the export benefit of the undertaking will increase and therefore to different effects are therefore for treating the sale being part of the turnover and also treating the receipt of sale scrap being part and parcel of the activity being proximate to the activities of the industrial undertaking while computing the deduction u/s 80-IC of the Act. For the reasons stated above, we uphold the order passed by the ld CIT(A) and dismiss the .....

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pect of the manufactured goods sold to them, is required to be allowed as deduction u/s 80-IC of the Act. However, the assessee itself is engaged in manufacturing activities and trading of goods, therefore, the assessee has itself offered amount for taxation. The assessee has not filed bifurcation of the interest received under the manufacturing and trading activities, considering the complicity, the ld Assessing Officer has allowed 50% of interest received are in respect of trading item and 50% .....

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etween the amount of the credit balance of ₹ 48,875/- for the A.Y. 2010-11 and ₹ 70,670/- for A.Y. 2011-12 with that of the manufacturing activities. The assessee is directed to produce all the evidences before the Assessing Officer. In this regard, the Assessing Officer is directed to examine the same and after examination, the Assessing Officer, if found that the creditors were associated with the manufacturing activities of the assessee, then he shall reduce the credit balance fro .....

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ders dated 10/09/2014, 26/02/2013 and 30/09/2014 passed by the learned CIT(A)-III, Jaipur for A.Y. 2008-09, 2009-10, 2010-11 and 2011-12. The effective grounds of all the appeals are as under:- Grounds of ITA No. 706/JP/2014 (assessee's appeal) A.Y. 2008-09 "1. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld. AO in reopening the assessment by recourse to section 147 of the I.T Act 1961. The action of the ld. CIT(A) is il .....

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duction under section 80-IC. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by excluding the income fully deductible under section 80-IC from the purview of applicability of tax under section 115JB of the I.T. Act 1961. 3. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in reducing the deduction u/s 80-IC to the extent of ₹ 93,56,777/- out o .....

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Particulars Amount Interest on FD and others 38,219/- Interest against sale 6,711/- Total 44,930/- The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction U/s 80-IC in respect of the above incomes as claimed by the assessee company." Grounds of ITA No. 800/JP/2014 (revenue's appeal) A.Y. 2008-09 "1. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in res .....

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case and in law, the Ld.CIT(A) has erred in restricting the disallowance to ₹ 6711/- as against disallowance of ₹ 1,34,228/- made by the AO out of claim of deduction u/s 80-IC on account of interest against sales invoices." Grounds of ITA No. 734/JP/2013 (assessee's appeal) A.Y. 2009-10 "1. That on the facts and in the circumstances of the case and in law, the action of the CIT(A) in not allowing relief in imposing Minimum Alternate Tax under section 115 JB on book pro .....

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inst the facts of the case. Relief may please be granted by allowing deduction under section 80-IC as claimed by the assessee. 3. For that the assessee denies liability to pay the tax assessed and interest charged under section 234B, 234C and 234D. Grounds of ITA No. 707/JP/2014 (assessee's appeal) A.Y. 2010-11 "1. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld.AO in charging tax on the book profits of 22,65,01,252/- un .....

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, 1961 and quashing the tax liability of ₹ 5,39,64,730/-. 2. In the facts and circumstances of the case in law the ld.CIT(A) has erred in confirming the action of the ld. AO in further reducing the deduction u/s 80-IC in respect of the under noted income and taxing them separately:- Particulars Amount (In Rs.) Interest against sale invoices 258/- Sundry Creditors Balance written back 48,875/- Total 49,133/- The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the f .....

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ook profits in respect of its income eligible for 100% deduction under section 80-IC. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by excluding the income fully deductible under section 80-IC from the purview of applicability of tax under section 115JB of the I.T. Act 1961. 2. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in reducing the deduc .....

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of the under noted income and taxing them separately:- Particulars Amount Interest against sale invoices 680/0 Sundry Creditors Balance written off 70,670/- Total 71,350/- The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction u/s 80-IC in respect of the above incomes as claimed by the assessee company." Grounds of ITA No. 801/JP/2014 (revenue's appeal) A.Y. 2011-12 "1. On the facts .....

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rofit from eligible business. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance to ₹ 680/- as against disallowance of ₹ 234005/- made by the AO out of claim of deduction u/s 80-IC on account of interest against sales invoices." 2. All the appeals have been heard together, therefore, for the sake of convenience, a common order is being passed in all these appeals. 3. We shall decide the ground No. 1 of the assessee& .....

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1) of the Act was issued on 23/2/2010. The assessee vide writ petition No. 02/2010 had challenged the applicability of Section 115JB of the Act before the Hon'ble High Court of Uttrakhand and in the said writ petition, the Hon'ble High Court of Uttrakhand has granted following interim order:- "Mr. A.K. Mitra and Mr. S.N. Mitra, Senior Advocates with Mr. Tishi Dipankar and Mr. D. Barthwal, Advocates appears for the petitioner. Mr. K.P. Upadhyay, Additional Chief Standing Counsel appe .....

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fore us pertaining to its liability to pay tax under Section 115JB of the Income Tax Act, 1961. In the event the State expresses its mind pertaining to the issue under consideration in this petition, it shall be open to the State to file a counter affidavit." The assessee filed the reply to the writ petition in pursuance to the notice dated 23/2/2010. However, the assessment proceedings were not finalized. The ld Assessing Officer for the assessment year 2008-09 had issued another notice re .....

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Distribution expenses ₹ 14,74,80,692/- (iv) Furnished list of unsecured loans amounting to ₹ 5,99,55,848/- which have been webbed off during the period under consideration alongwith made of repayment of unsecured loan. (v) Furnish details of miscellaneous income of ₹ 6,86,819/- (vi) Furnish details of evidences in respect of fixed assets as under: (A) Land ₹ 3,82,803/- (B) Building ₹ 1,75,37,657/- (C) Furniture & Fittings ₹ 29,15,948/- (D) EDD Units (Compu .....

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le Uttrakhand High Court vide order dated 26/11/2010 has dismissed the writ petition filed by the assessee vide reasoned order. It was held that Section 115JB of the Act will apply to the assessee being a company if it is entitled to deduction mentioned in section 80-IC of the Act. The reasoning of the Hon'ble Uttrakhand High Court is as under:- "14. The first thing that is required to be considered is whether in the matter of construction of the provisions of the Act, one can take noti .....

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ature. The policy also made the same clear. 15. The Legislature, while enacting section 80-IC, made it a part of Chapter VI-A of the Act, where provisions have been made for deductions to be made in computing total income. Section 80-IC also, in so many terms, allows deductions to be made in computing total income. If the assessee is a company and comes within the purview of section 80-IC, it is entitled to deductions, to the extent specified therein, to be made in computing its total income. Se .....

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itled to the benefits thereof, became entitled to deduct the income made by them from the profits and gains derived by them from an undertaking or an enterprise of the nature mentioned in the said section. As a result of such deduction, if a company has only such profits and gains as mentioned in section 80-IC, that company would not be liable to pay any Income-tax, but by virtue of section 115JB, if the same is applicable to the company, it will be liable to pay such tax as mentioned in section .....

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ess than what has been mentioned in section 115JB, the assessee, if it is a company, will be liable to pay Income-tax to be ascertained in the manner and to the extent prescribed in section 115JB. Since these two sections deal with two different situations, they play their role in two different situations and, accordingly, should be read to ascertain the purpose thereof as depicted by the clear words mentioned therein. Whereas section 80-IC grants deduction to all assessees and, accordingly, a c .....

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d to control section 80-IC. However, a look at section 115JB would make it amply clear that, from the day one, section 115JB controlled Income-tax payable on the total income as computed under the Act and, in the matter of computing Income-tax on the total income, after insertion of section 80-IC, all assessees, including a company, became entitled to deductions prescribed in section 80-IC. Therefore, even after insertion of section 80-IC, when the total income, as computed after taking into con .....

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in section 115JB, by reason of the plain words used in section 115JB, an assessee, being a company, is liable to pay such tax as mentioned in section 115JB. In the circumstances, I am of the view that if by virtue of section 80-IC, no Income-tax is payable by an assessee, being a company, it would be liable to pay Income-tax to the extent as mentioned in section 115JB and that was and still is the very object of inserting section 115JB in the Act. 20. It was urged that the Central Government is .....

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islature did not accept the same. To that extent, the promise is not enforceable. 21. It was contended that a company will be liable to pay tax despite getting 100 percent deduction, but as against that, any other assessee will not be liable to pay any tax, that is discrimination. However, the vires of section 115JB, on that ground, has not been challenged. I would, therefore, not venture to go into that question except noting that on and from the date of insertion of section 115JB, an assessee, .....

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om the Government authority, which is evLd.ent from the schedule 27(M) of the Balance sheet. The assessee company is having manufacturing drug license No. 01/UA/HPM/2006 dated 27/3/2006 issued by Drug Controller, Uttrakhand for manufacturing the Homeopathic medicine in Uttrakhand State. We have already submitted copy of the same. 2. The computation and balance sheet of SBL Pvt. Ltd. Delhi which is sister concern of the assessee company, for the relevant assessment year is enclosed. 3. It is subm .....

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the ld CIT(A) vide notice dated 28/3/2012 has issued show cause notice U/s 263(1) of the Act stating therein that the order passed by the ld Assessing Officer was erroneous and prejudicial to the interest of the revenue as the ld Assessing Officer has failed to impose the liability of MAT U/s 115JB of the Act amounting to ₹ 1.113 crores approximately. The ld CIT(A) has dropped the proceedings U/s 263 of the Act with the following reasons: "The contents of your letter dated 09.05.2012 .....

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263 in respect of the order under sec. 143(3) dated 30.12.2010 for the assessment year 2008-09, are hereby dropped." It will be useful to mention here that the assessee feeling aggrieved by the order passed by the Hon'ble Uttrakhand High Court, had preferred an SLP before the Hon'ble Supreme Court bearing No. 6319/2011. The Hon'ble Supreme Court had disposed off the SLP with the following observation : "In our view, the writ petition ought not to have been filed before the .....

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r the assessment year 2008-09 had issued a notice U/s 147 to the following effect: "The assessee company is assessed to tax with this ward. It has e-filed its return of income for the A.Y. 2008-09 on 20.09.2008 declaring total income of ₹ 44,11,630/-. Assessment u/s 143(3) was completed on 30.12.2010 at the return income. On going through the assessment records, it has been observed that the assessee company was liable for MAT u/s 115JB of the Income-tax Act on its book profit. The pr .....

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l be the amount of income-tax at the rate of ten per cent." The assessee company has shown book profit of ₹ 11,47,82,752/- on which MAT of ₹ 1,30,04,885/-including surcharge, Education Cess & Higher Education Cess was payable. However, the records reveal that no MAT has been paid by the assessee for the A.Y. 2008-09. In these facts and circumstances, I have reason to believe that income of ₹ 11,47,82,752/- chargeable to tax under the provisions of sec. 115JB of the Inc .....

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s not imposed provision of MAT on the assessee and has accepted the return of income as filed by the assessee. It was also submitted that the reassessment of the proceedings arising out of the notice, is only a change of opinion as the assessee has already been stated to scrutiny assessment and the Assessing Officer has applied his mind to the facts and circumstances of the case. The ld AR for the assessee relied upon the judgment of the Full Bench of the Hon'ble Delhi High Court in the case .....

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d as under:- The objections raised by the assessee have been considered and are disposed off as under:- 1. Notice u/s 148 has been timely issued as per provisions of section 149(l)(b) which provLd.es that notice can be issued for the relevant assessment year up to six years from the end of the relevant previous year after obtaining necessary approval/satisfaction u/s 151(2) of the I.T. Act, 1961. Necessary approval /satisfaction of the Joint Commissioner of Income-tax, Range-7, Jaipur was convey .....

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-09 on its book profit of ₹ 11,47,82,752/-. Accordingly the case was reopened as income of ₹ 11,47,82,752/- chargeable to tax under the provision of section 115JB of the IT Act 1961 has escaped assessment within the meaning of section 147 of the IT Act 1961. This issue was never considered in full during the course of assessment proceedings u/s 143(3) of the IT Act for the A.Y. 2008-09. Further, it is pertinent to mention here that in the case of assessee company itself, the Hon' .....

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e was liable for MAT for the A.Y. 2008-09 on the book profit calculated as per P&L A/c prepared in accordance with the provisions of the Companies Act, 1956. 3. Hence, the objections raised by the assessee company are disposed or considering the facts as mentioned above." 4. Being aggrieved by the order passed by the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who after considering the legal position has also upheld the order passed by the ld Assessing Of .....

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(supra) stating that it is presumed that the Assessing Officer should be applied its mind on the documents before it after taking into accounts all the provisions of the law. Further, it was submitted that the power under section 263 of the Act had already been exercised by the officer and thereafter the proceedings were dropped, therefore, now it will be not be proper and absurd for the Assessing Officer (a subordinate) to set aside the order of the superior [CIT(A)] by invoking the provisions .....

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occasion for the Assessing Officer to reopen the reassessment on the pretext of escapement of the assessment by not applying the provisions of Section 115JB of the Act. 6. On the other hand, the ld DR has submitted that the action of the ld Assessing Officer was in accordance with law and has relied upon the various decisions, which is as under:- (i) Kalyanji Mavji & Co. v. CIT 102 ITR 287. (ii) Ess Kay Engineering Co. P. Ltd. v. CIT 247 ITR 818 (iii) Purushottam Das Bangur & Anr. v. IT .....

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T(A) was conspicuous and shows a total disrespect to the assessment proceedings and to the revision proceedings. The above said comment is based on the following analyses made us on the facts reproduced here in below: The assessee with a view to glossed over and with an intention to mislead had filed a reply before the ld Assessing Officer dated 16/12/2010 wrongly stating therein that the Hon'ble High Court of Uttarakhand in the writ petition order dated 16/9/2010 had requested the departmen .....

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gard of law has submitted incorrect, untrue and false reply to the Assessing Officer whereby they had wrongly relied upon the interim order dated 16/9/2010 whereas by the date and time, the writ petition itself had already been dismissed by the Hon'ble Division Bench on 26/11/2010, therefore, there was no reason for the assessee to file reply before the ld Assessing Officer and to impress upon her not to pass order U/s 115JB of the Act as the Hon'ble High Court has already restrained the .....

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passed in the writ petition by the Hon'ble High Court of Uttarakhand and the ld CIT(A) had dropped the proceedings U/s 263 after going through the order passed by the Hon'ble High Court dated 13/9/2010. The ironically when then letter dated 09/5/2012 was filed before the ld CIT(A) by the assessee, by that time, the SLP of the assessee has already been dismissed/disposed off by the Hon'ble Supreme Court vide order dated 06/1/2012. Thus, the assessee has been perpetuating and relying u .....

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al (supra) is misplaced and is not applicable in favour of the assessee. Our reading of the said judgment along with other judgments shows that in the present set of facts and circumstances, the ld Assessing Officer was right in reopening the assessment proceedings. Similar fact has recently been decided by this Bench in the case of Shree Durga Marbles Vs ITO order dated 16/08/2016 passed in ITA No. 277/JP/2015 has occasion to go through the various cited case laws on the reopening and thereafte .....

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and thereafter elucidated and explained that there was no difference between observations of the Supreme Court in Kalyanji Mavji & Co. (supra) and Indian & Eastern Newspaper's case (supra), as far as proposition (4) is concerned. It was held that: "We have pointed out earlier that Kalyanji Mavji (supra) outlines four situations in which action under Section 34(1)(b) can be valLd.ly initiated. The Indian Eastern Newspaper Society's case has only indicated that proposition (2 .....

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pra) and we shall discuss its application to this case a little later. But, even leaving this out of consideration, there can be no doubt that the present case is squarely covered by proposition (4) set out in Kalyanji Mavji & Co. (supra). This proposition clearly envisages a formation of opinion by the Income-tax Officer on the basis of material already on record provided the formation of such opinion is consequent on "information" in the shape of some light thrown on aspects of f .....

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y by the assessee. That would be a case where the I.T.O. derives information from the record on an investigation or enquiry into facts not originally undertaken. Again, suppose in I.T.O. accepts the plea of an assessee that a particular receipt is not income liable to tax. But, on further research into law he finds that there was a direct decision holding that category of receipt to be an income receipt. He would be entitled to reopen the assessment under Section 147(b) by virtue of proposition .....

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ition (4) refers to a case where the I.T.O. initiates reassessment proceedings in the light of "information" obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so wLd.ely expressed as to include also cases in which the I.T.O., havi .....

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, it also ropes in cases of a "bare or mere change of opinion" where the I.T.O. (very often a successor officer) attempts to reopen the assessment because the opinion formed earlier by himself (or, more often, by a predecessor I.T.O.) was, in his opinion, incorrect. Judicial decisions had consistently held that this could not be done and the Indian Eastern Newspaper Society's case (supra) has warned that this line of cases cannot be taken to have been overruled by Kalyanji Mavji (s .....

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e observations in Kalyanji Mavji, the position as summarised by the High Court in the following words represents, in our view, the correct position in law: The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income-tax Officer subsequent to the original assessment. If the Income-tax Officer had .....

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er, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred. 37. We are conscious of the fact that the aforesaid observations have been made in the context of Section 147(b) with reference to the term 'information' and conceptually there is difference in scope and ambit of reopening provisions incorporated w.e.f. 1st April, 1989. However, it was observed by the Supreme Court in .....

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written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc, because the aspect or question may be too apparent and obvious. To hold that the assessing officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raise .....

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icer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case. The Hon'ble Delhi Court in the case of Consolld.Ated Photo And Finvest Ltd. v. Assistant Commis .....

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edings. What Mr. Vohra argued was that the Assessing Officer could not, on the basis of the very same material as was available to him at the time of assessment, initiate action under section 147, for doing so, would constitute action based entirely on a change in his opinion. The contention is that if the material was available to the Assessing Officer and if an assessment order based on that material is passed by him, a reassessment using the very same material or inferences available from tha .....

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ses where income chargeable to tax has escaped assessment on account, inter alia, of the failure of the assessee to disclose fully and truly all material facts. The argument that production of the account books and other documentary evidence relevant for assessment must imply a full and true disclosure of all material facts must be rejected out of hand in the light of the provisions of Explanation 1, according to which mere production of the books of account or other evidence from which the Asse .....

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the High Court of Gujarat with which we find ourselves in respectful agreement, the action initiated by the Assessing Officer for reopening the assessment cannot be said to be either incompetent or otherwise improper to call for interference by a writ court. The Assessing Officer has in the reasoned order passed by him indicated the basis on which income exigible to tax had in his opinion escaped assessment. The argument that the proposed reopening of assessment was based only upon a change of o .....

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n to merit acceptance. There may indeed be a presumption that the assessment proceedings have been regularly conducted, but there can be no presumption that even when the order of assessment is silent, all possible angles and aspects of a controversy had been examined and determined by the Assessing Officer. It is trite that a matter in issue can be valLd.ly determined only upon application of mind by the authority determining the same. Application of mind is, in turn, best demonstrated by discl .....

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d his mind and taken a conscious decision on a particular matter in issue. It will have no application where the order of assessment does not address itself to the aspect which is the basis for reopening of the assessment, as is the position in the present case. It is in that view inconsequential whether or not the material necessary for taking a decision was available to the Assessing Officer either generally or in the form of a reply to the questionnaire served upon the assessee. What is impor .....

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end or excuse no man (fraus et dolus nemini patrocinari debent) are two doctrines which are applied by the Courts to recall earlier orders/judgments. 2. Since fraud strikes at the very root of an Order/judgment and effects solemnity, and the Rule of Law, Courts have exercised their inherent power whenever it is brought to their notice that fraud has been practiced. The above principles have been recently reiterated by the Supreme Court in the case of Hamza Haji v. State of Kerala and Anr. wherei .....

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t obtained and tainted by fraud. Power to recall is somewhat different and distinct from power of review. Power of recall is an inherent power, whereas power of review must be specifically conferred on the authorities/Court (Refer Budhiya Swain v. Gopinath Deb reported in [1994] 4 SCC 396 for the distinction between the two and when power to recall can be exercised). 8. We are conscious of the fact that there is difference between a mere mistake and even negligence which by itself is not fraud b .....

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aled. The Petitioner/non-applicant was fully aware that true facts were not brought to the notice of the Court. Thus actual fraud has been established and it is not a case of mere constructive fraud. 9. Failure to point out the factum of employment cannot be regarded as a mere secondary fact that was immaterial or irrelevant for granting relief. The facts concealed were not collateral or extraneous. In Story's Equity Jurisprudence, 14th Edition, Vol.1, as quoted in Hamza Haji (supra) it has .....

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State of Maharashtra has held that suppression of a material document would amount to fraud on a Court. In another case S.P. Chengalvaraya Naidu (decd) thr. LRs v. Jagannath and Ors. , the Supreme Court was critical and did not agree with the High Court that there is no legal duty cast upon a party to come to the Court with a true case and prove it by true evidence. It was held that fraud is an act of deliberate deception with a design to secure something by taking unfair advantage. Deception t .....

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the law laid down in the above said decisions we deem it appropriate to decide the issue of reopening against the assessee in respect of assessment year 2008-09. Accordingly, this ground of appeal is decided against the assessee. 8. Now the other grounds raised by the assessee are with respect of application of Section 115JB of the Act on the assessee. The assessee is engaged in the business of manufacturing of homeopathic medicines including the Mother Tincture, Bio Chemic Medicines, Specialize .....

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Assessing Officer for the following main reasons (CIT(A)pages 19 to 21): (a) That the provisions of section 115JB are of overrLd.ing nature. (b) That nothing is provided in section 115JB that such tax will not be paid in case of assessees covered u/s 80-IC. (c) That CBDT vide letter dated 05/06/2008 addressed to the Principal Secretary, Industrial Development, Uttarakhand, has clarified that companies covered u/s 80-IC are also to pay MAT under the provisions of section 115JB. (d) That the promi .....

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umstances and not related to the facts of the Appellant's case." 9. Feeling aggrieved by the order passed by the ld CIT(A), the assessee filed the appeal before us and it was contended as under:- "4.3 Ld. CIT(A) has, in a very summary manner, without appreciating the background and the promise with reference to which section 80-IC was introduced, has rejected the submissions of the Appellant and dismissed this ground of appeal. 4.4 Section 115JB was introduced with effect from 01/0 .....

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s in Uttarakhand. Thus section 115JB was special to a wLd.er class, within which section 80-IC was 'super' special to a very specific class. Ld. CIT(A) has not appreciated the nuances of principles of interpretations and without dealing with this aspect of submissions, has summarily held that section 115JB has an overrLd.ing impact and that nothing was provided in section 115JB that the companies covered u/s 80-IC will be out of the purview of section 115JB. 4.5 Ld. CIT(A) has also not a .....

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ow the principle of promissory estoppel. Similarly, CBDT cannot issue a clarification which is contrary to the specific provisions of the Act. On harmonious reading of both the sections, 115JB and 80-IC, it is crystal clear that Parliament provided that provisions of section 115JB would not apply on assesses covered by section 80-IC. Under these circumstances CBDT has no authority to snatch a benefit granted to the assessees by the Parliament. 4.7. Ld. CIT(A) gravely erred in observing that sinc .....

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n from application of provision of section 115JB. Section 80-IC is a special provision and was introduced knowing very well the provisions of section 115JB. The Parliament, through this way, was clear in granting benefit. Thus, the legal interpretation placed by the Ld. CIT(A) deserves to be quashed. 4.8 Against the order of the Hon'ble High Court of Uttarakhand, the Hon'ble Supreme Court has categorically held that the claim has to be decided uninfluenced by the decision of Uttarakhand .....

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. He has not dealt with how those judicial pronouncements do not support the case of the assessee. He has, in a very summary manner, simply mentioned that the facts and circumstances of assessee's case are different. No speaking order in this regard is passed. 4.10 In respect of principle of estoppel, further reliance is placed on a recent judgment of the Hon'ble Supreme Court delivered on September 03,2015 in the case of Lloyd Electric and Engineering Ltd vs. State of Himachal Pradesh a .....

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by the Government..." 10. On the other hand, the ld DR has submitted that Section 115JB of the Act is required to be applied in view of the law laid. down by the Hon'ble Supreme Court in the case of Apollo 255 ITR 273 (2002) being the special provision and therefore the interpretation as sought to be given by the ld AR is not correct. He had further relied upon the judgment of the Hon'ble Delhi Tribunal in the case of the assessee itself being ITA No. 3957/Del/2012 order dated 23/0 .....

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mputation is specified therein. The Hon'ble Supreme Court in the case of Apollo 255 ITR 273 (2002) held that while computing the book profits of a company u/s 115J under the Act, the AO has only the power of examining whether books of accounts are certified by the authorities under the Companies Act and thereafter as the limited power of making increase or decrease of certain items specifically provided for in the Explanation to S. 115J. 10. Applying the proposition laid down by the Hon' .....

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ce the AO is correct in making adjustment u/s 143(1). Thus, we are unable to persuade ourselves to agree with the finding of the Ld. CIT(A)-I, Dehradun on this issue. The fact that the return is processed by a computer or by the Officer himself, does not make a difference, as in our opinion computerized processing is only an aid to the AO. As computation of book profits u/s 115 JB of the Act is not done in accordance with the provisions of the Act, and when an incorrect claim of reduction from b .....

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ld as under:- "26. We shall now examine the scheme of the provisions of sec. 115JB of the Act. It is pertinent to note that the provisions of sec. 10 lists out various types of income, which do not form part of Total income. All those items of receipts shall otherwise fall under the definition of the term "income" as defined in sec. 2(24) of the Act, but they are not included in total income in view of the provisions of sec. 10 of the Act. Since they are considered as "income .....

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c of these provisions, in our view, is that an item of receipt which falls under the definition of "income", are excluded for the purpose of computing "Book Profit", since the said receipts are exempted u/s 10 of the Act while computing total income. Thus, it is seen that the legislature seeks to maintain parity between the computation of "total income" and "book profit", in respect of exempted category of income. If the said logic is extended further, an .....

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idered by the Special bench. We notice that the Special bench considered the following decisions:- (a) Malayala Manorama Co. Ltd v. CIT [2008] (300 ITR 251)(SC) (b) NJ. Jose & Co. (P) Ltd (321 ITR 132)(Ker) (c) CIT v. Veekaylal Investment Co. (P) Ltd (249 ITR 597)(Bom) In all these cases, the Courts were dealing with the issue of inclusion of Capital gains in the computation of "Book Profits", but such capital gains were otherwise chargeable to capital gain tax u/s 45 of the Act un .....

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he profits and gains arising on transfer of a capital asset by a holding company to its wholly owned Indian Company does not fall under the definition of "income" at all u/s 2(24) of the Act and hence the same does not enter into the computation provisions of the Act at all. We are impressed by the arguments advanced in this regard and we have also extensively dealt with the relevant provisions and also about the scheme of the provisions of sec. 115JB of the Act. We are of the view tha .....

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cussions, we find merit in the contentions of the assessee that the profit arising on transfer of capital asset to its wholly owned Indian subsidiary company is liable to be excluded from the Net profit., i.e., the Net profit disclosed in the Profit and Loss account should be reduced by the amount of profit arising on transfer of capital asset and the amount so arrived at shall be taken as "Net profit as shown in the profit and loss account" for the purpose of computation of book profi .....

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fit" for the reasons discussed above." It was further contended by the ld AR that the principle of promissory estoppels is applicable to the facts and circumstances of the case and therefore, the assessee cannot be asked to pay the MAT U/s 115JB of the Act as the Hon'ble Prime Minister has given assurance to extend the concession of 100% income tax exemption for initial period of 5 years in terms of office memorandum dated 07/1/2003. It was further submitted that the Finance Act, 2 .....

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tral Government's Notification dated 7th January, i.e. 100% income tax exemption for initial five years and 30% thereafter for a further period of 5 years would be available to them and they will not be subjected to the minimum tax prescribed in 115JB, as stated above. Section 115JB existed in the statute much before the Notification dated 7th January, 2003 was published and subsequent incorporation of Section 80-IC." The ld AR has also drawn our attention to the reply given on behalf o .....

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l exchequer, in any case, the MAT paid by companies can be carried forward for 7 years and can be adjusted .against normal income tax payable in any of the future 7 years, on fulfillment of certain conditions. Thus, it is like payment of an advance tax only. 2.1 Profit-linked tax incentives, like the one under Section 80-IC, are inherently iniquitous as the bigger entitles comer greater tax benefits. MAT acts as a cap on the total exemption claimed by profit-making Corporate entitles. 3. The phi .....

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ition and make huge investment, the revenue and the Government of India are bound by the principle of statutory estoppels and therefore, now the revenue cannot change the assessee U/s 115JB of the Act. 11. We have gone through the rival contentions of both the parties and perused the material available on the record. In our view, the issue of applicability of Section 115JB of the Act is no more res integra in view of the categorical finding by the Coordinate Bench of Delhi ITAT in ITA No. 3957/D .....

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ions of Section 115JB of the Act are not subjected to other provisions of the Act rather it starts with non-obstante clause. Whereas Section 80-IC of the Act provides the exemption of the profit and gain derived by an undertaking subject to the provisions of the said sub-section. The assessee is required to pay minimum tax as per applicable rate on the book profit under explanation-1 of Section 115JB of the Act. There is no provision of deduction U/s 80-IC which prohibits filling of return under .....

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ant to have been exempted from filling the return under section 115JB. Therefore, the conjoint reading of the two provisions make it clear that Section 115JB of the Act shall apply even to the companies getting deduction U/s 80-IC of the Act and the said. Companies are liable to pay MAT charges. In our view, if the Legislature intends to give the exemption from the application of Section 115JB to the undertaking benefitting U/s 80-IC, then the Legislature would have amended or made the said legi .....

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the threshold limit provided under the provisions. Besides the above, the Hon'ble Supreme Court had examined the legality of Section 115J of the Act in the case of JCIT v. Rolte India (2011) 9 taxmann.com 2011 and held as under:- 7. In our view, section 115J/115JA are special provisions. Section 207 envisages that tax shall be payable in advance during any financial year on current income in accordance with the scheme provided in sections 208 to 219 (both inclusive) in respect of the total i .....

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erest was inescapable. The assessee was bound to pay advance tax under the said scheme of the Act. Section 115J/115JA of the Act were special provisions which provided that where in the case of an assessee, the total income as computed under the Act in respect of any previous year relevant to the assessment year is less than 30 per cent of the book profit, the total income of the assessee shall be deemed to be an amount equal to 30 per cent of such book profit. The object is to tax zero-tax comp .....

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nce because specific provision(s) is made in the section saying that all other provisions of the Act shall apply to the MAT Company [section 115JA(4) and section 115JB(5) ]. Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under sections 115JA and 115JB. So far as interest leviable under section 234B is concerned, the section is clear that it applies to all companies. The pre-requisite condition for applicability of section 234B is that asses .....

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section 115J/115JA in the regular assessment. 9. The question which remains to be considered is whether the assessee, which is a MAT Company, was not in a position to estimate its profits of the current year prior to the end of the financial year on 31st March. In this connection the assessee placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. (supra) and, according to the Karnataka High Court, the profit as computed under the Income-tax Act, 1961 had .....

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ovisions of sections 207, 208, 209 and 210 (predecessors of sections 234B and 234C) were not applicable until and unless the accounts stood audited and the balance sheet stood prepared, because till then even the assessee may not know whether the provisions of section 115J would be applied or not. The Court, therefore, held that the liability would arise only after the profit is determined in accordance with the provisions of the Companies Act, 1956 and, therefore, interest under sections 234B a .....

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appears that none of the assessees challenged the decisions of the Gauhati High Court, Madhya Pradesh High Court as well as Bombay High Court in the Supreme Court. However, it may be noted that the judgment of the Karnataka High Court in Kwality Biscuits Ltd.'s case (supra) was confined to section 115J of the Act. The Order of the Supreme Court dismissing the Special Leave Petition in limine filed by the Department against CIT v. Kwality Biscuits Ltd. [2006] 284 ITR 434. Thus, the judgment o .....

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n payment of advance tax in respect of tax payable under section 115JB, it was liable to pay interest under sections 234B and 234C of the Act. Thus, it can be concluded that interest under sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001, dated 9-11-2001 issued by CBDT reported in 252 ITR (St.) 50 has no application. Moreover, in any event, para 2 of that Circular itself in .....

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present set of appeals , therefore respectfully following the law laid down by the various courts referred hereinabove, more particularly, the decision of the Hon'ble Supreme Court, the assessee is liable to be assessed U/s 115JB of the Act. 11.1 The argument of the ld AR invoking the principle of estoppels, in our view is not sustainable in the eyes of law. Under Articles 265 of the Constitution of India, the power to make laws lies with the Parliament. The office memorandum, though had bee .....

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essee. As is clear from the correspondence placed on record by the assessee that a letter dated 20/2/2008 was written by the Principal Secretary of Industrial Development Department, Dehrodoon, Uttrakhand seeking the clarification, however, the competent officer of the revenue (CBDT) vide letter dated 05/6/2008 has clarified that the provisions of Section 115JB of the Act are applicable to the facts and circumstances of the case. The reliance on the Hon'ble Supreme Court judgment by the AR, .....

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the government of India for grant of exemption from Section 115JB of the Act at any point of time by the parliament. Therefore, the judgment of the Hon'ble Supreme Court is on different facts and is not applicable to the case in hand. Moreover, the Secretary, CBDT vide letter dated 05/6/2008 has clarified that the provision of Section 115JB of the Act are applicable, therefore, in our view, no shadow of doubt should remain in the mind of the assessee that the provision of Section 115JB shal .....

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Sethi Auto Service Station & ... v. Delhi Development Authority & Ors on 17 October, 2008 has held as under:- "12. It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision-making authority. Need .....

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s not communicated to the person concerned. Referring to the Article 166(1) of the Constitution, the Court held that order of the Minister could not amount to an order by the State Government unless it was expressed in the name of the Rajpramukh, as required by the said Article and was then communicated to the party concerned. The court observed that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Befor .....

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ich of the two opinions can be regarded as the "order" of the State Government? It was held that opinion becomes a decision of the Government only when it is communicated to the person concerned. 11.2 Further the Hon'ble Supreme Court in the case of Amin Merchant v. Central Board of Excise & Revenue in Civil Appeal No. 4676-4677/2013 on 22nd July, 2016 has decided the identical issue and held in paragraph No. 31 as under:- "The whole thrust of the appellant is that the pro .....

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ular tariff was specified. We are unable to agree with the argument advanced by the appellant for the reason that he is unable to make note of the difference between a proposal moved before the Parliament and a statutory provision enacted by the Parliament, because the process of Taxation involves various considerations and criteria. Every legislation is done with the object of public good as said by Jeremy Bentham. Taxation is an unilateral decision of the Parliament 21 http://www.itatonline.or .....

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by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament. Now in the present facts of the case, as per the finance bill, the legislative will of the Parliament is that for the commodities falling under Tariff Head 2208.10, the tariff is ₹ 300/- per litre or 400% whichever is higher. Even assuming that the amount of tax is excessive, in the matters of taxation laws, the .....

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estioned the same if permissible. Hence, this issue is answered against the appellant. The law laid down by the Hon'ble Supreme Court is clearly applicable to the facts of the present case also. In view thereof, we find that Section 115JB is applicable to the assessee company and therefore, the ground of the assessee is required to be dismissed and we accordingly dismiss this ground in respect of all the appeals. 12. Ground No. 4 of ITA No. 706/JP/2014, ground No. 1 of 800/JP/2014, 801/JP/20 .....

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d Assessing Officer that the said sister concerns have sold the goods to the assessee company as its cost price and no profit on the amount was taken by the sister concerns. Therefore, the ld Assessing Officer has held that with a view to obtain benefit of Section 80-IC, the assessee and the sister concerns have showed their affairs in such a manner that the exemption U/s 80-IC can be increased. It was noticed that the sister concerns have disclosed GP rate of 55% on the goods sold to the outsid .....

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t. Similarly, the ld Assessing Officer has made disallowance of ₹ 2695292 out of the deduction U/s 80-IC for the assessment year 2011-12. 13. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A) and it was contended by the AR of the assessee before the ld CIT(A) that out of the total purchases of ₹ 37906334/- the traded goods constitute for a sum of ₹ 20894012 and the remaining goods were for raw material/packing materia .....

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s granted relief on the traded goods in respect of both the assessment years. However, CIT has made the confirmation in respect of the remaining goods purchased by the assessee from the sister concerns namely the raw material and packing material and to that extent, the ld CIT(A) has confirmed the order passed by the ld Assessing Officer. 14. Now the revenue as well as the assessee are in appeals before us. The ld AR of the assessee has supported the order of the ld CIT(A) whereby the benefit ha .....

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d by the ld lower authorities with respect of raw material and packing materials and has submitted that the assessee has inflated the profit. The ld DR, in respect of traded goods , has submitted that the ld CIT(A) has wrongly given the benefit to the assessee as it was not the case of the assessee before the ld Assessing Officer that the goods purchased include the traded goods on which no 80-IC has been claimed by the assessee. It was further submitted that whether the assessee has claimed 80- .....

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nder:- "2.4 During the course of reassessment proceedings it was adequately explained vide letter dated 28/2/2014 that there is no question of inflation of profits for claiming enhanced deduction under section 80-IC. It was also explained that the assessee company has not claimed any 80-IC deduction on profit from trading of goods. The ld. AO without assigning any reason rejected the explanation and proceeded to reduce the 80-IC deduction. 2.5 & 2.6** ** ** 2.7 Further, the sister conce .....

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the allegation that these purchases from the sister concern have resulted into inflated deduction under section 80-IC is baseless." Similarly in assessment year 2011-12, the assessee in paragraph No. 2.2.4 and 2.2.7 has submitted as under: "2.2.4 During the course of assessment proceedings it was adequately explained vide litter dated 5.03.2014 & 18.03.2014 that there is no question of inflation of profits for claiming enhanced deduction under section 80-IC. It was also explained .....

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arty. The said sales were to take care of the emergency needs of the appellant company. Since these are not finished goods produced and dealt with by the sister concern, there does not arise any question of earning any profit thereon by the sister concern. Thus, the allegation that these purchases from the sister concern have resulted into inflated deduction under section 80-IC is baseless. From perusal of the submissions made by the assessee before the ld CIT(A), it is abundantly clear that the .....

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of the assessee that the sister concerns are not manufacturing the raw material and packing material. Therefore, the goods purchased by the assessee whether comes under traded items or the assessee has done anything which may attract the definition of manufacturing is also required to be examined in the light of law laid down by Hon'ble Supreme court. In the case of Oracle Software India Ltd. (supra), the Hon'ble Supreme Court has observed in paragraph 10 as under: "10. In our view, .....

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context of the above process. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word "manufacture". Applying the above test to the facts of the present case, we are of the view that, in the present case, the assessee has undertaken an operation which renders a blank CD fit for use for which it was otherwise not fit. The blank CD is an input. By the duplicating process undertaken b .....

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efore, processing of blank CDs dedicating them to a specific use, constitutes a manufacture in terms of section 80-IA(12) read with section 33B of the Income-tax Act." Similarly, in the case of Emptee Poly-Yarn (P.) Ltd. (supra), the Hon'ble Supreme Court has followed the decision in the case of Oracle Software India Ltd. (supra), and held in paragraph 8 as under : "Applying the above test to the facts of this case, it is clear that POY simpliciter is not fit for being used in the .....

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No. 2) Act, 2009, which states that "manufacture" shall, inter alia, mean a change in bringing into existence of a new and distinct object or articles or thing with a different chemical composition or integral structure. Applying this definition to the facts of the present case, it may be mentioned that the above thermo mechanical process also beings about a structural change in the yarn itself, which is one of the important tests to be seen while judging whether the process is manufac .....

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of emergency. (ii) Whether the said goods purchased from the sister concerns were used by the assessee company for the purposes of manufacturing, in the light of stated herein above (iii) Whether out of the goods purchased from the sister concerns any goods were traded by the assessee company , with amount if any, without taking benefit of Section 80-IC of the Act or not. (iv) Whether the sister concerns had earned GP profit of 55% on such goods by selling the same to other parties. (v) Whether .....

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e purchased price of the assessee from the sister concerns. In the light of the above, the matter is remanded back to the file of the ld Assessing Officer. If it is concluded by the ld Assessing Officer that the goods purchased by the assessee were traded without trading any benefit U/s 80-IC then the Assessing Officer shall not reduce deductions U/s 80-IC to that extent. Further if the Assessing Officer found that the raw material/packing material are not manufactured by the sister concerns and .....

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r shall calculate the GP profit @ 55% and apply the provisions of section 80-IC(7) read with Section 80IA(10) of the Act. In the light of the above, these issues are remanded back to the file of Assessing Officer and the appeal of the revenue as well as the assessee is allowed for statistical purposes only. 17. Sale of scrap:- The ld Assessing Officer has noticed that the scrap sale declared by the assessee of the packing material is out of the manufacturing activity of the assessee and therefor .....

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e profit of the undertaking. It was held that there is a direct nexus between the sale activities and the profit from the eligible business and therefore has allowed the ground. 18. Now the revenue is in appeal before us. The ld DR has submitted that the first degree nexus is not with respect to amount received for the sale of scrap and therefore, it is not the part of the manufacturing activities of the assessee as laid down by the Hon'ble Supreme Court in the case of Liberty India v. CIT [ .....

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e excluded from business profit for the purpose of calculation of deduction under section 80HHC of the Act." 19. On the other hand, the ld AR of the assessee has submitted that the ld CIT(A) has held that the scrap is generated out of the manufacturing activities of the undertaking and the sale receipt on account of scrap will ultimately reduce the purchase price of the raw material. It was submitted that the said sale scrap cannot be utilized by the assessee and therefore, the ld CIT(A) wa .....

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on under section 80-IC. The following cases support the view that 80-IC deduction would be available with respect to sale of scrap. 1. CIT v. Sundaram Clayton Ltd. [1982] 133 ITR 34 (Mad.); 2. CIT v. Wheels India Ltd. [1983] 141 ITR 745 (Mad.); 3. CIT v. Sadhu Forging Ltd. [2011] 336 ITR 444/11 taxmann.com 322/200 Taxman 1 (Mag.) (Delhi); and 4. Fenner (India) Ltd. v. CIT (No. 2) [2000] 241 ITR 803/[2002] 125 Taxman 386 (Mad.). 37. In the case of Sadhu Forgings Ltd. (supra) it has been held as f .....

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ur charges as the same were attributable to the business carried on by the assessee, but not derived from the profits of industrial undertaking. On appeal, the Commissioner (Appeals) allowed deduction under section 80-IB on the scrap sales holding that the scrap generation at various stages of manufacturing process was part of the manufacturing activity of an industrial unit and, thus, profits and gains derived on that account were from the industrial undertaking. However, with regard to the cla .....

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the assessee, by utilising its plant and machinery installed in the undertaking, gave rise to income which had a direct nexus with the assessee's industrial undertaking, and, thus, was entitled to claim of deduction under section 80-IB. From a plain reading of section 80-IB, it would be seen that the only essential requisite is that the eligible industrial undertakings should be carrying out manufacture or production of articles or things. The industrial undertaking set-up by the assessee wa .....

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treatment and machining. Dye making was stated to be the primary process and was a separate industry by itself. It was noted, and rightly so, that each of the above processes could be done in separate industrial undertaking, whereas the assessee had undertaken all those processes in its units. The issue was also that the assessee was doing those works on job basis for other undertakings, by getting the raw material from them. When the assessee was entitled to claim exemption in respect of income .....

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perature and then cooled in different manner which results in changing the mechanical properties desired by the customers. The heat treatment toughens the forged part for being used as automobile parts. The process of heat treatment is absolutely essential for rendering them marketable. Without the heat treatment, the material is not fit for automobile industry. (para 10) Thus, in view of several decisions of the High Courts and the Supreme Court, the activity of forging is 'manufacturing .....

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which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. Those receipts could not be said to be independent income of the manufacturing activities of the undertakings of the assessee and, thus, could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB. Those were gains derived from industrial undertakings and, so, entitled for the purpose of computing deduction und .....

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0-IB and 80-IC, the above case shall apply in the case of 80-IC deduction with respect to sale of scrap. Respectfully following the decision in Sadhu Forgings Ltd. (supra) we allow ground Nos. 2 and 3 raised by the assessee. The judgment relied by the revenue is not applicable to the facts and circumstances of the case as the issue involved in the said judgment was pertaining to Section 80HHC of the Act and the issue of 80HHC was examined by the Hon'ble Supreme Court in the case of CIT v. Pu .....

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erial under the head "Guidance Note on Tax Audit under section 44AB of the Income-tax Act". The said material has been published so as to guide the members of the ICAI. In our opinion, when a recognized body of accountants, after due deliberation and consideration publishes certain material for its members, one can rely upon the same. Paragraph 5 of the said Note deals with "sales", "turnover" and "gross receipts". Paragraph 5.2 and 5.3 of the said Note ar .....

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inguish the sales aggregate before and after deduction of returns and trade discounts.' 5.3 The Guide to Company Audit issued by the ICAI in the year 1980, while discussing 'sales', stated as follows : "Total turnover, that is, the aggregate amount for which sales are effected by the company, giving the amount of sales in respect of each class of goods dealt with by the company and indicating the quantities of such sales for each class separately. Note (i) The term "turnove .....

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es that in normal accounting parlance the word "turnover" would mean "total sales" as explained hereinabove. The said sales would definitely not include the scrap material which is either to be deducted from the cost of raw material or is to be shown separately under a different head. We do not see any reason for not accepting the meaning of the term "turnover" given by a body of accountants, which is having a statutory recognition. 26. If all accountants, auditors, .....

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ion 80HHC of the Act. 28. The intention behind the enactment of section 80HHC of the Act was to encourage export so as to earn more foreign exchange. For the said purpose, the Government wanted to encourage businessmen, traders and manufacturers to increase the export so as to bring more foreign exchange in our country. If the purpose is to bring more foreign exchange and to encourage export, we are of the view that the Legislature would surely like to give more benefit to persons who are making .....

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s by giving such business units more benefits as contemplated under the provisions of law. 29. For the aforesaid reasons, we are of the view that the view expressed by the High Court is in conformity with the normal accounting practice followed by the traders, including the respondent-assessee and it was justified in coming to a conclusion that the proceeds generated from the sale of scrap would not be included in the "total turnover". However, in the present case, the issue is of Sect .....

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st of the undertaking and thereby decline the profit margin of the undertaking whereas in the case of 80HHC if the sale scrap is made a part of the turnover the export benefit of the undertaking will increase and therefore to different effects are therefore for treating the sale being part of the turnover and also treating the receipt of sale scrap being part and parcel of the activity being proximate to the activities of the industrial undertaking while computing the deduction u/s 80-IC of the .....

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that the interest charged on account of delayed payment from the purchaser in respect of the manufactured goods sold to them, is required to be allowed as deduction u/s 80-IC of the Act. However, the assessee itself is engaged in manufacturing activities and trading of goods, therefore, the assessee has itself offered amount for taxation. The assessee has not filed bifurcation of the interest received under the manufacturing and trading activities, considering the complicity, the ld Assessing Of .....

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rds reduction of ₹ 134228/- on account of interest against sales invoices, it may be noted that the assessee was engaged in trading of goods as well as manufacturing activities and as bifurcation of such interest income from trading viz a viz manufacturing was not given therefore the A.O. reduced 50% of such interest income from claim u/s 80-IC. The appellant case is that 95.00% (Rs. 443979181/-) of the turnover is of manufactured goods and the turnover of trading goods was only for 5% (Rs .....

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l contentions of both the parties and perused the material available on the record. The conclusion of the ld CIT(A) that the turnover of the trading goods was only 5% i.e. for ₹ 25326452, on the face of it is appears to be incorrect. As per CIT(A), the total purchase of traded goods from the sister concerns was ₹ 20894012/-, therefore the basis for attributing at the figure of ₹ 25326452/-, in our view, was incorrect and is required to be verified by the ld Assessing Officer. T .....

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and thereafter disallowed interest on sale invoices only in respect to the manufactured goods . In view thereof, this issue is also remanded back to the file of the Assessing Officer. Accordingly, this ground of appeal is allowed for statistical purposes only. 24. Ground No. 2 of the assessee's appeal for A.Y. 2010-11 and Ground No. 3 of the assessee's appeal for A.Y. 2011-12 are against confirming the action of the ld Assessing Officer in reducing the deduction u/s 80-IC. The ld Assess .....

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ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the order passed by the ld Assessing Officer by observing as under:- "As regards the creditors balance of ₹ 48875/- reduced from deduction u/s 80-IC, the appellant case is that due to written back of such amount the cost of material consumed was reduced and it would enhance the profit of the undertaking. In this connection, it may be noted that there is nothing on record which may indicate th .....

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