TMI Blog2016 (9) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... e of deduction u/s 80-IA in the computation of book profit under Section 115JA - Held that:- This Section 80-IB merely says that the assessee is eligible to claim deduction at 100% of he profits and gains for the first five assessment years. For the first five assessment years, the assessee is eligible for 100% of the profits and gains and in the next year, in the case of company, the assessee is eligible for 30% of the profits. Therefore, the 30% of the profits and gains allowed under Section 80-IA of the Act has to be reduced from the book profit computed for the purpose of Section 115JA of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to reduce 30% of the profits and gains, which was computed under Section 80-IB(4) of the Act, from the book profit for the purpose of computing taxable income under Section 115JA of the Act. Estimation of profit for the purpose of computing profit under Section 155JA - addition made to the extent of ₹ 61 Crores in the normal computation - Held that:- The very same issue was considered by this Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im on the ground that the assessee has not filed Form 10CCAC, which was a pre-condition for allowing deduction under Section 80HHC of the Act. Therefore, the CIT(Appeals) directed the Assessing Officer to verify Form 10CCAC. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Set off of losses by the assessee while computing book profit - Held that:- It is not known what kind of claim was made by the assessee to set off while computing the book profit. In the absence of details of claim for set off for deduction under Section 80HHC of the Act, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, the orders of the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. - ITA No. 718/Mds/2011, ITA No. 1008/Mds/2011 - - - Dated:- 23-9-2016 - N. R. S. Ganesan (Judicial Member) And S. Jayaraman (Accountant Member) For the Assessee : Dr. Anita Sumanth, Advocate For the Revenue : M. Swaminathan, Sr. Standing Counsel ORDER N. R. S. Ganesan (Judicial Member) Both the appeals of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction under Section 80-IA of the Act. 5. The Ld. Sr. Standing Counsel for the Revenue has also submitted that the CIT(Appeals) has placed his reliance on the judgments of Apex Court in Pandian Chemicals v. CIT (262 ITR 278) and in Liberty India v. CIT (317 ITR 218). In view of these judgments of Apex Court, according to the Ld. Sr. Standing Counsel, the assessee is not eligible for deduction under Section 80-IA of the Act of the amount received from interest income, management fees and corporate guarantee commission. 6. We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 80-IA of the Act. Section 80-IA of the Act clearly says that where the gross total income of the assessee includes profits and gains derived by an undertaking or an enterprise from any business referred to in subsection (4) of Section 80-IA of the Act. Section 80-IA(4) of the Act clearly says that the provisions of Section 80-IA of the Act is applicable to an enterprise on the business of developing, operating and maintenance or developing, operating and maintaining of any infrastructure faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal is of the considered opinion that the entire miscellaneous income has to be excluded since they are not derived from industrial undertaking. Therefore, the question of netting would not arise for consideration. This Tribunal is of the considered opinion that the judgment of Apex Court in ACG Associated Capsules Pvt. Ltd. (supra) would not be applicable to the facts of the case. In view of the above discussion, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 8. The next ground of appeal is with regard to disallowance of deduction under Section 80-IA of the Act in the computation of book profit under Section 115JA of the Act. 9. Dr. Anita Sumanth, the Ld.counsel for the assessee, submitted that the Assessing Officer disallowed the claim of the assessee by placing reliance on sub-section (4) of Section 80-IB of the Act. Referring to sub-section (4) of Section 80-IB of the Act, Dr. Anita Sumanth submitted that the deduction under Section 80-IB of the Act shall be 100% of profits and gains derived from industrial undertaking for five assessment years. The deduction of profit from book profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a as referred to in sub-section (4) and sub-section (5) of Section 80-IB of the Act is eligible for deduction of 100% of the profits and gains under sub-section (4) and sub-section (5) of Section 80-IB of the Act. This sub-section, as rightly pointed out by the Ld.counsel for the assessee, does not restrict the deduction allowed under Section 80-IA or under Section 80-IB of the Act, as the case may be. This Section merely says that the assessee is eligible to claim deduction at 100% of he profits and gains for the first five assessment years. For the first five assessment years, the assessee is eligible for 100% of the profits and gains and in the next year, in the case of company, the assessee is eligible for 30% of the profits. Therefore, the 30% of the profits and gains allowed under Section 80-IA of the Act has to be reduced from the book profit computed for the purpose of Section 115JA of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to reduce 30% of the profits and gains, which was computed under Section 80-IB(4) of the Act, from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on the purchase of steel. 18. Shri M. Swaminathan, the Ld. Sr. Standing Counsel for the Revenue, submitted that the assessee claimed depreciation on bogus purchase of steel. The assessee could not produce purchase bills before the Assessing Officer or the CIT(Appeals). The CIT(Appeals) by placing reliance on the order of this Tribunal for the block period, presumed that the assessee has purchased the steel which was used for fabrication of plant. The Ld. Sr. Standing Counsel further submitted that block assessment proceeding was set aside by this Tribunal on the ground that there was no search material found during the course of search operation and the order is barred by limitation. This Tribunal had no occasion to discuss the matter on merit. When this Tribunal has not discussed the matter on merit and no evidence like bills for purchase of steel was produced, according to the Ld. Sr. Standing Counsel, the matter needs to be verified by the Assessing Officer. Therefore, the Ld. Sr. Standing Counsel submitted that the matter may be remitted back to the file of the Assessing Officer for reconsideration. 19. On the contrary, Dr. Anita Sumanth, the Ld.counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment under Section 143(3) of the Act. Under the old scheme of block assessment, the Assessing Officer was empowered to frame assessment in respect of undisclosed income under Section 158BC of the Act on the basis of the material found during search operation and also regular assessment in respect of income disclosed in regular course under Section 143(3) of the Act. Now, admittedly, no assessment is in existence in respect of undisclosed income for want of search material and the order of Assessing Officer itself was barred by limitation. Therefore, this Tribunal is of the considered opinion that placing reliance on the order of the CIT(Appeals) for the block period, which was admittedly set aside by this Tribunal, is not justified. 22. The CIT(Appeals) is expected to examine the genuineness of purchase of steel independently on the basis of the material available on record and thereafter record his own finding with regard to acquisition and existence of the capital asset. Unfortunately, the CIT(Appeals) has not taken any pain to ascertain the genuineness of purchase of steel and the acquisition/existence of the capital asset. Therefore, as rightly submitted by the Ld. Sr. Stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal, the assessee submits that no expenditure was incurred and the assessee s own funds were invested. The assessee being a company, has to entrust the matter to some of the executives for making investment. Therefore, the salary paid to the executives, who were entrusted the work of investment, is definitely a cost incurred by the assessee for taking administrative decision to invest in the shares which yielded exempted income. The managerial function performed by the executives need to be taken into consideration for the purpose of estimation of disallowance. Since Rule 8D is not applicable, this Tribunal is of the considered opinion that a reasonable estimation has to be made. This Tribunal, wherever Rule 8D of Income-tax Rules, 1962 is not applicable, is uniformly making 2% disallowance of investment. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to estimate the disallowance at 2% of investment made by the assessee. 28. The next ground of appeal is with regard to deduction claimed by the assessee under Section 80HHC of the Act. 29. Shri M. Swaminathan, the Ld. Sr. Standing Counsel for the Revenue, submitted t ..... 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