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M/s Kudu Knit Processors P. Ltd. Versus The J.C.I.T., Circle-1, Ludhiana

Revision u/s 263 - deduction under section 80IB - Held that:- We are dealing with a case where the revisionary powers of the Commissioner of Income Tax are being exercised. The proposition laid down by the Hon'ble High Court as to the eligibility conditions being satisfied by the assessee, has to be decided by the Assessing Officer. It was the Assessing Officer who, on whatever enquiry he made, was satisfied that the assessee is eligible to deduction under section 80IB of the Act. Now, under the .....

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of the assessee. - ITA No.370/Chd/2014 - Dated:- 5-1-2016 - SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER For The Appellant : Shri Subhash Aggarwal For The Respondent : Shri Manoj Mishra, CIT DR ORDER PER RANO JAIN, A.M. : This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax-I, Ludhiana dated 24.3.2014 for assessment year 2009-10. 2. The facts of the case are that assessment under section 143(3) of the Income Tax Act, 1961 ( .....

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of the assessee as on 26.9.2008 and the assessee surrendered an amount of ₹ 80,50,000/- on account of excess claim. IN its return of income, the assessee has claimed deduction under section 80IB of the Act amounting to ₹ 39,02,098/- being 30% profits derived during the year. The said deduction was claimed including the income of ₹ 80,50,000/- surrendered during the survey. The learned Commissioner of Income Tax was of the view that the said deduction was allowed by the Assessin .....

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sheet and audit report in Form No.10CCB computing the deduction under section 80IB of the Act at ₹ 39,02,098/-. A survey under section 133A of the Act took place at the business premises of the assessee as on 29.2.2008 and some excess stock of manufactured goods was found. The assessee vide its letter dated 29.8.2008 surrendered an amount of ₹ 80,50,000/- on account of excess stock of knitted cloth manufactured and processed. This way, the issue stands duly examined by the Assessing .....

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learned Commissioner of Income Tax relied upon the following case laws : (i) Faquir Mohammad Haji Hasan Vs. CIT 247 ITR 290 (Guj) (ii) M/s Kim Pharma (P) Ltd. Vs. CIT (iii) ITA No.106 of 2011(P&H) (iii) CIT Vs. Active Traders (P) Ltd., 214 ITR 583 (Cal) (iv) National Legguard Works Vs. CIT 288 ITR 18 (P&H) (v) CIT Vs. Sterling Foods (1984) 150 ITR 292 (vi) Home Tex Vs. CIT (2011) 243 CTR 81. 5. Aggrieved by the said order of the learned Commissioner of Income Tax, the assessee has come .....

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e Tax Act. 4. That the claim u/s 80IB was allowed by the Learned AO on the basis of the material and facts on the record by due application of mind and there was no justification for CIT to set aside the assessment u/s 263 of the Income Tax Act. 5. That in any case the order of the CIT passed u/s 263 is against the law and facts and deserves to be quashed. 6. That the Appellant craves leave for permission to add, amend or alter any ground of appeal at the time of hearing. 6. Before us, the learn .....

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r section 80IB of the Act. At page 5 the copy of Form No.10CCB starts and at page 9 the amount of said claim amounting to ₹ 39,02,098/- being 30% of ₹ 1,20,06,994/- is mentioned. Page 12 is the letter dated 26.9.2008 filed by the assessee during the course of survey, whereby the surrender was made. Our attention was specifically invited to the following sentences : I Vipin Kumar, Managing Director of M/s Kudu Knit Process (P) Ltd., voluntary surrender a sum of Rupees Eighty Lacs and .....

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of assessment was fully aware of all the facts of the assessee relating to its claim of deduction under section 80IB of the Act and a specific query in this regard was made by him, which was duly replied to by the assessee. The important fact he tried to bring to our notice was that the surrender itself having been made on account of business income, there was no logic in treating the same as any other income. Further, attention was invited to Paper Book page 13, which was a reply filed by the a .....

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ons raised. At page 16 page 8, it is clarified by the Assessing Officer that the surrender itself was made on account of income out of manufacturing activity business of the assessee company on account of excess stock of knitted cloth manufactured and processed by the assessee found at the time of survey, therefore, the deduction under section 80IB of the Act was rightly allowed to the assessee. These papers were shown to us to emphasize that the Assessing Officer even after the assessment was c .....

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Chandigarh Bench in the case of Miss Mridula Vs. ACIT in ITA No.305/Chd/2007, dated 31.3.2006, whereby in the similar circumstances deduction under section 80IB of the Act is allowed on the income surrendered during the course of assessment. 8. The learned D.R., while relying on the order of the learned Commissioner of Income Tax, submitted that the findings of the learned Commissioner of Income Tax is corroborated by the order sheet dated 2.11.2011 and 23.11.2011 and the submission made by the .....

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power to confer jurisdiction under section 263 of the Act. The learned D.R. placed reliance on the following judgments : (i) Malabar Industrial Co. Ltd. Vs. CIT 243 ITR 83 (SC) (ii) Gee Vee Enterprises Vs. Addl.CIT 99 ITR 375 (Del) (iii) CIT Vs.Raja Industries (2011) 15 Taxmann.com 40 (P&H) (iv) Tudor Knitting Works (P) Ltd. Vs. CIT 9. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. .....

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he Act, while filing its return of income. Even after the assessment, on a query raised by the Assessing Officer, it was clarified that the surrender was on account of business income. The Assessing Officer allowed the deduction under section 80IB of the Act to the assessee on the said surrendered income, obviously, considering the same as business income. In view of these facts, it is quite apparent that the Assessing Officer was seized of the matter, correspondence between the assessee and the .....

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e Revenue. Both the conditions are to be satisfied simultaneously. For an order to be erroneous, there may be two situations, one where no enquiry at all has been conducted by the Assessing Officer and the other whereby as per the Commissioner of Income Tax s yardsticks inadequate enquiries were conducted by the Assessing Officer. In the first situation, where no enquiry is conducted by the Assessing Officer on a significant issue, the order may be considered erroneous and if it leads to loss of .....

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Commissioner of Income Tax cannot impose his view over the view taken by the Assessing Officer. However, in case on some enquiry, the Assessing Officer takes a view which is contrary to any law for the time being inforce, then the order can be said to be erroneous. 11. Now, we will analyze the facts of the present case to the law as described hereinabove. This is certainly not a case of no enquiry at all. The Assessing Officer, though, has not written in very clear terms, in his order, the reaso .....

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