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Dy. Commissioner of Income-tax, Circle-4, Jaipur Versus M/s Sankalp International

Trading addition - rejection of books of accounts - Held that:- There is no dispute with regard to the gross profit. It is also not undisputed that the assessee is maintaining books of accounts. Moreover, the Assessing Officer has not given any basis for making addition as to how this figure of ₹ 5 lacs as arrived at would be sufficient for estimating the profit. In the absence of such finding, we do not see any reason to interfere into the finding of the Ld. CIT(A), same is hereby affirme .....

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on the portal on 29.03.2013 itself as evidenced from the snap shot, yet the same could not be uploaded. In view of the above there has been a reasonable cause for non e-filing of the reports and in view of the fact that the manual reports were filed in time, in view thereof the deduction is allowable. - Decided in favour of assessee. - ITA No. 504/JP/2017 - Dated:- 11-8-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Revenue : Shri R.A. Verma (Addl.CIT) For The Assessee : Shr .....

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es of the ase and in law, the Ld. CIT(A) was justified in allowing the deduction u/s 80IA amounting to ₹ 1,62,25,183/-. 3. The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing. 2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 29/01/2016. While framing the assessment the Ass .....

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the extent of ₹ 1 lacs out of ₹ 5 lacs made by the AO. 4.1 Ld. Departmental Representatives vehemently argued that Ld. CIT(A) was not justified in restricting the addition. The Assessing Officer has specifically stated in the order that the assessee is not maintaining stock register. Therefore, consumption of raw materials with finished goods could not be compared and the assessee failed to get it verified from the books. 4.2 On the contrary, Ld. Counsel for the assessee Shri P.C. P .....

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icer rejected books of accounts by observing as under:- 3.3 I have considered the submission of assessee, although it is correct that the gross profit rate of the assessee has been better in comparison to last yer. But this fact cannot be ignored that the assessee is not maintaining stock register which is a basic document to verify consumption of raw material and also to ascertain yield percentage. On the basis of above discussion I hold that the books of accounts of assessee were not complete .....

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val contentions; there is no dispute with regard to the gross profit. It is also not undisputed that the assessee is maintaining books of accounts. Moreover, the Assessing Officer has not given any basis for making addition as to how this figure of ₹ 5 lacs as arrived at would be sufficient for estimating the profit. In the absence of such finding, we do not see any reason to interfere into the finding of the Ld. CIT(A), same is hereby affirmed. This ground is rejected. 5. Ground no. 2, is .....

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under:- Submission:- 1. The provision of sub section (5) of section 80IA read as under:- Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub section (1) apply shall, for the purpose of determining the quantum of deduction under that sub section for the assessment year immediately succeeding the initial assessment year or any subsequent year, be computed as if such eligible business were the only sourc .....

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nt to initial assessment year and to every subsequent assessment year. Thus, losses or depreciation from eligible business incurred prior to initial year already absorbed is not to be considered for determination of the eligible profit. This issue is also settled by various judicial pronouncements as under:- CIT Vs. Best Corporation Ltd. (2017) 244 Taxman 151 (SC) Where Tribunal held that assessee was entitled to deduction u/s 80-IA without setting off losses/unabsorbed depreciation pertaining t .....

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sed against High Court s ruling that in case of assessee engaged in generation of power through windmills, initial assessment year in sec.80-IA(5) would only mean year of claim of deduction u/s 80-IA and not year of commencement of eligible business. Assessee had option to choose first/initial assessment year of claim for deduction u/s 80-IA and assessee would be entitled to deduction u/s 80-IA without setting off losses/unabsorbed depreciation pertaining to windmill, which were set off in earli .....

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me manually on 30/09/2013. The assessee has also filed one audit report in form 10CCB electronically on 30/09/2013. However, there was no option to file more than one report online and therefore, assessee could not file the remaining reports electronically. The Ld. CIT(A) has therefore, rightly held that there was a reasonable cause for non e-filing of the reports. 4. It is a settled law that filing of audit report to claim exemption/ deduction is a mandatory requirement but the condition that i .....

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as filed the same before the completion of assessment. CIT Vs. Godha Chemicals (P.) Ltd. 83 DTR 190 (Raj.) The expression along with return of income as occurring in sub-section (4) of section 80HHC is directory in nature in so far as it relates to the time for furnishing of the report of an accountant by the assessee in the prescribed form & even if such a report in the prescribed form is not furnished along with the ROI but is furnished during the course of assessment proceedings, it canno .....

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gwith the return of income and the filing of said report later did not satisfy the condition stated in section 12A. The denial of exemption is supported on the ground that the provisions of section 12A are mandatory. There is no doubt that sec.12A specifically states that the provisions of sec 11 & 12 shall not apply in relation to income of any trust if conditions stated therein are not fulfilled and in the conditions, it is provided that the accounts of the trust should be audited and the .....

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the return, the provisions of section 12A are directory in the sense that the AO is not powerless to allow an assessee to file the audit report, if not filed along with the return, any time before the completion of the assessment. One has to look at the purpose of the provisions. One has to construe the provision to ensure coherence and consistency to avoid undesirable consequences. Where the audit report was made ready after the return was filed, there was no reason why such audit report shoul .....

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IA(5) for the purpose of determination of quantum of deduction u/s 80IA, income of eligible business to be computed as if such eligible business was the only source of income of the assessee during the previous year relevant to initial assessment year and to every subsequently assessment years. Thus, losses and depreciation from eligible business incurred prior to initial year already absorbed is not to be considered for determination of the eligible profit. 5.4 We have heard the rival contentio .....

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atory and the assessee has not e-filed the Form No. 10CCB either before the due date or even after the due date. The assessee has filed Form 10CCB in paper form on 30/9/2013. The CBDT circular extended the date of filing of audit report to 31/10/2013 subject to the conditions that the assesee should file the audit report along with copy of return in the paper form before the AO before 30/9/2013 and thereafter mandatory e-filing the audit report before 31/10/2013. However, the assessee has only f .....

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ssessee has installed 8 wind power turbines in different locations and for purpose of claiming deduction each has been considered as a separate business. The Assessing Officer did not agree with the same and after examining the chart of production year wise (at page 4 in his order) concluded that even if each single units is considered as a separate business, the unit has not earned profit since installation if all the direct and indirect expenses, depreciation for current year, unabsorbed busin .....

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isions of sub section (1) apply shall, for the purpose of determining the quantum of deduction under that sub section or the assessment year immediately succeeding the initial assessment year or any subsequent year be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year upto and including the assessment year for which the determination to be made. It was reiter .....

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initial year and already absorbed has no relevance. Reliance was placed on decisions of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT, (2012) 21 taxmann com 95 (Madras), CIT vs. Mewar Oil & Gen. Mills Ltd. 271 ITR 311. Sourabh Agrotech Pvt. Ltd. ITA No. 786 & 826/JP/2011. It was further claimed that the issue of initial assessment year, is also clarified by CBDT Circular No. 1/2016 dated 5/Feb, 2016 as per which the assessee has an option to choose the initial/first year from which he .....

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s by treating each wind turbine unit as a separate unit. In the case of these four units located at Bhu, Jaisalmer, Sadiya, Jettuai and NV Jaisalmer the date of production is 29.03.2006, 31.03.2008, 27.09.2009 and 31.03.2010. In the case of unit at Bhu the initial year has been taken as 2011-12 while for the other three it is 2013-14. The audit report of all four units have been filed and all the units are showing profit. The Assessing Officer's stand was that all earlier brought forward los .....

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s of the years beginning from initial assessment year alone are to be brought forward and not the losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the revenue to look backward and find out if there is any loss of earlier years and bring forward nationally even though the same were set off against other income of the assessee and the set off against the cur .....

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ofit of other business cannot be nationally brought forward and set off against the profits of the eligible business, as no such mandate is provided in section 80-IA(5) Vide decision dated 05.09.2016 in ACIT v. Velayudhaswamy Spinning Mills (P) Ltd. (2016) 76 taxmann.com 176 (SC), the SLP filed in the case has been dismissed by the Apex Court and the same has attained finality. Further, the concept of initial year has been clarified by the CBDT, Circular No. 1/2016 issued on 15th February, 2016. .....

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t year for granting deduction, ignoring the clear mandate provided under sub-section (2) which allows a choice to the assessee for deciding the year from which it desires to claim deduction out of the applicable slab of fifteen (or twenty) years. The matter has been examined by the Board. It is abundantly clear from sub-section (2) that assessee may desire the claim of deduction for ten consecutive years. Out of a slab of fifteen (or twenty) years, as prescribed under that sub-section. It is her .....

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ld not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. The Assessing Officer are, therefore, directed to allow deduction u/s 80IA in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on allow ability of deduction u/s 80IA shall also not be pursued to the extent it relates to interpreting 'in .....

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ally brought forward for adjustment. In view of the above, the deduction is allowable to the assessee. Now coming to the issue of e-filing of the audit report the assessee stated that efforts were made on 29.09.2013 to file the reports in form No. 10CCB electronically, however, the same could not be uploaded. In support of the electronic filing a copy of the snap shot of e-filing was submitted which shows that the assessee has registered on e-filing portal for online filing. It was further state .....

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