TMI Blog2018 (4) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... ur are not subjected to any manufacturing activity, appear to be in contradiction with the findings rendered by the Central Excise Department. This aspect also touches upon the jurisdiction of the Assessing Officer to render such a finding, when he had no independent material at the first instance while issuing the show cause notice dated 24.3.2015. If this interpretation is to be accepted, then, to the extent where there is no manufacturing activity, the Assessing Officer would be justified in denying deduction under Section 80IC of the Act. However, such procedure was not followed by the AO. The Appellate Authority, while testing the correctness of the orders passed by the Assessing Officer, appears to have not made an independent exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the petitioner requesting for stay of recovery of the outstanding demand for the assessment years 2011-12, 2012-13 and 2014-15. 3. The demands arose on account of denial of deduction claimed by the petitioner - assessee under Section 80IC of the Income Tax Act, 1961 (hereinafter called the Act for brevity). The starting point of the controversy was an Order-in-Original passed by the Assistant Commissioner of Central Excise dated 04.3.2015 with regard to the claim for exemption made by the petitioner in respect of their manufacturing unit at Rudrapur. The petitioner claimed exemption under Notification No.50/2003/CE dated 10.6.2003. 4. During the course of audit of the accounts for the period from April 2010 to November 2012, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93/-, other cess charges and penalty. The petitioner appears to have not contested the said proceedings and cleared the duty in full. In respect of the subsequent periods, it appears that the Central Excise Department had issued similar demands, which have been paid by the petitioner without contest. The details in this regard have been stated in paragraph 10 of the affidavit in support of the writ petition. 7. Based on the information received from the Central Excise Department, the Assessing Officer, under the Income Tax Act, 1961, issued a show cause notice dated 24.3.2015 stating that the processes adopted by the petitioner do not amount to manufacture and that the unit at Rudrapur is not eligible for deduction under Section 80IC of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the petitioner has not been able to show strong prima facie case. 10. After elaborately hearing the learned counsel for the parties and perusing the materials placed on record, we, prima facie, find that the Assessing Officer could not have gone beyond the observations rendered or findings recorded by the Central Excise Department, as, even in the show cause notice, there is a reference only to the findings recorded by the Central Excise Department. Therefore, we are of the prima facie view that the observations made by the Assessing Officer that 50% of the products sold at Rudrapur are not subjected to any manufacturing activity, appear to be in contradiction with the findings rendered by the Central Excise Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in (1991) 191 ITR 460]. 13. Thus, considering the facts and circumstances as stated above, we are of the view that the petitioner has made out a prima facie case for grant of interim order during the pendency of the appeals before the Tribunal. 14. It is seen that the total demand as per the order under Section 143(3) of the Act is ₹ 29,93,49,175/-, out of which, an amount of ₹ 4,61,39,680/- has been adjusted as against the refund, which was sanctioned to the petitioner for the assessment year 2010-11, thus leaving the remaining demand of Rs.,25,32,09,495/-. After giving effect to the order passed by the Commissioner of Income Tax (Appeals), the demand payable is ₹ 14,79,89,350/-, out of which, a sum of ₹ 5,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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