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TMI Blog2018 (4) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of revenue's appeal is against the action of Ld. CIT(A) in allowing deduction u/s. 80IC of the Income-tax Act, 1961 (hereinafter referred to as the "Act") of Rs. 4,70,63,306/- in violation of Rule 46A of the Income-tax Rules, 1962 (hereinafter referred to as the "Rules"). 3. Brief facts of the case are that the assessee claimed for its Dehradun units deduction u/s. 80IC of the Act of Rs. 4,70,63,306/-. AO has passed the best judgment assessment u/s. 144 of the Act and rejected the claim of the assessee by stating that the assessee did not cooperate or produce Form 10CCB before him, as well as taking note of the previous year assessment i.e. AY 2008-09 of the assessee, wherein the AO in that year made disallowance on proportionate basis u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that while passing the impugned order, the Ld. CIT(A) has sought the remand report from the AO and the remand report obtained from AO has been reproduced by ld CIT(A) at pages 5, 6, 7 and 8 of the order, so the ground of challenge of revenue is per-se weak. However, we would like to discuss the brief facts of the case. We note that the assessee is in the business of manufacturing tailormade rubber molded and metal bonded items. The assessee supplies to Indian Railways and to approved wagon builders as per the drawings and specification of Indian Railways under the category of exclusive commodity. Assessee has declared a total turnover of Rs. 62,51,97,114/- for this assessment year. During assessment proceedings, the AO noticed that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessment stage. However, during the remand proceedings before the AO, the assessee has placed the 10CCB and other books separately maintained for different units and the AO has taken out figures from very same books separately maintained by the assessee for different units located at different places. 6. We note that the first year of Sec. 80IC deduction was claimed by the assessee was in the previous AY 2008-09 which claim was allowed in part by the AO. However, on appeal, the Ld. CIT(A) has allowed the entire claim of sec. 80IC deduction of the Dehradun unit for A.Y 2008-09. Let us have a look at the previous year and compare with this relevant assessment year under appeal; we note that in the previous assessment year i.e. AY 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of savings in cost, which resulted in a profit margin of 26.84% of turnover cannot be termed as unnatural. Whereas it was pointed out to the Ld. CIT(A) and AO (during remand proceedings) that in the other units of assessee located at Chennai and Lucknow, old machines were used and there was irregular production and, therefore, there was less profit. It has brought to the notice of the ld. CIT(A) that the work at Haridwar and Chennai units are too miniscule in comparison to the operation of the company at Dehradun. It was brought to the notice of the Ld. CIT(A) that Dehradun unit is under Excise exemption which is 14.42% of the sale value and as such the net profit increased by such percentage has the relevance of increase in prices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the misc. income as taken in the P&L Account. We concur with the view expressed by the Ld. CIT(A) taking into consideration the fact that the AO could not point out any defects in the books of account maintained separately for the Dehradun unit and during remand proceedings when the Form 10CCB was produced before the AO, he could not point out any fault. We also note that there was no material to allege that there was shifting of expenses of eligible unit to non-eligible unit so that higher deduction can be claimed for 80IC unit at Dehradun. The Dehradun unit had new machineries and there were excise exemption also and thus, the profits generated at Dehradun unit cannot be termed as unnatural without any material to suggest the other wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order of Ld. CIT(A) the Ld. DR was unable to point out any defect or infirmity which need our interference. Therefore, we are not inclined to interfere with the order of the Ld. CIT(A) and we confirm the same. 10. The next issue is against the order of the Ld. CIT(A) allowing the claim of the assessee in respect to custom duty and entry tax of Rs. 12,74,450/-. The Ld. CIT(A) has noted that the AO did not understand the nature of custom duty and entry tax. The Ld. CIT(A) rightly stated that custom duty is paid on goods imported and is nowhere related to export sale of the company. The Ld. CIT(A) rightly noted that entry tax is payable for purchases from outside the local area of the city. The Ld. CIT(A) has taken note of the ledger cop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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