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TMI Blog2018 (5) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively, in proceedings u/s 143(3) of the Income Tax Act, 1961 (hereinafter the Act). 2. Heard both parties. Case files perused. 3. We advert to assessee's pleadings first. Its identical grievance in the former two assessment years challenges correctness of both the lower authorities action invoking section 14A r.w.r. 8D disallowance in relation to its exempt income (s) without establishing the relevant nexus between the corresponding income and expenditure. We notice in this background that the CIT(A) has already granted relief to the assessee in former two assessment years 2010-11 and 2011-12 deleting proportionate interest expenditure disallowance under Rule 8D(2)(ii) of Income Tax Rules. It further transpires that the assessee had s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is engaged in the business of growing and manufacturing of tea, manufacturing chemical and fertilizers, trading of tea, warehousing and development of real estate. The assessee claimed deduction of Rs. 1,30,08,824/- u/s 80IE of the Act in respect of following units situated at North-Eastern States. The ld. AO did not discuss anything about the claim of deduction u/s 80IE of the Act in the assessment order but merely proceeded to disallow the deduction u/s 80IE while completing the assessment. The Ld. CIT(A) on going through the accounts of the assessee as well as audit report submitted in form 10CCB in respect of eligible units, observed that the assessee had carried out substantial expansion and had not completed the same w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had set up tea estates in North-eastern States. The assessee had carried out certain substantial expansion in its existing eligible undertakings and had claimed deduction u/s 80IE of the Act in the return of income. It is a fact that the ld. AO had not discussed anything about the claim of deduction u/s 80IE of the Act in his assessment order. We find that the deduction u/s 80IE of the Act is eligible to assessee who begins to manufacture in any of the North Eastern States during the period 01.04.2007 to 31.03.2017 either by setting up a new unit or by undertaking substantial expansion to manufacture or produce any eligible article or thing. The provision of Section 80IE(1) stipulates that the assessee would be entitled to 100% of the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression 'substantial expansion' is also defined in 80IE(7)(iii) of the Act wherein, it should result in increase in investment of plant and machinery by at least 25% of the book value of plant and machinery. This factual aspect as to whether the assessee had indeed invested in plant and machinery more than 25% of the book value of plant and machinery (before depreciation in any year); as on the first day of the previous year in which substantial expansion is undertaken, was not verified by the authorities below. Hence, in the interest of justice and fair play, we deem it fit and appropriate, to remand this issue to the file of the ld. AO, for this limited purpose of verification of quantum of investment in plant and machinery so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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