TMI Blog2022 (5) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... f entry tax. Thus, payment or nonpayment of entry tax would not have stalled the manufacturing activity of the assessee. Thus it cannot be said that the interest income earned by the assessee is part of profits and gains derived from manufacture or production of article or things. Therefore, in our humble opinion, the interest income earned by the assessee would not qualify for deduction u/s 80IC of the Act. Disallowance made u/s 14A r.w.r. 8D. - HELD THAT:- Insofar as assessment year 2013-14 as before us, the assessee has submitted that it had sufficient interest refund available to take care of the investment made. In this regard, we must observe, neither before the departmental authorities nor before us the assessee has furnished any working computing the disallowance u/s 14A r.w.r. 8D. Therefore, in absence of any such computation/working by the assessee, we are unable to record any conclusive finding regarding assessee s claim. Necessity of recording satisfaction - For assessment year 2014-15 submission of learned counsel for the assessee that the AO has not recorded any valid satisfaction is unsustainable. Recording of satisfaction by the AO regarding correctne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. 3. Briefly the facts are, the assessee is a resident company engaged in the business of manufacturing and sale of tyre and tube, repair and purchase of allied products. Besides, the assessee also trades in shares and debentures of companies and units of mutual funds. For the impugned assessment year, the assessee had filed its return of income in regular course claiming deduction under section 80IC of the Act. In course of assessment proceeding, the Assessing Officer noticing that the assessee has claimed deduction under section 80IC of the Act, called upon the assessee to furnish the necessary details. On examining the details furnished by the assessee, the Assessing Officer found that the deduction under section 80IC of the Act was claimed in respect of Nalagarh Unit situated at Himachal Pradesh. On further verification of audited financial statement, he found that the assessee has included interest income earned on fixed deposits in the business profit for computing deduction under section 80IC of the Act. Therefore, he called upon the assessee to explain, why the interest income not being profits of the eligible business should not be reduced from the profits of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. Section 80IC of the Act is a special provision in respect of certain undertakings and enterprises functioning in certain special category States. It provides that profits and gains derived by an undertaking or enterprise from manufacture or production of any article or things as specified in sub-section (2) of the said provision shall be eligible for deduction on fulfillment of certain conditions enshrined therein. Thus, what is eligible for deduction under the aforesaid provision is the profit and gain derived from manufacture or production of any article or things specified in the provision. Sub-section (7) of section 80IC provides that the provisions contained under sub-sections (5) and (7) to (12) of section 80IA shall so far as may be applied to section 80IC of the Act. Sub-section (5) of section 80IA provides that for computing deduction under section 80IC of the Act, the business relating to manufacture or production of any article or things in terms of sub-section (2) of section 80IC has to be taken as the only source of income of the assessee during the year, wherein, the deduction is claimed. The expression derived from has come up for interpretation before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a first degree relationship with the eligible business. In the facts of the present appeal, admittedly, the interest income which the assessee has claimed as deduction under section 80IC of the Act was earned on fixed deposits kept in bank for the purpose of securing the entry tax which was under dispute. However, it cannot be said that such interest income has any direct nexus with profits and gains derived from manufacture/production of article or things. 9. In our view, the dispute relating to entry tax would not have any impact on the manufacturing activity of the assessee, since in the worst case the assessee would have brought the raw materials/goods on payment of entry tax. Thus, payment or nonpayment of entry tax would not have stalled the manufacturing activity of the assessee. Therefore, keeping in view the meaning given to the expression derived from by the Hon ble Supreme Court in the decision referred to above it cannot be said that the interest income earned by the assessee is part of profits and gains derived from manufacture or production of article or things. Therefore, in our humble opinion, the interest income earned by the assessee would not qualify for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance made should be deleted. 14. Learned Departmental Representative relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 15. We have considered rival submissions and perused the materials on record. Insofar as assessment year 2013-14 is concerned, as could be seen from the facts on record, in the Audit Report furnished by the assessee, the Auditor has reported an amount of Rs. 13,19,905/- as expenditure disallowable under section 14A of the Act. Whereas, in the return of income filed for the impugned assessment year, the assessee did not disallow such amount. Therefore, when in the Audit Report furnished by the assessee certain amount has been found to be disallowable, there was no necessity for the Assessing Officer to record any satisfaction as such information is obtained from a document furnished by the assessee itself. Thus, we do not find any merit in the submissions of the assessee regarding non-recording of satisfaction by the AO. However, before us, the assessee has submitted that it had sufficient interest refund available to take care of the investment made. In this regard, we must observe, neither before the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer, the assessee could not furnish supporting evidence to prove the payment made. Thus, in absence of such evidence, the Assessing Officer disallowed the amount of Rs.12,500/-. Learned Commissioner (Appeals) also sustained the disallowance on the very reasoning. 21. Having perused the orders of the departmental authorities on the issue, we find, assessee s claim of deduction was disallowed due to non-furnishing of supporting evidence. Learned Commissioner (Appeals) has observed that the assessee not only failed to furnish the receipt issued by the donee but also could not furnish the eligibility certificate of the donee. In our view, for claiming deduction under section 80G of the Act, the assessee is required to furnish the supporting evidence, if called upon to do so by the Assessing Officer. In absence of such supporting evidence, assessee s claim of deduction could not have been allowed. 22. However, to enable the assessee to furnish the supporting evidences to prove the claim of deduction under section 80G of the Act, we restore this issue to the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. 23. 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