2010 (11) TMI 380 - HC - Income Tax

Tribunal Upholds Tax Deletions & Deductions: Share Capital, Job Work Eligibility Confirmed

The Tribunal dismissed the appeal as it found no substantial question of law arising from the issues presented. The Tribunal upheld the deletion of ... Addition - Undisclosed income - Deduction u/s 80IA - In the light of the concurrent findings of fact recorded by both the Commissioner (Appeals) as well as the Tribunal, it is not possible to state that the conclusion arrived at by the Tribunal is not reasonable or contrary to the record - Primary onus to prove the identity and creditworthiness of the creditors as well as the genuineness of the transactions had been discharged by the assessee - Accordingly the addition is deleted On the findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is not possible to state that the view adopted by the Tribunal is in any manner unreasonable or perverse so as to give rise to a question of law - Regarding deduction u/s 80IA - The Assessing Officer has also reproduced an extract from Chaturvedi and Pithisaria’s Income-tax Law which says that one who makes himself and one who gets a thing made by others, both are manufacturers - The confusion is worst confounded when he concludes by saying that the assessee has incurred expenditure on account of job work that is to say, it had got its finished goods manufactured by other parties and was claiming deduction under section 80-IA of the Act on account of sale of such finished goods and as such cannot be permitted to claim the deduction on account of goods related to manufacture by others - It, therefore, cannot be said that the job work done by the assessee on account of others was not a manufacturing activity carried out by the industrial undertaking - Accordingly the appeal is dismissed Issues Involved:1. Addition of Rs. 25,00,000 under section 68 in respect of share capital received by the assessee.2. Addition of Rs. 45,05,000 under section 68 in respect of deposits received by the assessee from its shareholders.3. Eligibility for deduction under section 80-IA of the Act for job work receipts.Issue-wise Detailed Analysis:1. Addition of Rs. 25,00,000 under section 68 in respect of share capital received by the assessee:The appellant-Revenue questioned whether the Appellate Tribunal was correct in confirming the deletion of the addition of Rs. 25,00,000 made under section 68 regarding share capital received by the assessee. The Commissioner (Appeals) noted that the transactions were bank transactions and that the assessee had provided sufficient evidence to substantiate the source of the funds. The Tribunal concurred with the Commissioner (Appeals), concluding that the assessee had discharged its primary onus to prove the identity and creditworthiness of the creditors and the genuineness of the transactions. The Tribunal's decision was based on concurrent findings of fact, and no substantial question of law arose from this issue.2. Addition of Rs. 45,05,000 under section 68 in respect of deposits received by the assessee from its shareholders:The appellant-Revenue also questioned the deletion of the addition of Rs. 45,05,000 under section 68 for deposits received by the assessee. The Commissioner (Appeals) found that the assessee had provided confirmations, bank passbook extracts, and evidence of agricultural income from the depositors, thus discharging its primary burden of proof. The Tribunal agreed with the Commissioner (Appeals), noting that the Assessing Officer had not provided positive evidence to counter the information provided by the assessee. The Tribunal's findings were based on an appreciation of the evidence, and no substantial question of law was identified.3. Eligibility for deduction under section 80-IA of the Act for job work receipts:The final issue was whether the job work receipts (net of expenses) were eligible for deduction under section 80-IA of the Act. The Assessing Officer's confusion about the facts led to an erroneous conclusion that the assessee was not entitled to the deduction. The Commissioner (Appeals) clarified that the job work receipts were for services rendered by the assessee and were derived from the main activity of ginning and pressing cotton and manufacturing cotton seed oil and oil cake. The Tribunal upheld this view, stating that the job work charges were derived from manufacturing or producing articles and things within the meaning of section 80-IA. The Tribunal's interpretation was consistent with the provisions of section 80-IA, and no legal error was found.Conclusion:The Tribunal's order was found to be based on concurrent findings of fact and a correct interpretation of the law. No substantial question of law arose from the issues presented, and the appeal was dismissed.