2015 (2) TMI 14 - AT - Income Tax

Tribunal grants relief to assessee on various issues, remands certain matters for re-adjudication

The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal for statistical purposes. The issues of purchase discrepancies and Section ... Deduction U/S 80-IC - CIT(A) allowed the claim - Held that:- Present year was not the first year for claim of exemption and was rather 3rd year of such claim and in the earlier years such claim was allowed though u/s 143(1). Ld. D.R. did no bring to our notice that assessment of earlier years were also reopened to disallow the claim of assessee. As per Section 80-IC, the deduction is available for a period of 10 years starting form initial Assessment Year and initial Assessment Year has been defined as assessment year relevant to previous year in which undertaking or enterprise begins to manufacture and produce articles or things and in the case of assessee this is not an initial year.Though the case law relied upon by Ld. A.R. relates with the claim of exemption examined u/s 143(3) instead of u/s 143(1) as in the present case, yet for all practical purposes, the assessment u/s 143(1) and u/s 143(3) are one and same and therefore, for this reason also, the claim of assessee cannot be denied unless it is denied in the initial year which has not been done in the present case. - Decided in favour of assessee. Disallowance of sundry creditors - CIT(A) deleted the addition - Held that:- CIT(A) on 10.01.2013 had written a letter to ITO Hardwar wherein he had asked the A.O. to confirm as to whether the confirmations were placed in the file or not. We find that A.O. on 10.01.2013 itself had confirmed to Ld. CIT(A) Dehradun that the necessary confirmation were there in the file. Regarding argument of Ld. D.R. that assessee itself had stated that confirmations could not be filed vide its letter dated 23.11.2012, we find that the date of confirmations obtained by Ld. CIT(A) from A.O. is vide letter dated 10.01.2013 which is after the date of submissions and we find that A.O. had confirmed the fact that confirmations were on record and a copy of letter written by Ld. CIT(A) and reply submitted by ITO, Ward I on 10.01.2013 is placed on record. As the addition was made only on account of non confirmation of balances by creditors and therefore, grievance of revenue is removed with the finding of A.O. vide letter dated 10.01.2013 that the same were available in the file and therefore, we do not find any infirmity in the order of Ld. CIT(A) - Decided in favour of assessee. Disallowance u/s 40(a)(ia) confirmed by CIT(A) - Held that:- Ld. A.R. had advanced various arguments for its non liability for deduction of TDS u/s 40(a)(ia) on various counts and we are of the opinion that the same may also be examined by Ld. CIT(A) afresh in view of the arguments advanced by him - Decided in favour of assessee for statistical purposes. Disallowance on account of difference in confirmations - purchases as claimed by assessee and as per confirmation of different creditors - CIT(A) confirmed part addition - Held that:- We find that assessee in the form of reconciliation has tried to explain the difference by stating that creditors were maintaining two separate accounts for purchases made by Hardwar unit and Faridabad unit and, therefore, there was no difference in the purchases. We find that Ld. CIT(A) has not considered these arguments and has simply allowed relief by excluding opening balances, whereas in our opinion, the entire reconciliation of figures should have been examined by Ld. CIT(A) and after getting confirmations of the same from respective creditors, should have examined the explanation of assessee. - Decided in favour of assessee for statistical purposes. Issues Involved:1. Deduction under Section 80-IC.2. Addition on account of unconfirmed sundry creditors.3. Addition of Rs. 3,69,73,180/- due to differences in purchase confirmations.4. Disallowance under Section 40(a)(ia) of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Deduction under Section 80-IC:The assessee claimed deduction under Section 80-IC, which was disallowed by the AO on several grounds including lack of evidence for manufacturing activities, discrepancies in purchase locations, and lack of transport bills. The assessee provided extensive documentation to the CIT(A), including VAT returns, excise survey records, and certificates from the Tehsildar and Chartered Engineer, substantiating the manufacturing activities at the Haridwar unit. The CIT(A), after obtaining a remand report from the AO, allowed the deduction. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had provided sufficient evidence of manufacturing activities and that the claim was consistent with previous years where no disallowance had been made.2. Addition on Account of Unconfirmed Sundry Creditors:The AO added Rs. 4,65,11,519/- to the income due to unconfirmed sundry creditors. The CIT(A) deleted this addition after confirming with the AO that the necessary confirmations were indeed on record. The Tribunal upheld this deletion, noting that the addition was made on a wrong premise as the confirmations were available.3. Addition of Rs. 3,69,73,180/- Due to Differences in Purchase Confirmations:The AO added Rs. 3,69,73,180/- due to discrepancies between the purchases claimed by the assessee and those confirmed by the creditors. The CIT(A) partially upheld this addition, allowing relief only for the opening balances. The Tribunal found that the CIT(A) should have considered the complete reconciliation provided by the assessee and remanded this issue back to the CIT(A) for re-adjudication after verifying the reconciliations with the respective creditors.4. Disallowance under Section 40(a)(ia):The AO disallowed Rs. 5,20,550/- under Section 40(a)(ia) for non-deduction of TDS on job work and freight charges. The CIT(A) upheld this disallowance, stating that the critical determinant is the aggregate payment during the year. The Tribunal remanded this issue back to the CIT(A) for fresh examination in light of the arguments advanced by the assessee, including the absence of a contract and individual payments being below the threshold for TDS deduction.Conclusion:The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal for statistical purposes, remanding the issues of purchase discrepancies and Section 40(a)(ia) disallowance back to the CIT(A) for re-adjudication.