TaxTMI 
TaxTMI 
2015 (3) TMI 457
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....presented by the assessee on record and thereby reversing a well versed and reasoned orders by the CIT(A)? (II)Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified in denying the claims of the appellant under Section 80IB of the Income Tax Act, 1961 by blindly relying upon the judgment of this Hon'ble Court in the case of National Legguard Works v. CIT and another, 288 ITR 18 (P&H) which is distinguishable on facts itself and rather favours the present appellants case? III. Whether, on the facts and circumstances of the case, the findings of ITAT are perverse and against the evidences on record thus unsustainable in law? IV. Whether the ITAT has misdirected itself in being influenced by irrelevant factors and applying erroneous criteria while deciding the issue for claiming deduction under Section 80IB of the Income Tax Act, 1961?" 2. Briefly, the facts necessary for adjudication of the controversy involved, as narrated in the appeal may be noticed. The assess....
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....ivities and was in addition to normal business income and there was direct and proximate connection of this income with the business of the industrial undertaking. According to the learned counsel, the finding recorded by the Tribunal that it was not derived from the industrial undertaking was erroneous. It was infact as a result of business income and, therefore, deduction under Section 80IB of the Act was admissible. It was also argued that the income was assessed by the Assessing Officer under the head "business or profession" and, therefore, the assessee was entitled for deduction under Section 80IB of the Act. Reliance was placed upon judgments in Broach District Cooperative Cotton Sales, Ginning and Pressing Society Limited v. CIT, (1989) 177 ITR 418 (SC), CIT v. Gwalior Rayon Silk Manufacturing Co. Limited, (1992) 196 ITR 149 (SC), Bajaj Tempo Limited v. CIT, (1992) 196 ITR 188 (SC), CIT v. Margaret's Hope Tea Co. Limited, (1993) 201 ITR 747 (Cal.), Gopal Stores v. CIT, (1995) 215 ITR 265 (Gau), Mysore Minerals Limited v. CIT, (1999) 239 ITR 775 (SC), CIT v. Rathore Brothers, (2002) 254 ITR 656 (Mad.), Padmasundara Rao (deceased) and others v. State of Tamil Nadu and oth....
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.... assessee to deduction under section 80IB, there must be a direct nexus between the income in question and the industrial undertaking. In other words, even if a particular income is liable to be assessed as business income, but the nexus is indirect or incidental, such income, though assessable as business income, would not qualify for deduction under Section 80IB of the Act because it cannot be said to be derived from an industrial undertaking on account of it being devoid of any direct nexus. 6. With this discussion, we may now examine the facts of the present case. In this case, the assessee surrendcered an amount of Rs. 1,20,00,000/- during the course of a survey operation under Section 133A of the Act on account of difference in stock, debtors receivable and on account of differnece in the amount invested in construction of building. The assessee claimed deduction under Section 80IB on such income declared in the return. Ostensibly, in order to hold such income eligible for deduction under Section 80IB, the nexus with the industrial undertaking is required to be established. The moot question is whether the same sta....
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....om the industrial undertaking. As observed earlier, in terms of the decision of the Hon'ble Jurisdictional High Court, there cannot be a presumption that surrendered income is eligible for Section 80IB benefits. On the contrary, the assessee has to demonstrate that the income in question is eligible for 80IB benefits. In this case, though the income surrendered is assessed by the Assessing Officer as business income, however, its nexus with the industrial undertaking is left to be established. There is nothing on record relied upon by the assessee to show that in the course of survey, any evidence of unaccounted turnover, inflation of expenses etc., was discovered, so as to say that the surrenderfed income was directly linked to the business of the industrial undertaking. There is no positive evidence led by the assessee to establish direct nexus with the industrial undertaking and therefore in our considered opinion, the burden cast on the assessee has not been discharged. 9. In this background, in our view, the CIT(Appeals) was wrong both on facts and in law to allow the claim of the assessee for deduction un....
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.... the industrial undertaking. 8. From the perusal of the findings as noticed above, the Tribunal had come to the conclusion that onus upon the assessee was not discharged. In such a situation, it could not be said that the Tribunal had erred in holding that deduction under Section 80IB of the Act was not admissible to the assessee. This Court in Home Tex v. CIT, (2011) 59 DTR Judgments 165, considering similar issue had noticed as under:- "12. It is quite evident from the above letter submitted by assessee that Rs. 40 lakhs income was surrendered only on account of excess stock found as per physical verification. It was also stated in the letter that no adjustment will be made against the surrendered income and such surrendered income is over and above the regular income as per books of account. Advance tax on the additional income was also proposed to be deposited vide post dated cheques. Since in the letter itself the assessee has accepted that this additional income was over and above the regular income as per books of account, the regular income which is arising out of industrial underta....