2015 (12) TMI 973

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....an assessee then either the addition is to be confirmed or deleted in toto and thus the partial confirmation by the ITAT is bad in law. II. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that appellant was not entitled to the deduction under section 80HHC on the surrendered amount though utilized for the business of the appellant without placing any evidence against the assessee on record and without rebutting the evidence presented by the assessee on record? III. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that appellant was not entitled to the deduction under Section 80HHC on the interest received on FDRs which though were maintained for the purpose of taking limits from the Banks and thus was factually directly and intrinsically related to the business activities of the appellant and thus was eligible for the impugned deduction in view of established principles of law?" 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee is a limit....

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....CIT(A) before the Tribunal regarding the deletion on account of wastage as according to the revenue it was without any reasons and the wastage claimed was in excess to the wastage as claimed in earlier years by the assessee. The assessee filed cross objections against the relief declined by the CIT(A). The Tribunal reduced the addition to 50% of the total i.e. from the total addition of Rs. 20,12,092/- to Rs. 10,06,000/-. Thus the Tribunal partly allowed the appeal filed by the revenue and dismissed the cross objections filed by the assessee. Hence the instant appeal by the assessee. 3. We have heard learned counsel for the parties. 4. Question No.I relates to excess wastage claimed by the assessee. The Tribunal had disallowed 50% of the wastage claimed by the assessee. According to the learned counsel for the assessee, no addition could have been made without rejecting the books of account especially when every entry of wastage was vouched. 5. On the other hand, learned counsel for the revenue relied upon findings recorded by the Tribunal to the effect that in the entire year, the average wastage per day came to 66.734 kgs whereas during the impugned period for 25 days, w....

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....- Quantitative details of closing stock as on 5.3.2004 (Garments) Cutting Waste Particulars Quantity (Kg.) Particulars Quantity (Kg) Opening stock 3300.00 Sale 12770.000 Garments 22689.656 Closing stock 13219.656 Total 25989.656   25989.656   Quantitative details of closing stock as on 31.4.2004 (Garments) Particul ars Quantity (Pcs) Quantity (Kg.) Particulars Quantity (Pcs) Quantity (Kg) Opening stock 4550 1706.25 Sale Local 166981 62617.875 Finished goods 298646 143576.923 Sale Bison 39795 14923.125       Sale Export 45914 17217.750       Cutting Waste   31585.923       Closing stock 50500 18937.500   503190 145283.173   303190 145283.173   Cutting Waste Particulars Quantity (Kg.) Particulars Quantity (Kg) Opening stock 3300.00 Sale 12770.000 Garments 31586.923 Closing stock 22118.923 Total 34886.923   34886.923   Quantitative deta....

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.... 10,06,000/- in place of Rs. 20,12,092/- made by the learned Assessing Officer, because firstly, upto 5.3.2004 no disallowance was made by the learned Assessing Officer himself, and secondly the steep increase in the wastage is not supported by any evidence like consequential increase in production etc. Lastly,if not the least, the Assessing Officer has not made blind addition and before 5.3.2004 it was allowed. We are making it clear that the aforesaid adoption may not be treated as precedent for other assessment years as this belongs to facts of the present assessment year only, therefore, this ground of the revenue is partly allowed." It is a question of fact adjudicated by the Tribunal which is a plausible view. In such circumstances, no interference is called for with the findings recorded by the Tribunal. 7. Question No.II relates to the amount of Rs. 20 lacs which was surrendered by the assessee which was from business income. Learned counsel for the assessee submitted that the assessee was entitled to deduction under Section 80HHC of the Act and the Assessing Officer should have allowed the same. Reliance was placed on judgments in CIT vs. Suman Paper and Boards Limit....

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....ed's case (supra), the Gujarat High Court was considering the issue of deduction under Sections 80I and 80IA of the Act. It was held that in the light of provisions of section 158BB of the Act as amended by the Finance Act, 2002 retrospectively w.e.f Ist July 1995, no fault could be found with the impugned order of the Tribunal holding that the assessee was entitled to claim deduction under Section 80I or 80IA of the Act in the block assessment. In Margaret's Hope Tea Co. Limited's case (supra), the assessee's main activity was the cultivation, manufacture and sale of tea. The cash credits account had appeared in the assessee's books of account. The Tribunal was held justified in holding that the cash credits appearing in the books of account should be treated as income of the assessee from its tea business and not as income from undisclosed sources. Such is not the situation in the present case. Thus, the assessee cannot derive any advantage from the said pronouncements. 11. This Court while considering identical issue in National Legguard Works's case (supra) recorded as under:- "7. We are unable to accept this submission. Deduction under Secti....