TaxTMI 
TaxTMI 
2016 (3) TMI 530
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....aised any additional ground before the CIT(Appeal). It had only filed the documents in accordance with Rule 46A for accepting the additional evidence. 5. It is contended that the CIT(Appeal) had accepted the additional evidence and then only forwarded the same to the assessing officer or his comments. Accordingly the CIT(Appeal) had erred in holding that such additional ground is not to be entertained and erred in rejecting such additional evidence. 6. It is contended that for technical breach of not filing Form No.10CCB before the AO, could not lead to disallowance of the claim of deduction u/s. 80IC. Further contended that the AO had never called for the Form No.10CCB from the Appellant. 7. It is contended that the Appellant had fulfilled the conditions of 80IC which also has not been disputed by the lower authorities but for non-filing of Form NO.10CCB such deduction claimed by the Appellant was disallowed. 8. The assessing officer had erred in disallowing interest of Rs. 16,57,972/ - as claimed by the Appellant. 9. It is contended that the assessing officer and the CIT(Appeal) have wrong established the alleged nexus between the loan taken and the interest free a....
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....tioned at page 2 of the assessment order. 4. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of Rs. 5,00,000/- made by the AO out of travelling expenses. 5. The appellant craves to amend, modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal." 3. The assessee company is engaged in the business of manufacturing and sale of electronic component mainly in switches, relays and other assemblies. The assessee company had two units one at Baddi (Himachal Pradesh) and other at Gurgaon (Haryana). The Baddi Unit was situated in special economic zone and the profit of which were claimed as deduction u/s 80IC of the Income Tax Act, 1961 (hereinafter 'the Act') @ 100% while the profits derived from Gurgaon unit were claimed to be qualifying of deduction u/s 80I. The return of income was filed on 23.11.2006 electronically declaring an income of Rs. 53,93,220/-. The case was processed u/s 143(1) of the Act on 19.01.2008. The assessee's case was selected for scrutiny and notices u/s 143(2) and 142(1) were issued. In response to these notices, the ....
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....s of Baddi units 40,46,546/- Profits of Gurgaon units 1,65,69,402/- Deduction allowable u/s 80I In respect of Gurgaon Units i.e. 30% of Rs. 1,65,69,402/- 49,70,820/- Deduction allowable u/s 80IC In respect of Baddi Units i.e. 100% of Rs. 40,46,546/- 40,46,546/- 90,17,366/- Deduction claim by the assessee u/s 80I 23,22,307/- u/s 80IC 1,28,74,923/- 1,51,97,230/- Difference 61,79,864/- The AO, therefore, was of the opinion that the assessee had claimed deduction in excess by an amount of Rs. 61,79,864/- which was only because of transfer of profits from Gurgaon units to Baddi units. 7.1 Further, according to AO, as per provisions of section 80IA (7) of the Act, which also apply to section 80IC, the assessee was required to file a report of audit in Form no.10CCB. But the assessee had not filed the said report. Accordingly, the AO held that the assessee had failed to comply with the provision of sub-section 7 of section 80I and consequently the provision of section 80IC and made the deduction u/s 80IC of the Act. The ld. CIT (A) su....
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.... the law under Chapter VIA i.e. 80IA, 80IB or 80IC, there is a requirement of furnishing of certificate in Form 10CCB and it is quite possible that the AO might have carried away by such provisions of the law although for 80I, this is no such requirement for a Company. Section 80I allows deduction @ 30% of profits and gains computed under the Act whereas in section 80IC etc. the admissible amount is 100% thereof. Furthermore section 80I was introduced by Finance Act, 1980 w.e.f. 01.04.1981 whereas 80IC was brought into the statute by Finance Act, 2003 w.e.f. 01.04.2004 i.e. it is a much later development. In this case the matter was remanded to the Ld AO, he has given his comments vide his report No.1296 dated 01.10.2009 wherein he has discussed the matter only on technical issue and not on merit. I am now constrained to examine the matter on merit and I am of the opinion that there is no such requirement in law for form No.10CCB in respect of section 80I in case of the appellant company. Hence the action of the AO is not sustained and the appellant is entitled for the claim of 80I to the extent of Rs. 23,22,307/-." 8. Ld. AR reiterated the submissions made before the ld. CIT (A....
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....w can a new unit make such a huge profit in the first year and compared the low profit of 10 year unit at Gurgaon. He submitted that there is clear case of transfer of profit from one unit to another. The ld. DR does not want us to interfere in the order of the authorities below as regards 80IC deduction and pleaded to remit the matter back to the file of the ld. CIT (A) on the issue of deduction claimed under section 80I. 10. We have heard both the sides and perused the material on record. Before discussing the aforesaid issues, we need to first see whether to admit the additional evidence filed in the Form of 10CCB. We find that the assessee has two units i.e. Gurgaon and Baddi. Admittedly, the Gurgaon unit claimed deduction u/s 80I for the 10th year in this assessment year and previously the Department has accepted the claim of the assessee and has been granting 80I deduction for the said unit. However, for the 10th year, the AO did not grant the 80I deduction because of non-production of Form 10CCB and on the ground that Gurgaon unit is showing low turnover compared to that of Baddi which is claiming 100% deduction u/s 80IC. The ld. CIT (A) was of the opinion that Form 10CCB....
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....rd to show that any interest had been charged on the loans and advances given. The AO also observed that as against these elements of capital work in progress and interest free loans/advances given, the assessee had claimed interest payment of Rs. 16,57,972/- to the banks against secured loans taken. Therefore, the AO held that interest paid @ 15% disallowed on the amount of secured loans of Rs. 2.42 crores is not allowable and, therefore, restricted the disallowance to Rs. 16,57,972/- being the amount of interest actually claimed. The ld. CIT (A) sustained the addition by observing as under :- "5.4. After carefully examining the rival issues, I could find that the appellant has failed to justify for advancing fund towards interest free loan to others. The claim of the Ld AR is that the appellant is the best judge for utilization of it owns fund and such judgement of the appellant neither cannot be dictated nor substituted neither suggested by the revenue. It is not denied that the appellant is the best judge as to where to invest its own fund and that to be for what point of time. It is also admitted that the appellant is to decide as to whether such investment would be made Sc....
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....ere interest bearing loans and not interest free loan. He submitted that when interest bearing loan are diverted for the purposes other than business, disallowance is valid. 15. We have heard both the sides and perused the material on record. From the balance sheet placed before us, we take note that assessee had share capital of Rs. 1,50,82,500/= and reserves and surplus of Rs. 9,26,94,892/= at the end of the year, which are far in excess to the amount invested in capital works in progress of Rs. 1.86 crores and interest free advance of Rs. 2.42 crores. Thus, applying the principles laid down by Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Limited reported in 313 ITR 340 (Bom.) and Hon'ble Delhi High Court in the case of CIT vs. Bharti Televenture Ltd. - 331 ITR 502 (Delhi), it is held that there was no diversion of borrowed funds for capital work-in-progress / interest free loan. It is also not a case where either the AO or CIT (A) has identified that any specific borrowing had been utilized for making such investment / advances. On the contrary, the assessee has stated that advances include advance for purchase which are in the course of the busin....
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....ot filed. 18. Ld. AR submitted that all details were placed on record and drew our attention to page 54 of paper book, giving the details of depreciation claimed. 19. On the other hand, ld. DR relied on the orders of the authorities below and submitted that it is not clear whether the assets were put to use or not. He further submitted that it is not clear what prevented the assessee to furnish the details. He submitted that for allowing the depreciation, it has to be proved that these assets were put to use before the AO and filing of only the audit accounts will not help. 20. We have heard both the sides and perused the material on record. We find that the CIT (A) has not considered the depreciation chart furnished by the assessee. We further notice that even the AO has held that whether the asset was put to use or not could not be ascertained. Having regard to the above, it is apparent that the disallowance has been made, without proper investigation and consideration of the facts. We, therefore, restore the matter back to the file of AO, for de novo consideration this issue. 21. Ground No.12 is against the disallowance of Rs. 2,48,334/- on account of subscription an....
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....not require any adjudication. 31. Ground No.2 of the revenue's appeal is against allowing the deduction claimed by the assessee u/s 80I on the duty drawback and job work charges amounting to Rs. 75,78,346/-. 32. The AO, on perusal of financial statement filed during the course of assessment proceedings, noticed that the assessee company had received a sum of Rs. 55,88,493/- on account of duty draw back Rs. 19,89,853/- (19,19,623/- + 70,230/-) on account of job work charges aggregating to Rs. 75,78,346/- on which deduction u/s 80I was claimed. He observed that this income not being an income from industrial undertaking did not qualify for allowance of deduction u/s 80I or 80IC and disallowed the claim. 33. Having already held that the claim of 80IC needs to be de novo adjudicated and since this issue is interlinked with that issue, in the fitness of things, we are inclined to remit this issue also to the file of the AO. We order accordingly. 34. Ground No.3 of revenue's appeal was not pressed by the revenue and the same is accordingly dismissed as not pressed. 35. Ground No.4 taken by the revenue is against the deletion of addition of Rs. 5 lakhs made out of t....