TaxTMI 
TaxTMI 
2016 (5) TMI 1251
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....de during the course of appeal by the appellant and is totally bad in law & wrong on facts. The CIT (Appeals) has only gone by surmises, conjectures and guess work in drawing inference and recording conclusion. In the absence of any cogent material to support findings, the same being based on conjuncture & surmises can't be upheld. 2. The Learned CIT (Appeals) has erred while confirming the disallowance of the deduction of interest income under section 80IC declaring that such income is not directly derived from the business. The interest received on FDR pertains to the interest on Fixed Deposit (With CITI Bank) made and kept as a security Deposit with the VAT Department (Himachal Pradesh) for getting the VAT Registration. Until and unless such sum (Fixed Deposit) is not kept under lien with VAT Department (Himachal Pradesh), the registration of VAT may never be granted and consequently no Business Operation. Hence interest so received is an income derived from the eligible Business. 3. The Learned CIT (Appeals) has erred in law and on facts in confirming the disallowance made by Learned Assessing Officer and adding back Rs. 86883.00 on account of Pre Operative Expenses w....
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....ax(Appeals) and therefore the assessee filed application under Rule 11 of the ITAT Rules for admission of fresh (additional) ground of appeal on 09/04/2013. The learned AR supported his contention that the Tribunal had jurisdiction to examine a question of law which arose from the facts as found by the lower authorities and having a bearing on the tax liability of the assessee, with the judgment of the Hon'ble Supreme Court in the Case of National Thermal Power Company Limited Vs. CIT (1998) 229 ITR 383 (SC) and CIT Vs. Mahalaxmi Textile Mills (1967) 66 ITR 710 (SC). 4. 3.1 The Ld. Senior DR, on the other hand, did not oppose admission of the additional ground. 3.2 We have heard the rival submissions and perused the material on record. We find that the ground raised by the assessee is in the nature of a legal claim as an alternative to the other grounds raised by the assessee. In view of the judgments cited by ld. AR, it is settled law that legal grounds may be raised before any appellate authority for first time, we admit the additional ground raised by the assessee. 4. The ground No. 1 of the appeal is general in nature and not required to adjudicate upon by us. 5. In....
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....s to reduce the cost of production of an industrial undertaking were held as part of the profit of the eligible undertaking and deduction under section 80IB and 80IC was accordingly allowed. He further submitted that the SLP filed with the Revenue against the said judgment of the High Court was dismissed recently on 09/03/2016 in civil appeal No. 7622/2014. The Ld. AR further relied on the judgment of the Hon'ble High Court of Gauhati in the case of CIT versus Universal Pipes Private Limited (2012) 28 taxmann 131 (Gauhati) wherein interest received for delay in payment by creditor was held as business income eligible under section 80IC of the Act. 5.2 On the other hand, the Ld. Senior Departmental Representative (DR) relying on the findings of the authorities below submitted that though the FDR was made as a requirement of VAT registration, but the immediate source of interest income is the FDR and not the eligible business of the assessee and therefore there is no first degree nexus between the interest income and the eligible business of the assessee and at maximum the interest income may be attributable to the business of the assessee but not income derived from the eligible ....
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....ason of such export, the export promotion scheme applies. There under, the assessee is entitled to import entitlements, which it can sell. The sale consideration therefrom cannot, in our view, be held to constitute a profit and gain derived from the assessee's industrial undertaking." 5.4 In our opinion, the source of interest income is not the eligible business but the fixed deposit which was made as a requirement of VAT registration and which is not having a first degree nexus with the eligible business but only incidental and thus it may be attributable to the business of the assessee. 5.5 Further, we find that the issue involved in the case of Meghalya Steels Ltd. (supra), the SLP filed against which by the Revenue has been dismissed, was of subsidies of the nature which went to reduce the cost of production, deduction in respect of such subsidies was held to be allowable under section 80IC of the Act. The facts of the assessee in hand are distinguishable from the facts of the cited case. 5.6 The claim of the assessee is also not getting support from the finding of the Hon'ble High Court of the Gauhati in the case of CIT versus universal pipes private limited (supra) b....
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....ring the Previous year relevant to the respective Assessment Year Amount. amortized during the Previous year relevant to the respective Assessment year Cumulative amount of preoperative expenses carried over at the end of relevant previous year. 2004-05 Rs. 56,104.00 Rs. 56,104.00 2005-06 Rs. 43,055.10 Rs. 99,159.10 2006-07 Rs. 1,138.23 Rs. 1,00,297.33 2007-08 Rs. 577.58 Rs. 1,00,874.91 2008-09 Rs. 3,33,540.00 Rs. 43,442.00 Rs. 3,90,972.91 2009-10 Nil Rs. 86,883.00 Rs. 3,04,089.91 2010-11 Nil Rs. 86,883.00 Rs. 2,17,206.91 6.1 It has been further claimed by the assessee that these preoperative expenses were incurred by the assessee from the date of formation of the partnership firm to the date of starting a business activities which included, preparation of the feasibility report and project report, conducting market survey necessary for the business of the assessee, engineering services related to the business of the assessee, legal charges for drafting agreements etc., however, the Assessing Officer in the assessment order held that no satisfactory det....
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....a of allowing deduction under section 80IC of the Act, if the disallowance of preoperative expenses is sustained. We find that the issue of allowance of amortization of preoperative expenses, has already been restored to the file of the Assessing Officer for deciding in accordance to law, the ground raised by the assessee does not survive, and accordingly this ground of the appeal is dismissed as rendered infructuous. 9. In the result, the appeal of the assessee is partly allowed for statistical purpose. ITA No. 480/Del/2014 for AY: 2010-11 10. Now we take up the appeal of the assessee in ITA No. 480/Del/2014. The grounds raised by the assessee are as under: 1. The Learned CIT (Appeals) imprecisely confirmed the order of the Learned Assessing Officer is in mechanical manner, without even considering the submission made during the course of appeal by the appellant and is totally bad in law & wrong on facts. The CIT (Appeals) has only gone by surmises, Conjectures and guess work in drawing inference and recording conclusion. In the absence of any cogent material to support his findings, the same being based on conjuncture and surmises cannot be upheld. 2. The Learned C....