TaxTMI 
TaxTMI 
TaxTMI 
2009 (12) TMI 986
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.... course of survey. 5. The facts, in brief, are that the assessee claimed deduction u/s 80-IB at ₹ 4,31,200/-. The A.O. found that there was a survey action u/s 133A on 3.1.2003, wherein unaccounted excess stock of Kapas valued at ₹ 14,81,350/- was surrendered by the assessee. The assessee, however, claimed deduction thereon u/s 80IB subsequently. The assessee, relying on the decision of the Indore Bench of the Tribunal in the case of Chhabra Ginning Udyog, contended that it was eligible for deduction u/s 80IB on such surrendered income. The A.O., however, held that in that case, the assessee was not engaged in trading of raw cotton, whereas in the present case, the assessee's personal set of Profit and loss account revealed that it was also engaged in the sale of cotton and cotton seed, income from arat commission and lease rent. Hence, inspite of the fact that income from non industrial activity shown was small, the assessee's involvement in unaccounted trading activities could not be denied. He, accordingly, held that facts of that case was entirely different and ,therefore, the same was not of any help particularly when during the course of survey, the assessee had ....
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..... income and there was same mistake on the part of the auditor. Such contention regarding mistake by auditor cannot be accepted. That the appellant has traded in raw cotton on adapt basis cannot be denied, though the appellant has not done any job work. The Apex Court decision in the case of CIT vs. Sterling Food is squarely applicable to the facts of this case. The deduction u/s 80IB in respect of surrendered income is only admissible unless it is proved that the income was deriving from the industrial undertaking through use of plant and machinery. In this instant case the excess stock was found was of raw cotton and there is no evidence to show that the surrendered amount in respect of the raw cotton and the money invested in its purchase was derived from the industrial undertaking. I also do not accept the appellant contention that interest income received in FDRs and deposits with the other concerns can qualify u/s 80IB of the Act. The A.O. has cited several Court decision which support the view that deduction u/s 80IB is not admissible in respect of income from other sources also netting is not permissible between interest receipt and interest paid unless a direct nexus is e....
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....considered as income derived from industrial undertaking and in this process the Tribunal had applied the ratio of the decision of the Hon'ble Punjab & Haryana High Court in the case of Notinal Legguard Works vs. CIT, and others reported in 288 ITR 18, which was a case relating to consideration of surrendered income for computing deduction u/s 80HHC and not u/s 80-IB. The Learned counsel further contended that there were several decisions of the Tribunal, wherein a view in favour of the assessee had been taken under the same set of facts and these decisions had not been considered in the aforesaid decision of the Tribunal, hence, such decision was not binding. The Learned counsel cited following judicial decisions in support of his such contention :- 1. ACIT vs. Chhabra Ginning Udyog, (2000) 28 ITC 338 order Dated 9th February, 1999. 2. Mannalal Agrawal vs. ACIT, (1998) 26 ITC 146 order Dated 15th October, 1997. 3. Bharat Beej Bhandar vs. ITO, (2004) 32 ITC 562 order Dated 13th July, 2004. 4. Sevakram Ghansyamdas vs. Dy. CIT, (2005) 33 ITC 165/ 5. Royale Sunrise vs. ITO, (2006) 99 TTC (Bang) 1305 order Dated 6th January, 2006. 6. ITO vs. Jamunadas Mooljibhai, (2006) 99 T....
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....um of ₹ 14,81,350/- on account of excess stock of kapas found during the course of survey. This amount has been credited in the profit and loss account of industrial undertaking prepared by the assessee. The assessee has also claimed deduction on this amount u/s 80-IB of the Act. Both the Revenue Authorities have rejected this claim of the assessee for the reason that the assessee could not be said to be solely engaged in the business of running of industrial undertaking only. Though the Learned counsel has pleaded to be engaged only in this activity, however, we find that the assessee is also deriving income from arat business, wherein trading turnover of same commodity, excess stock of which was found during the course of survey is to the tune of ₹ 62.02 lakhs. The assessee, thus, cannot be said to be engaged only running of an industrial undertaking. We are of the view that the profits of industrial undertaking are eligible for incentive deduction under chapter VIA, hence, there has to be a normal tendency to increase profit thereof and not of entering into the modus operandi of earning income from such undertaking outside the books as stated by the assessee now. Fur....
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....of this ground is accepted subject to concession given by the assessee in respect of interest earned on FDR. 15. In the result, the appeal filed by the assessee stands partly allowed in terms indicated above. 16. Now, we shall take up the assessee's appeal in I.T.A.No. 756/Ind/2009, wherein the issue of netting of interest received and payment is involved. 17. Both the parties have reiterated the submissions made in regard to this issue in assessee's appeal in I.T.A.No. 757/Ind/2006. Hence, following the same reasons, we restore this issue to the file of A.O. to be decided on similar lines. Thus, this ground of the assessee stands allowed for statistical purposes. 18. In the result, the appeal filed by the assessee stands allowed for statistical purposes. 19. Now, we shall take up assessee's appeal in I.T.A.No. 20. In ground no.1, the assessee is aggrieved by the decision of Ld. CIT(A) in partly confirming the disallowance made by the Assessing Officer on account of low house hold withdrawals. 21. The facts, in brief, are that the A.O. found that the assessee had withdrawn a sum of ₹ 15,000/- only towards house hold expenses. Hence, having regard to a joint family com....
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....siness purposes. The Ld. CIT(A) restricted this to 25 %. Aggrieved by this, the assessee is in appeal before us. 28. The Learned counsel for the assessee submitted that a reasonable view in the matter could be taken and disallowance @ 20% was sufficient. 29. The ld. Departmental Representative, on the other hand, submitted that the assessee was residing at far off place from Indore and must be coming to Indore for various personal purposes and, therefore, disallowance sustained by the CIT(A) was justified. 30. Having considered the submissions of both the sides, we are of the view that the disallowance @ 20 % of total vehicle running expenses would meet the ends of justice in the background of the facts of this case. Accordingly, this ground of the assessee is partly allowed. 31. In ground no.3, the issue involved is regarding netting of interest for computing deduction u/s 80-IB, which is identical to the issue raised in ground no.1 of the assessee's appeal in I.T.A.No. 757/Ind/2006, hence, restored to the file of A.O. to be disposed of in similar manner. 32. In the result, the appeal filed by the assessee stands partly allowed in terms indicated above. 33. Now, we shall ta....