TaxTMI 
TaxTMI 
2017 (2) TMI 1225
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....ocumentary evidence tendered by the appellant to establish that appellant is eligible for deduction u/s 80IB of the Act. It is therefore, prayed that, disallowance sustained u/s 80IB of the Act may kindly be deleted and appeal of the appellant company be allowed." 3. From the above grounds, it is gathered that the only grievance of the assessee relates to the denial of deduction u/s 80IB of the Income Tax Act, 1961 (hereinafter referred to as the Act) for a sum of Rs. 7,58,275/-. 4. Facts of the case in brief are that the assessee filed the return of income on 15.10.2010 declaring an income of Rs. 17,69,310/- which was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee had claimed deduction of Rs. 7,58,275/- on a total profit of Rs. 23,54,230/-. He asked the assessee to furnish its justification for claim of deduction u/s 80IB of the Act. In response, the assessee submitted that the assessee company was setup as an industrial undertaking in the State of Jammu & Kashmir for blending and bottling of Indian made Foreign Liquor (IMFL) and that the blending and bottling of IMFL ....
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....t assessee filed its return of income declaring taxable income of Rs. NIL under normal provisions and Rs. 2,429 crores under section 115JB. During assessment, the Assessing Officer disallowed the deduction under section 80HHC while computing the income under section 115JB. The Commissioner (Appeals) directed the Assessing Officer to compute the deduction under section 80HHC. Accordingly, the Assessing Officer allowed the deduction under section 80HHC with reference to the profit as per the accounts, while determining the book profits. The Assessing Officer noticed subsequently that the assessee had reduced 90 per cent of the rent income while computing the deduction under section 80HHC on the book profits, but no deduction was made in respect of other income such as interest, profit and sale of investment, etc. That is how by mistake, the excess deduction was given to the assessee under section 80HHC. Therefore, an order under section 154 was passed and the Assessing Officer reduced 90 per cent of other income such as interest, profit and sale of investment from eligible business profits while computing the deduction under section 80HHC for the purpose of determining the book profi....
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.... 17. Also in the case of Satish Kumar Aggarwal v. DCIT 8 ITR 424 (Trib) (Del), the facts were that assessee had claimed deduction under section 80HHC on the basis of certificate issued by the chartered accountant and the working supplied with the return of income. The Assessing Officer allowed the claim after due deliberation and section 80HHC working of the assessee was accepted. Subsequently, the Assessing Officer held that there was a mistake apparent from record and by order passed under section 154, the deduction under section 80HHC was reduced. The Commissioner (Appeals) upheld the action of the Assessing Officer. The Tribunal has held as under: "10. We have heard the rival contentions and perused the material on record. In our view, the assessee furnished a detailed working under section 80HHC along with the chartered accountant's certificate, which was considered by the Assessing Officer, and thereafter order under section 143(3) by way of scrutiny assessment was passed on March 31, 2004. In our view, what is envisaged under section 154 is a glaring and apparent mistake and it does not clothe the Assessing Officer with a power to review his own order. The Income-tax Act ....
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....e (2) of Part C of schedule XIII read with fifth proviso to 80IB(4) of the Act to conclude that, blending and bottling of IMFL is an ineligible activity. The finding overlooks the documentary evidence tendered by the appellant to establish that, appellant is eligible for deduction u/s 80IB of the Act. 1.2 That the learned Commissioner of Income Tax (Appeals) has proceeded to rely upon Board Circular and, auditors observation mechanically without appreciating the submission and evidence placed on record by the appellant company and as such, conclusion so arrived in disregard of the law is not tenable. 2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in confirming the levy of interest under sections 234B of the Act." 21. We have already held while disposing off ITA No. 5304/D/2012 that order made u/s 143(3) of the Act dated 30.12.2009 for AY 2007-08 entitling the deduction u/s 80IA of the Act was valid and could not be subject matter of rectification u/s 154 of the Act. The consequent effect of the aforesaid finding is that claim made u/s 80IA of the Act stands allowed in the initial assessment year 2007-08 in assessment framed ....
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....I of the Act is available to an assessee in respect of the assessment year (referred to as the initial assessment year) relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning or the company commences work by way of repairs to ocean-going vessels or other powered craft. Such deduction is also available for the seven assessment years immediately succeeding the initial assessment year. Surely in cases where an assessee is held to be eligible for deduction in the initial assessment year, the same cannot be denied in the subsequent assessment years on the ground of ineligibility since the set of facts which enable an assessee to claim to be eligible for deduction under section 80-I of the Act occur in the previous year relevant to the initial assessment year and have to be examined in the initial assessment year. In such cases, where the facts on the basis of which the deductions are claimed are subject matter of an earlier assessment year and do not arise in the current assessment year, it wo....
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....ssment in the initial assessment year. The relevant extract from the decision of the Gujarat High Court in Saurashtra Cement & Chemical Industries (supra) is quoted below:- "The next question to which the Tribunal addressed itself, and no our opinion rightly, was whether the Tribunal was justified in refusing to continue the relief of tax holiday granted to the assessee-company for the assessment year 1968-69, in the assessment year under reference, that is, 1969-70, without disturbing the relief granted for the initial year. It should be stated that there is no provision in the scheme of s. 80J similar to the one which we find in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. No doubt, the relief of tax holiday under s. 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds. But without disturbing the relief granted in the initial year, the ITO cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted." 79. The Division Bench of the Bombay High Court in the case of Paul Broth....