2026 (2) TMI 807

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....ment order dated 22.12.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18. 2. Brief facts of the case are that assessee is a partnership firm, engaged in manufacturing of sheet metal component for Air Conditioners/ Refrigerators/Four wheelers and e-filed its return of income on 28.10.2017, declaring total income of INR 2,35,34,290/- after claiming deduction under Chapter-VIA which mainly comprising of deduction u/s 80-IC of the Act of INR 64,87,054/-. The case of the assessee was selected for scrutiny for the reason "large deduction claimed u/s 80-IC in comparison to preceding year". The AO observed that during the year under appeal, assessee has started one more Unit for manufacturing of the similar items which were....

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....on being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief." 5. The solitary issue in this appeal is with respect to the disallowance of deduction u/s 80-IC of the Act to the extent of INR 43,00,753/- on assumption and presumption. 6. Before us, Ld. AR for the assessee submits that assessee is regularly claiming deduction u/s 80-IC of the Act since Assessment Year 2010-11 from the income of Unit-1 which was never doubted. Merely because new production unit was started in the previous year, the AO alleged that the profits of new unit were diverted to the old unit o claim higher amount of deduction u/s 80IC of the Act. Ld. AR submits that new Unit was installed and the reasons for esta....

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....its of eligible business and therefore, there would not be much difference between the taxes paid on the profits of Unit-1 and Unit-2. It is thus prayed that the assessee has rightly claimed the deduction u/s 8-IC of the Act and requested to delete the disallowance made by the AO. 8. On the other hand, Ld. Sr. DR for the Revenue supported the orders of the lower authorities and requested for the confirmation of the same. 9. Heard the contentions of both the parties at length and perused the material available on record. The solitary issue in dispute is with respect to the quantum of profits earned from the Unit eligible for claiming deduction u/s 80-IC vis-a-vis profits from the non-eligible Unit. The AO alleges that assessee has show....