2012 (3) TMI 463 - AT - Income Tax

2015 (6) TMI 725 - AT

Issues Involved:
1. Deduction u/s 80IC
2. Addition u/s 2(24)(x)
3. Addition u/s 40A(ia)
4. Disallowance of interest-free advances
5. Disallowance of higher depreciation on Tempo/Truck
6. Disallowance of audit fee
7. Disallowance of commission paid to sister concern
8. Disallowance of rebate and discount

Summary:

1. Deduction u/s 80IC:
The revenue contended that the CIT(A) erred in allowing the deduction u/s 80IC. Both parties agreed that the issue was covered by a previous Tribunal decision in the assessee's favor. The Tribunal upheld the CIT(A)'s decision to allow the deduction, dismissing the revenue's appeal on this ground.

2. Addition u/s 2(24)(x):
The revenue challenged the deletion of an addition of Rs. 34,050/- made u/s 2(24)(x). The CIT(A) had followed the jurisdictional High Court's decision in CIT v. M/s Nuchem Ltd, which was in turn based on the Apex Court's decision in CIT V. Alom Extrusions Ltd. The Tribunal agreed with the CIT(A) and dismissed the revenue's appeal.

3. Addition u/s 40A(ia):
The revenue contended that CIT(A) erred in deleting an addition of Rs. 4,91,072/- made u/s 40A(ia). The CIT(A) had relied on the decision in Bhagwati Steel Sales V. Addl CIT and CIT v. United Rice Land Ltd. The Tribunal agreed with CIT(A) and dismissed the revenue's appeal.

4. Disallowance of interest-free advances:
The revenue challenged the deletion of an addition of Rs. 1,20,000/- for interest-free advances. The CIT(A) had followed the Supreme Court's decision in Munjal Sales Corporation. The Tribunal found the facts similar to the case of Abhishek Industries and allowed the revenue's ground. However, it directed that any addition made would enhance the eligible amount of deduction u/s 80IC for the assessee.

5. Disallowance of higher depreciation on Tempo/Truck:
The assessee contended that CIT(A) erred in confirming the addition of Rs. 2,38,633/- for higher depreciation on Tempo/Truck. The CIT(A) upheld the AO's decision, referencing the Supreme Court's decision in CIT V. Gupta Global Exim Pvt Ltd. The Tribunal found no infirmity in CIT(A)'s findings and dismissed the assessee's appeal.

6. Disallowance of audit fee:
The assessee contended that CIT(A) erred in confirming the addition of Rs. 37,500/- for audit fee. The CIT(A) upheld the AO's decision, citing Section 194J for non-deduction of tax. The Tribunal found no infirmity in CIT(A)'s order and upheld the addition.

7. Disallowance of commission paid to sister concern:
The assessee contended that CIT(A) erred in confirming the addition of Rs. 11,11,733/- for commission paid to a sister concern. The CIT(A) upheld the AO's decision under Section 40A(2)(b), citing the lack of evidence to prove the genuineness of the commission. The Tribunal upheld CIT(A)'s findings and dismissed the assessee's appeal.

8. Disallowance of rebate and discount:
The assessee contended that CIT(A) erred in confirming the addition of Rs. 24,81,356/- for rebate and discount. The CIT(A) upheld the AO's decision, noting that the amount represented irrecoverable sales rather than genuine rebate and discount. The Tribunal upheld CIT(A)'s findings. However, it clarified that the assessee is eligible for enhanced deduction u/s 80IC for any addition made.

Conclusion:
The appeal of the revenue was partly allowed, and the appeal of the assessee was allowed to the extent of enhanced deduction u/s 80IC for any additions made. The Tribunal pronounced the order on 16.3.2012.

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