2011 (8) TMI 1149 - AT - Income Tax

Disallowance of deduction u/s 80IB - jurisdiction of State of Gujara - Held that - It is not in dispute that the office of Income Tax Office Vapi Ward-4 Daman falls within the jurisdiction of Income Tax Officer Vapi who is in jurisdiction of CIT Valsad and CCIT Surat and CCIT Ahmedabad which are situated in the State of Gujarat. The PAN and TAN details submitted by the assessee clearly indicated that the jurisdiction of the assessee lies at Gujarat only. Even the learned CIT(A) who decided the appeal of assessee at Daman is situated at Valsad (Gujarat). The copy of the acknowledgement of return is filed in the paper book to show that return is filed in the office of Income Tax Office Vapi Ward-4 Daman on 01-12-2006 and the Assessing Officer in the case of the assessee is also designated as Income Tax Officer Vapi Ward-4 Daman. The contention of the assessee is therefore correct that for all purposes the assessee is assessed at Vapi (State of Gujarat). The jurisdiction of the assessing authority at Daman and concurrently at Vapi which admittedly falls in the jurisdiction of State of Gujarat as noted above. For all practical intent and purposes the cases of Daman falls in the jurisdiction of Vapi and Valsad. Therefore the assessee is rightly held to be assessed within the jurisdiction of State of Gujarat. Thus the circular of CBDT applies to the case of the assessee also. The learned CIT(A) on proper appreciation of the facts and CBDT Circular and the beneficial provisions extended to the assessee rightly allowed the appeal of the assessee by granting deduction u/s 80 IB of the IT Act

Summary

Issues Involved:
1. Disallowance of deduction under section 80 IB of the IT Act.
2. Disallowance of unaccounted purchases.

Issue-wise Detailed Analysis:

1. Disallowance of deduction under section 80 IB of the IT Act:

The revenue challenged the orders of the learned CIT(A) in deleting the additions made on account of disallowance of deduction under section 80 IB for both assessees. The primary contention was that the assessees filed their returns after the due date specified under section 139(1) of the IT Act. The AO argued that the extension of the due date for filing returns, as per the CBDT circular, was applicable only to assessees in Gujarat, not in Daman, where the assessees' businesses were located.

The assessees contended that although their businesses were located in Daman, they were assessed in Gujarat. They argued that the CBDT extended the due date for filing returns due to heavy rains and floods in Gujarat, and this should apply to them as well since Daman is surrounded by Gujarat and their assessments were handled by the Income Tax Office in Vapi, Gujarat. They supported their argument with legal precedents emphasizing liberal interpretation of taxing statutes to promote growth and development.

The learned CIT(A) accepted the assessees' contention, noting that the assessees were assessed under the jurisdiction of CCIT, Ahmedabad, and that the PAN and TAN details indicated Gujarat as their jurisdiction. The CIT(A) emphasized that the purpose of the CBDT circular was to provide relief to assessees affected by floods, and it would be unreasonable to exclude the assessees based on their location in Daman. The CIT(A) concluded that the assessees should be considered as assessed in Gujarat, thus entitled to the extended due date for filing returns.

The tribunal upheld the CIT(A)'s decision, agreeing that the assessees were assessed in Gujarat and thus eligible for the extended due date. The tribunal dismissed the revenue's appeal, finding no merit in their arguments.

2. Disallowance of unaccounted purchases:

In the case of M/s. A. Kumar Industries, the revenue also challenged the deletion of an addition on account of unaccounted purchases. The CIT(A) upheld the disallowance made by the AO but directed the AO to grant deduction under section 80 IB while computing income from the business. Thus, the tribunal found this ground of appeal infructuous as the CIT(A) did not delete the addition but only directed the AO to allow the deduction under section 80 IB.

Conclusion:

The tribunal dismissed both appeals by the revenue, upholding the CIT(A)'s decisions to allow the deductions under section 80 IB and confirming that the assessees were assessed in Gujarat, thus eligible for the extended due date for filing returns as per the CBDT circular. The tribunal also found that the issue of unaccounted purchases was correctly addressed by the CIT(A).