2008 (9) TMI 976 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of deduction u/s 80-IB of the IT Act.
2. Jurisdiction of the AO in disallowing the deduction on export incentives.

Summary:

Issue 1: Disallowance of Deduction u/s 80-IB of the IT Act

The appellant challenged the CIT(A)'s order confirming the disallowance of deduction u/s 80-IB, arguing that the AO should have decided based on the Tribunal's order. The Tribunal had previously set aside the CIT(A)'s order and directed the AO to redecide the issue in light of its directions for earlier assessment years (1991-92 to 1993-94). The AO, in compliance, denied the deduction due to the appellant's failure to furnish necessary details and also on the ground that export incentives were not income derived from the industrial undertaking, as per the judgment in Liberty India Ltd. vs. CIT.

Issue 2: Jurisdiction of the AO in Disallowing Deduction on Export Incentives

The appellant contended that the AO exceeded his jurisdiction by disallowing the deduction on export incentives, which was not part of the original assessment or Tribunal's directions. The CIT(A) upheld the AO's action, citing the binding nature of the jurisdictional High Court's judgment in Liberty India Ltd. The Tribunal, however, concluded that the AO acted beyond his jurisdiction by introducing a new ground for disallowance in the remand proceedings, which were limited to the original subject matter of appeal. The Tribunal emphasized that the AO's powers in remand proceedings are confined to the directions given by the Tribunal and cannot extend to new issues not previously addressed.

Conclusion:

The Tribunal set aside the CIT(A)'s order and directed the AO to delete the disallowance of deduction u/s 80-IB on the income from export incentives, as it was beyond the scope of the AO's jurisdiction in the remand proceedings. The appeal of the assessee was allowed.