2015 (1) TMI 1339 - AT - Income Tax

Deduction u/s. 80IB - expenses eligible for deduction - Held that - Undoubtedly, the job work charges are directly related with the business of the assessee, hence, eligible for deduction u/s. 80 IB of the Act. We order accordingly. However, in respect of the claim of other income which relates to sundry balances written back, we find that the sundry balances written back relates to the purchases/expenses made in the earlier years. However, this fact needs to be verified by the AO. We, therefore, restore this issue to the file of the AO for the limited purpose of verification of the written back amount relating to the purchases/expenses of earlier years. The AO is directed to verify and if found to be related with the purchases /expenses of earlier years, the same has to be treated as eligible for deduction u/s. 80IB Bogus and fabricated purchase and sale - Held that - It is an undisputed fact that there is no issue/dispute in relation to third party sales, whereas the Tribunal has considered and accepted the genuineness of the sales made to (i) M/s. Suryavinayak Aromatics (ii) Laveesha Enterprises (iii) Jaywant Industries Ltd. & (iv) Jaywant Products Ltd. After para -17 of the Tribunal s order following para -17(a) is to be inserted which reads as under Para-17(a) To complete the adjudication we have considered the sales made to aforementioned parties though the sale made to these parties is not the issue raised by the Revenue in its ground.

Summary

Issues:
1. Disposal of Ground No.2 in ITA No.6631/Mum/2011.
2. Deduction under section 80IB for job work income and other income for AY 2002-03.
3. Findings on Ground No.2 of Revenue's appeal for AY 2000-01 and 2002-03.

Analysis:

1. Disposal of Ground No.2 in ITA No.6631/Mum/2011:
The Tribunal did not dispose of Ground No.2 in ITA No.6631/Mum/2011, which raised concerns about transactions between two arms of the same business of the assessee. The issue was related to the provisions of section 80 IB(13) of the Act. The Tribunal found that the transactions with specific entities were covered by section 80 IB(13), and as the Revenue did not dispute the consideration for these transactions, Ground No.2 raised by the Revenue was dismissed. The Miscellaneous Application No.284/Mum/2014 was allowed with this amendment to the Tribunal's order.

2. Deduction under section 80IB for job work income and other income for AY 2002-03:
In the case of MA No.366/Mum/2014 arising out of ITA No.5082/Mum/2012, the Tribunal considered the deduction under section 80 IB for job work charges and other income for AY 2002-03. The Tribunal found that job work charges were directly related to the business of the assessee and hence eligible for deduction under section 80 IB. However, regarding the claim of other income related to sundry balances written back, the Tribunal directed the AO to verify if these amounts were related to purchases/expenses of earlier years. If verified, the same was to be treated as eligible for deduction under section 80IB. The Miscellaneous Application No.366/Mum/2014 was treated as allowed for statistical purposes with these modifications.

3. Findings on Ground No.2 of Revenue's appeal for AY 2000-01 and 2002-03:
The Tribunal addressed the common grievance raised by MA No.282 & 283/Mum/2014 regarding the findings given for Ground No.2 of the Revenue's appeal for AY 2000-01 and 2002-03. The Tribunal acknowledged that the Revenue's concern was related to sales made by one concern of the assessee to another concern of the assessee. After careful consideration, the Tribunal found no dispute regarding third-party sales and accepted the genuineness of sales made to specific entities. An additional para was inserted to complete the adjudication, allowing MA Nos.282 & 283/Mum/2014.

In conclusion, the Appellate Tribunal ITAT Mumbai provided detailed analysis and rulings on various issues related to deductions under section 80IB and the disposal of specific grounds in different assessment years, ensuring a comprehensive and fair adjudication of the matters at hand.