2013 (8) TMI 280 - AT - Income Tax

Deduction u/s 80IC - higher profit - purchase of some of the components from outside - Held that - pursuance of remand report shows that all the details were furnished before the Assessing Officer on 28.3.2011 and the books of account along with vouchers were also produced before him. It has been specified at para 6 of the remand report that books of accounts of Nathu Plasi, Nalagarh were verified that separate books of account have been maintained. Only objection which he has raised regarding denial of deduction that some of the components have been purchased from outside and the profit of the eligible unit are on higher side - it was not denied that the assessee was manufacturing the transformers and some components were purchased from the market. It cannot be accepted that the assessee should be manufacturing all the components. Further merely showing that that the profits are on higher side, is not sufficient and no defects are pointed out and therefore deduction cannot be denied - Decided against Revenue.

Summary

Issues:
Appeal against allowance of deduction u/s 80IC of the Act without fulfilling prescribed conditions.

Analysis:
The Revenue appealed against the allowance of deduction u/s 80IC of the Act by the ld. CIT(A) due to non-fulfillment of prescribed conditions. The Assessing Officer initially disallowed the deduction citing various reasons such as delayed audit report submission, lack of verification on machinery installation, non-filling of required columns, absence of separate account books, discrepancies in worker count, and other operational irregularities. The Tribunal set aside the ld. CIT(A)'s order, emphasizing the need for compliance with evidence admission provisions and proper verification of accounts. The matter was remitted back to the ld. CIT(A) for reconsideration.

Upon reevaluation, the ld. CIT(A) observed that the Assessing Officer had confirmed the maintenance of separate books of accounts by the assessee, leading to the conclusion that the unit was eligible for the deduction u/s 80IC. The ld. CIT(A) carefully analyzed the assessment order, remand report, and submissions, noting the absence of discrepancies in the books of accounts and other details. The ld. CIT(A) highlighted that the Assessing Officer failed to present new facts or evidence to refute the eligibility of the unit for the deduction. The ld. CIT(A) also referenced relevant court decisions supporting the manufacturing activities undertaken by the appellant, ultimately allowing the appeal based on the findings of the Assessing Officer regarding eligibility under section 80IC.

During the hearing, the Revenue's representative supported the Assessing Officer's stance, while the assessee's counsel referenced the remand report to demonstrate the Assessing Officer's satisfaction with the deduction's allowability. The Tribunal, after considering both sides' arguments, found that the details provided to the Assessing Officer, including the production of books of accounts and vouchers, supported the eligibility of the unit for the deduction. The Tribunal dismissed the Revenue's appeals, affirming the ld. CIT(A)'s decision and confirming the allowance of the deduction u/s 80IC for the assessee.

In conclusion, the Tribunal upheld the ld. CIT(A)'s decision to allow the deduction u/s 80IC for the assessee, emphasizing the proper examination of books of accounts, absence of significant defects, and compliance with the prescribed conditions, leading to the dismissal of the Revenue's appeals.

Judgment:
The Tribunal dismissed the Revenue's appeals, confirming the allowance of deduction u/s 80IC for the assessee based on the proper verification of accounts and compliance with prescribed conditions.