2013 (12) TMI 830 - AT - Income Tax

Deduction u/s 80IC - prohibited category of business - principle of res-judicata - Held that - This is the ninth year of relief being claimed by the assessee. In all the earlier eight years, relief has been allowed on identical facts and the same has not been disturbed. In view of the above, respectfully following the above decision of Hon ble Jurisdictional High Court 2013 (6) TMI 70 - DELHI HIGH COURT as well as Hon ble Supreme Court 2013 (10) TMI 324 - SUPREME COURT , we are of the opinion that on the principle of consistency, learned CIT(A) was justified in directing the Assessing Officer to allow deduction under Section 80IC of the Act

Summary

Issues:
- Disallowance of deduction u/s 80IC amounting to Rs.2,77,80,153.

Analysis:
1. The Revenue appealed against the CIT(A)'s order disallowing the deduction u/s 80IC amounting to Rs.2,77,80,153 for the AY 2009-10. The Assessing Officer denied the deduction, stating that the business activity of the assessee fell under a prohibited category, despite the deduction being allowed in the preceding eight years. The CIT(A), after considering submissions and evidence, directed the AO to allow the deduction, highlighting that the items manufactured by the assessee were not in the negative list as per the Thirteenth Schedule.

2. The CIT(A) noted that the AO had erred in classifying the items manufactured by the appellant under the negative list, as they did not fall within the prohibited categories. The CIT(A) emphasized the principle of consistency, pointing out that the deduction u/s 80IC had been allowed in all earlier years without disturbance. The CIT(A) found the AO's disallowance misconceived and deleted the addition of Rs.2,77,80,153, emphasizing the appellant's continuous claim of deduction u/s 80IC since AY 2001-02.

3. The ITAT upheld the CIT(A)'s order, stating that the nature of the business activity and items manufactured remained consistent over the years. Referring to relevant case laws, the ITAT emphasized the importance of upholding consistency in allowing deductions, especially when the claim had been accepted in previous assessments. Citing decisions of the Jurisdictional High Court and the Supreme Court, the ITAT concluded that the deduction under Section 80IC should be allowed based on the principle of consistency, dismissing the Revenue's appeal.

4. The ITAT's decision was based on the principle that the Revenue should not flip-flop on allowing deductions when consistent claims have been accepted in previous assessments. Upholding the CIT(A)'s order, the ITAT emphasized the importance of maintaining consistency in tax assessments and concluded that the deduction under Section 80IC should be allowed for the AY 2009-10 based on past practices and legal precedents.

This comprehensive analysis highlights the key arguments, findings, and legal principles involved in the judgment related to the disallowance of deduction u/s 80IC in the specified case.