2015 (8) TMI 360 - AT - Income Tax

Deduction u/s 80 IB - OEPB licenses utilized during the year for duty free import of raw materials - Focus market incentive - Held that - Assessee s claim for deduction under section 80IB in relation to incomes by way of DEPB investments and focus market incentives the decision of in the case of Liberty India vs. CIT, 2009 (8) TMI 63 - SUPREME COURT covers the controversy in favour of the Revenue. Deduction under section 80IB in relation to sundry income the assessee fairly conceded that the said income has been rightly held to be not derived from the industrial undertaking and accordingly the denial of deductions under section 80IB of the Act is hereby affirmed. - Decided against assessee. Disallowance u/s 14A - Held that - At the time of hearing the only plea set up by the appellant is that the suo-moto disallowance made by the assessee in its computation of income amounting to ₹ 19,64,974/- out of interest paid for purchase of investment and SEBI filing fees for open offer for investments in shares of M/s. Uniflex Cables Ltd. be reduced from the total disallowance worked out by the AO. Consequently, we set aside the matter to the file of AO, who shall allow appropriate relief to the assessee on this aspect. - Decided in favour of assessee by way of remand. Exemption u/s 54G denied - additional evidence submitted - Held that - On the basis of the material submitted, the assessee does not intend to make out any new case, but the it merely seek to corroborate its earlier stand. Some of the additional evidences, for instance, confirmations from the transport contractor, engineering contractor, etc. are third party independent evidences and in our view it would be appropriate to consider the same for the purpose of adjudicating the assessee s claim for deduction under section 54G of the Act. In our considered opinion, having regard to the facts and circumstances of the present case, the avowed object of Rule 29 of the Appellate Tribunal Rules would be sub-served if the additional evidences are admitted in order to appropriately adjudicate assessee s claim for deduction under section 54G of the Act. We hold so. So however, since the aforesaid evidences/material was not before the lower authorities, it would be in the fitness of things that the issues relating to assessee s claim for deduction under section 54G of the Act is restored back to the file of AO, who shall revisit the same as per law after taking into consideration the aforestated additional evidence - Decided in favour of assessee by way of remand.

Summary

Issues Involved:
1. Deduction under section 80-IB.
2. Disallowance under section 14A.
3. Exemption under section 54G.
4. Long Term Capital Gain under section 50B on slump sale of Polymer Division.

Detailed Analysis:

1. Deduction under section 80-IB:
- Issue: The assessee claimed deductions under section 80-IB for DEPB licenses, focus market incentives, and sundry income.
- Judgment: The appellate authority denied the deduction for DEPB licenses (Rs. 5,67,09,436) and focus market incentives (Rs. 3,74,09,929), stating these incomes do not constitute incomes "derived from" the industrial undertaking, aligning with the Supreme Court decision in Liberty India vs. CIT. The deduction for sundry income (Rs. 1,86,778) was also denied on similar grounds. Thus, Ground Nos. 1(a), (b), and (c) were dismissed.

2. Disallowance under section 14A:
- Issue: The assessee contested the disallowance of Rs. 26,22,666 made by the AO under section 14A, arguing that the suo-moto disallowance of Rs. 19,64,974 should be considered.
- Judgment: The tribunal acknowledged the assessee's plea regarding the suo-moto disallowance and remanded the matter to the AO for appropriate relief. The rest of the issues under Ground Nos. 2.1 to 2.3 were dismissed.

3. Exemption under section 54G:
- Issue: The assessee claimed exemption under section 54G for expenses incurred on shifting the industrial undertaking from Mahul to Valia, which was denied by the AO and CIT(A).
- Judgment: The tribunal admitted additional evidence, including confirmations from transporters and contractors, production details, and an affidavit from the company's director, which were not previously considered. The tribunal restored the issue to the AO to reassess the claim under section 54G, considering the new evidence. Ground No. 3 was allowed for statistical purposes only.

4. Long Term Capital Gain under section 50B:
- Issue: The assessee contested the reduction of Rs. 13,24,41,682 from the net worth of the undertaking at Valia while calculating long term capital gains under section 50B.
- Judgment: The tribunal did not provide a detailed analysis in the provided text, implying the issue might not have been separately adjudicated in this order.

Conclusion:
The appeal was partly allowed. The tribunal dismissed the grounds related to deductions under section 80-IB and most issues under section 14A, while remanding the matter of disallowance under section 14A for reconsideration and allowing the claim under section 54G for statistical purposes.