2015 (8) TMI 877 - AT - Income Tax

Deduction under section 80IB disallowed - CIT(A) excluded from the profits eligible for deduction under sect ion 80IB i.e. Rebate on Central Sales Tax payable as per Schedule 10 of Pilerne Unit and Commission on High Sea Sales payable as per Schedule 11 of other operational income - Held that - By considering the totality of the facts we restore both the issues to the file of Assessing Officer for considering it afresh regarding eligibility of these two items deduction under section 80IB in accordance with law in the light of decision of the Hon ble Supreme Court in the case of Liberty India vs.- CIT reported in 2009 (8) TMI 63 - SUPREME COURT. - Decided in favour of assessee for statistical purposes. Disallowance of loss suffered in its SEZ Unit which was claimed by the appellant adjustable against business income - Held that - Assessing Officer as well as the ld. CIT(Appeals) have not properly appreciated under which provision the assessee was required to furnish the details. The Assessing Officer has himself observed that the deduction was claimed under section 10AA but he referred to the details as were required to be furnished as per section 10AA(8). Under such ci rcumstances and for proper appreciation of facts and law we restore the matter back to the file of Assessing Officer for fresh adjudication after providing reasonable opportunity of being heard to the assessee. Working out S.T. capital gains at Rs. 1, 19, 66, 299/- by CIT(A) as against Rs. NIL as claimed by the appellant - Held that - Admittedly in the books of account the assessee s block of assets was Rs. 1, 33, 701/- which was liquidated by way of sale at a total consideration of Rs. 1, 21, 00, 000/-. Therefore there was no justification in allocating the sale consideration against various items i.e. furniture & fixtures elect ric instal lation air conditioners office equipment s etc. The ld. CIT(Appeals) has observed that in the sale deed there is no such bifurcation though such bifurcation was made at the time of amalgamation. Under such circumstances we do not find any infirmity in the order of ld. CIT(Appeals). Accordingly this ground is dismissed.

Summary

Issues Involved:
1. Disallowance of deduction under section 80IB of the Income Tax Act.
2. Disallowance of loss claimed from SEZ Unit.
3. Computation of Short Term Capital Gain.
4. Allocation of expenses among various units.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80IB:

The appeal ITA No. 43/KOL/2013 was filed by the assessee against the order of the Commissioner of Income Tax (Appeals), Central-I, Kolkata. The Assessing Officer (AO) initially allowed the deduction claimed by the assessee but later withdrew the claim under section 80IB amounting to Rs. 69,86,940/- after determining the eligible claim at Rs. 1,73,39,563/-. The AO's withdrawal was based on the Supreme Court decision in Liberty India vs. CIT. The CIT(A) had decided in favor of the assessee regarding eligibility for deduction under section 80IB for three units. However, the issue before the Tribunal was the disallowances made while computing the deduction under section 80IB. The CIT(A) excluded from the profits eligible for deduction, the rebate on Central Sales Tax payable and commission on High Sea Sales. The Tribunal restored these issues to the AO for fresh consideration in light of the Supreme Court decision in Liberty India vs. CIT.

2. Disallowance of Loss Claimed from SEZ Unit:

In ITA No. 44/KOL/2013, the assessee had claimed a loss of Rs. 10,40,736/- from its SEZ Unit, which was disallowed by the AO on the grounds that the assessee did not file a declaration as required under section 10(8). The CIT(A) confirmed the addition. The assessee contended that there is no corresponding provision to section 10A(8) in section 10AA of the Income Tax Act. The Tribunal restored the matter to the AO for fresh adjudication after providing the assessee a reasonable opportunity to be heard.

3. Computation of Short Term Capital Gain:

The assessee disposed of an office in Mumbai for Rs. 1,21,00,000/- but deducted only Rs. 6,34,845/- instead of the full sale consideration. The AO recalculated the short-term capital gain at Rs. 1,19,66,299/- as per section 50(1) of the Income Tax Act. The CIT(A) confirmed the AO's action, noting that the sale deed did not bifurcate the sale consideration among various items. The Tribunal upheld the CIT(A)'s decision, dismissing the assessee's ground.

4. Allocation of Expenses Among Various Units:

In ITA 2409/KOL/2013, the Revenue appealed against the CIT(A)'s order allowing apportionment expenses of Rs. 1,34,08,126/-. The AO had observed that the profit margin in the Kolkata Unit was much less compared to the Goa Unit due to disproportionate allocation of common expenses. The CIT(A) had followed his earlier decision to rule against the AO. The Tribunal restored the issue to the AO for fresh adjudication in accordance with the provisions of the Income Tax Act, following the Tribunal's earlier order in the assessee's own case.

Conclusion:

The Tribunal allowed the appeal ITA No. 43/KOL/2013 for statistical purposes, partly allowed ITA No. 44/KOL/2013 for statistical purposes, and allowed ITA No. 2409/KOL/2013 for statistical purposes. The issues were restored to the AO for fresh consideration and adjudication in accordance with the law.