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2015 (10) TMI 986 - AT - Income TaxAdmission of additional evidence - Held that - Assessee did not have sufficient time to represent in about 105 assessments in the Central Circle, Chandigarh. When a period of less than two months was available and certain documents were not easily traceable then the same would constitute a reasonable cause for not producing the documents sought to be admitted as additional evidence. This has to be further considered in the light of the fact that the assessee had serious disputes with its auditor, Shri Rajinder Sandal whose services were ultimately terminated. Keeping these two constraints, we are of the opinion that the Ld. CIT(A) should have admitted the additional evidence. This has to be particularly seen in the light of the nature of documents sought to be admitted which we have already produced above. It cannot be said that these documents could have been generated as an after-thought. Therefore in our opinion, these documents should have been admitted. In any case we further find that the Ld. Counsel for the assessee was able to show us the various letters through which it was ascertained that various bills etc. are being enclosed with those letters and no comments have been given by the authorities in their respective orders. These bills etc. wherever found necessary, were produced even before us for our clarification. Therefore this ground is allowed (in fact during the hearing certain bills and other documents were produced before us which we examined to avoid further controversy) - Decided in favour of assessee. Disallowance of deduction u/s 80IB(11A) - Held that - 100% deduction cannot be allowed to the assessee because we have already held while discussing the activities of the assessee that processing of paddy cannot be said to be covered by the activities given in Sec 80IB(11A). Therefore to find out the quantum of deduction we refer to the assessment order for Assessment year 2010-11 wherein it was observed that milling expenses vary from ₹ 15 to 25 per Qtl depending upon the nature of paddy to be milled. It is also to be noted that some of the bi-products are also obtained in the milling process which also generate some profits. It has to be noted that major profit would accrue to the assessee from storage activity because storing one quintal of basmati costing between ₹ 2500 to 3500 per Qtl which would involve lot of interest element as well as storage charges. This makes it clear that maximum profit would accrue to the assessee from the activity of storage itself. Therefore considering the overall facts and circumstances as well as the observations made in the assessment order for Assessment year 2010-11 we are of the opinion that the assessee should be granted deduction @ 70% of the total profits of the composite unit i.e; profits from the whole business except the profits of power plant. In conclusion it can be said that the assessee is definitely eligible for deduction u/s 80IB(11A) because the assessee started integrated business of handling, storage and transportation of food grains in Financial year 2005-06 i.e. Assessment year 2006-07 on proportionate basis @ 70%. However, the assessee is not entitled to deduction in Assessment year 2008-09 because the return of income was filed late and therefore deduction cannot be allowed in view of the restrictions contained in Sec 80AC. Therefore we confirm the action of Assessing officer and Ld. CIT(A) in denying the deduction because return has been filed late in violation of Section 80AC.- Decided partly in favour of assessee. Disallowance of depreciation on power plant - Held that - We have already observed that power plant was ready and no further major purchases have been made on account of power plant till August 2008, and the plant was commissioned, therefore, the same is entitled for depreciation. However, during the course of hearing when reference was made to the rules, we find that assessee is not entitled to depreciation @ 100%. The new Appendix X which provides for depreciation under the head plant and machinery under the main Head III allows depreciation under clause 8(ix) which pertain to power plant items is allowable only at the rate 0f 80%. This position was admitted by Ld. Counsel for the assessee also. Therefore, we set aside the order of CIT(A) and direct the Assessing Officer to allow depreciation @ 40% (i.e. 50% of 80%) because plant has been made operational only in the second half only.) - - Decided partly in favour of assessee. Non allowance of the set off of loss from power plant against the business income - Held that - Yhe provisions of section 80-I(6) and 80B(5). Since section 80B(5) is starting with non-obstante clause, therefore full effect has to be given to the same. In any case, by reducing the loss of power plant from the other business the assessee is rather losing the deduction on the other business instead of getting any benefit. Therefore, in view of the decision of Synco Industries Ltd v Assessing Officer (Income Tax) & Another 2008 (3) TMI 13 - Supreme court we decide this issue in favour of the assessee. Additional depreciation on the power plant - Held that - he plain reading of the above provision shows that in case of the business of generation and distribution of power, the provision for allowance of additional depreciation was inserted by Finance Ac, 2012 w.e.f. 1.4.2013, therefore, the additional depreciation can be considered in case of assessee engaged in the business of generation or distribution of power only form assessment year 2013-14. Therefore, we set aside the order of Ld. CIT(A) and hold that additional deduction @ 20% is not allowable in the case of assessee against power plant. - Decided against assessee. Unsecured investment u/s 69 - CIT(A) deleted the addition - Held that - The question itself depicts that stock has been valued on approximate basis. Further, the books of account were always taken by the assessee and it has not been denied before us that books were not taken before the Assessing Officer. In any case the bills of bardana have been produced and, therefore, we find nothing wrong with the order of Ld. CIT(A) and confirm his order. - Decided against revenue.
Issues Involved:
1. Admission of additional evidence. 2. Disallowance of deduction under Section 80IB(11A). 3. Disallowance of depreciation on the power plant. 4. Set-off of loss from the power plant against other business income. 5. Additional depreciation on the power plant. 6. Addition on account of stock difference. Detailed Analysis: 1. Admission of Additional Evidence The assessee sought to file additional evidence, which the CIT(A) rejected under Rule 46A of the Income Tax Rules, 1962, citing that the assessee had sufficient opportunities during assessment proceedings. The Tribunal found that the assessee had valid reasons for not producing the evidence earlier, including the transfer of cases and disputes with the auditor. The Tribunal allowed the admission of additional evidence, emphasizing the principle of natural justice. 2. Disallowance of Deduction under Section 80IB(11A) The assessee claimed a deduction under Section 80IB(11A) for handling, storage, and transportation of food grains. The CIT(A) denied this, citing late filing of returns and non-filing of Form 10CCB. The Tribunal observed that the assessee's activities did qualify for the deduction, but the deduction was denied due to the late filing of returns as per Section 80AC. The Tribunal allowed the deduction at 70% of the profits, noting that the assessee had created infrastructure for handling, storage, and transportation of food grains. 3. Disallowance of Depreciation on the Power Plant The assessee claimed depreciation on a power plant, which the Assessing Officer and CIT(A) denied, citing discrepancies in the commissioning date and reliance on the auditor's statement. The Tribunal found that the power plant was commissioned on 25th March 2008, supported by certificates from M/s Shriram EPC and the Director of Boilers. The Tribunal allowed depreciation at 40% (50% of 80%) for the second half of the financial year. 4. Set-off of Loss from the Power Plant Against Other Business Income The assessee sought to set off the loss from the power plant against other business income, which the Assessing Officer and CIT(A) denied, citing Section 80IA(5). The Tribunal, referencing the Supreme Court's decision in Synco Industries Ltd., held that losses must be set off against other income before allowing deductions under Chapter VI-A. The Tribunal allowed the set-off. 5. Additional Depreciation on the Power Plant The CIT(A) allowed additional depreciation on the power plant, which the Revenue contested, arguing that the provision for additional depreciation under Section 32(i)(iia) for power plants came into effect from the assessment year 2013-14. The Tribunal upheld this, disallowing the additional depreciation for the relevant assessment year. 6. Addition on Account of Stock Difference The Assessing Officer added Rs. 6 crores for stock differences found during the search. The CIT(A) deleted this addition, noting the stock valuation was approximate and the books of account were not rejected. The Tribunal upheld the CIT(A)'s decision, finding no specific details of unreconciled stock and agreeing that it was unreasonable to expect precise reconciliation in a voluminous business. Conclusion: The Tribunal's decisions were based on detailed analysis and adherence to principles of natural justice, allowing the admission of additional evidence, granting proportionate deductions under Section 80IB(11A), allowing depreciation on the power plant, permitting the set-off of losses, and upholding the deletion of stock difference additions. However, additional depreciation on the power plant was disallowed as it was not applicable for the relevant assessment year.
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