2015 (10) TMI 1584 - AT - Income Tax

Deduction claimed u/s. 80- IC - CIT(A) allowed the claim - Held that - We find force in the submissions of the Ld. DR. Prima facie there appears to be difference in the sale figure taken by the AO and by the Ld. CIT(A). Such factual errors cannot be brushed aside lightly, therefore, in the interest of justice and fair play, we restore this issue to the file of the AO. The AO is directed to decide the claim of deduction denovo after giving reasonable and sufficient opportunity to the assessee to explain the difference, if any, in the sales. Thus restore the entire issue relating to the claim of deduction u/s. 80IC to the file of the AO with a direction to decide the issue afresh as per the provisions of law. - Decided in favour of assessee for statistical purpose.

Summary

Issues:
1. Appeal by Revenue against CIT(A) order regarding deduction u/s. 80-IC.
2. Validity of Inter Divisional Sales for deduction eligibility.
3. Allocation of Head Office expenses to Solan Unit for deduction.

Analysis:
1. The appeal by the Revenue was against the CIT(A) order concerning the deduction claimed u/s. 80-IC of the Income Tax Act. The Revenue raised four substantive grounds of appeal, focusing on the eligibility of the deduction.

2. The main issue revolved around the treatment of Inter Divisional Sales for the purpose of claiming the deduction. The Assessing Officer (AO) contended that sales between units should not be considered as part of sales generating business profit eligible for deduction. The AO reduced the business profit of the Solan unit by the amount of Inter Divisional Sales.

3. Another issue was the allocation of Head Office expenses to the Solan Unit for the purpose of claiming the deduction. The AO questioned the basis for attributing expenses to the Solan Unit and made an addition to the total expenses allocated, disagreeing with the methodology used by the assessee.

4. The CIT(A) accepted the assessee's explanations and deleted the additions made by the AO regarding both the Inter Divisional Sales and the allocation of Head Office expenses. However, the ITAT observed that the CIT(A) accepted the contentions without verifying all details and directed the AO to re-examine the issues after giving a fair opportunity to the assessee to present their case.

5. The ITAT found discrepancies in the sales figures considered by the AO and the CIT(A), emphasizing the importance of verifying factual errors. Therefore, the ITAT remanded the issues back to the AO for fresh consideration, ensuring a fair opportunity for the assessee to address any differences in sales figures and comply with the provisions of the law.

6. Ultimately, the ITAT allowed the Revenue's appeal for statistical purposes, restoring the entire issue of the deduction u/s. 80IC to the AO for a fresh decision in accordance with the law.