2016 (2) TMI 410 - HC - Income Tax

Addition made on account of suppression of profit - denial of exemption u/s.10B - ITAT deleted the addition - Held that - The assessee was engaged in manufacturing activity and had two units at Ahmedabad, one of them being export oriented unit, entitled for 100% deduction under section 10B of the Income Tax Act. As the assessee strenuously pointed out that the manufacturing activity of both units was entirely different. The process was vastly different. CIT(Appeals) considered the evidence on record and in a detail discussion in the order came to a conclusion that there was no basis for making additions as done by the Assessing Officer rightly confimed by ITAT - Decided against revenue

Summary

Issues:
Appeal against the judgment of Income Tax Appellate Tribunal regarding addition made by Assessing Officer and deletion by CIT(Appeals) of Rs. 1.27 crores and consequential denial of exemption u/s.10B of the Income Tax Act.

Analysis:
The case involved an appeal by the Revenue against the decision of the Income Tax Appellate Tribunal. The main issue was the addition of Rs. 1.27 crores made by the Assessing Officer, which was subsequently deleted by the CIT(Appeals) and confirmed by the Tribunal. The assessee, engaged in manufacturing activities with two units, one being an export-oriented unit eligible for 100% deduction under section 10B of the Income Tax Act, was accused by the Assessing Officer of diverting claims from the non-exempted unit to the exempted unit to avoid tax. The Assessing Officer based this accusation on a comparison of turnover, raw material consumption, and other parameters. However, the assessee argued before the CIT(Appeals) that the manufacturing processes of both units were entirely different, which was supported by evidence. The CIT(Appeals) carefully considered the evidence and concluded that there was no basis for the additions made by the Assessing Officer, a decision upheld by the Tribunal.

Upon review, the High Court found that the entire issue revolved around the appreciation of evidence on record. Since both the CIT(Appeals) and the Tribunal had arrived at concurrent factual findings, and there was no perversity in their decisions, the High Court determined that no question of law arose in this case. As a result, the Tax Appeal was dismissed by the High Court.

In conclusion, the judgment highlighted the importance of factual findings and evidence in tax disputes. The case emphasized the need for a thorough examination of the facts and circumstances to arrive at a just decision. The High Court's ruling underscored the principle that in the absence of any legal question arising from the factual findings of lower authorities, the High Court would not interfere with the decisions of the CIT(Appeals) and the Tribunal.