2013 (11) TMI 1746 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A)-II, Kanpur for assessment year 2007-2008 regarding deduction u/s 80IB and section 2(22)(e) of the Income Tax Act.

Deduction u/s 80IB:
The Revenue appealed against the order directing the Assessing Officer to allow deduction u/s 80IB without appreciating the facts. The Tribunal noted that the assessee started manufacturing activities in March 2006, making them eligible for the deduction. The facts remained consistent, as confirmed by the CIT(A) for the present year. Referring to previous years' decisions, the Tribunal found no reason to take a contrary view and upheld the CIT(A)'s order, rejecting the Revenue's ground.

Section 2(22)(e) - Deemed Dividend:
The Revenue challenged the direction to allow deduction u/s 2(22)(e) without appreciating the facts. The Tribunal examined the companies' main objects and found that although they could invest surplus funds, they were not primarily engaged in money lending. The exception clause of section 2(22)(e) was analyzed, concluding that the loans were not given in the ordinary course of business of the companies. The Tribunal disagreed with the CIT(A) and sided with the Assessing Officer, citing a Tribunal decision to support their interpretation. Consequently, the Revenue's appeal was partly allowed.

In conclusion, the Tribunal upheld the deduction u/s 80IB but reversed the decision on section 2(22)(e), ruling in favor of the Revenue on the latter issue.