2015 (9) TMI 1659 - AT - Income Tax

Disallowance of deduction claimed u/s.80IB(4) - profits derived from its unit located at Silvassa in the Union Territory of Dadra Nagar Haveli, an industrially backward area specified in 8th Schedule to the Act - HELD THAT - We find that the issue relating to disallowance of deduction u/s.80IB(4) has been recurring every year from Assessment Year 2005-06 onwards. The Assessing Officer has been disallowing deduction u/s.80IB(4) in all the aforesaid assessment years on the same ground. In Assessment Years 2005-06 and 2008-09 the CIT(A) upheld the findings of AO on the issue, whereas in Assessment Years 2006-07 and 2007-08 the CIT(A) allowed the claim of deduction u/s.80IB(4). Against the findings of the CIT(A) the assessee filed appeal before the Tribunal in Assessment Years 2005-06 and 2008-09 and the Revenue filed appeal before the Tribunal in Assessment Years 2006-07 and 2007-08. Since the issue raised in the impugned assessment year is identical and no change in the facts and circumstances have been pointed out by either sides, we deem it appropriate to remit this issue back to the file of Assessing Officer for fresh adjudication in accordance with the order of the Tribunal 2015 (2) TMI 1317 - ITAT PUNE . Thus, ground Nos. 1 to 7 in the appeal of assessee are allowed for statistical purposes. Disallowance of the commission expenses claimed by the assessee - HELD THAT - Assessee has stated at the bar that the documents as sought by the Assessing Officer are now available with the assessee and the same can be furnished, if an opportunity is granted. We deem it appropriate to remit this issue back to the file of the Assessing Officer with a direction to assessee to file the necessary documents in support of the claim. The Assessing Officer after considering the documents furnished by the assessee shall decide the issue afresh, in accordance with law. This ground of appeal of assessee is also allowed for statistical purposes.

Summary

Issues Involved:
1. Disallowance of deduction claimed by the assessee under Section 80IB(4) of the Income Tax Act.
2. Disallowance of commission expenses claimed by the assessee.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction Under Section 80IB(4):

The assessee, engaged in manufacturing Genset and Genset components, claimed a deduction under Section 80IB(4) on the profits from its unit located in Silvassa, an industrially backward area specified in the 8th Schedule to the Act. The Assessing Officer (AO) disallowed this claim, citing the assessee's failure to prove the commencement of manufacturing activity on or before 31-03-2004, which is a prerequisite for eligibility under Section 80IB(4). The AO relied on assessment orders from previous years (2005-06 to 2008-09) to support this disallowance.

The CIT(A) upheld the AO's decision in an ex parte proceeding, following his own order for the Assessment Year 2008-09, which was subsequently set aside by the Tribunal. The Tribunal noted that this issue had been recurring annually since 2005-06, with varying decisions from the CIT(A) across different years. The Tribunal had previously remitted the matter back to the AO for fresh adjudication, emphasizing the need for factual appreciation regarding the commencement of manufacturing activities.

The Tribunal highlighted inconsistencies in the transporter's statements, which were crucial to the AO's conclusion. The Tribunal observed that the transporter's denial of business transactions with the assessee and the authenticity of bills was later contradicted. Given these contradictions, the Tribunal emphasized the importance of cross-examination to establish the facts conclusively. The Tribunal directed the AO to allow the assessee an opportunity for cross-examination and to re-adjudicate the matter, considering all relevant evidence.

2. Disallowance of Commission Expenses:

The AO disallowed Rs. 13 lakhs claimed as commission expenses by the assessee due to the latter's failure to produce supporting documents such as bills and TDS certificates during the scrutiny assessment. The assessee's representative requested additional time to furnish these documents, which the AO did not grant, leading to the disallowance.

The assessee's representative assured the Tribunal that the necessary documents were now available and could be produced if given an opportunity. The Tribunal deemed it appropriate to remit this issue back to the AO, directing the assessee to submit the required documents. The AO was instructed to reconsider the matter afresh, based on the newly furnished evidence, and make a decision in accordance with the law.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, remitting both issues back to the AO for fresh adjudication. The Tribunal emphasized the need for thorough examination and cross-examination to ensure a fair and just resolution of the matters.