2018 (8) TMI 1868 - AT - Income Tax

Deduction under section 80JJA - assessee had claimed deduction beyond the permissible five years - HELD THAT - The first year in which 80JJA deduction was claimed, was the assessment year 2004-05 and, during the course of scrutiny assessment proceedings, the AO had specifically asked the assessee to show cause deduction of section 80JJA is allowable during the year under consideration as no such deduction was claimed in the earlier years . The claim was explained at length and the AO duly accepted it as the first year of claim. By this basis, the current year s claim is fifth and final year. There is no infirmity in the claim thus. The mere fact that the assessee was involved in somewhat similar activity is not really relevant inasmuch as the character of activity was materially distinct from assessment year 2004-05 and that aspect of the matter, by the AO having accepted it as first year of claim, has reached finality. In view of these discussions, I find merits in the plea of the assessee. The disallowance of claim under section 80JJA is thus devoid of legally sustainable merits, and cannot be upheld - thus direct the AO to delete the impugned disallowance of section 80JJA claim - Decided in favour of assessee.

Summary

Issues:
Challenge to correctness of order dated 29th December, 2014 passed by CIT(A)-2, Ahmedabad regarding assessment under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 for the assessment year 2008-09.

Analysis:
The appellant challenged the disallowance of claim of ?64,04,327/- under section 80JJA of the Income-tax Act, 1961. The Assessing Officer proposed to disallow the deduction as the appellant claimed it well beyond the permissible five years, despite commencing business in the relevant period. The CIT(A) confirmed the disallowance, stating that the appellant was producing enzymes since A.Y. 2000-2001 and changing the manufacturing process in 2003 did not alter the nature of the product. The CIT(A) held that the deduction under section 80JJA was available from A.Y. 2000-2001, not from 2004-05 as claimed by the appellant. The Tribunal noted that the first year the deduction was claimed was 2004-05, accepted by the Assessing Officer, making the current year's claim the fifth and final year. The Tribunal found the disallowance devoid of legally sustainable merits and directed the Assessing Officer to delete the disallowed claim of ?64,04,327 under section 80JJA.

Conclusion:
The Tribunal allowed the appeal, emphasizing that the appellant's claim under section 80JJA for the assessment year 2008-09 was valid as the first claim was made in 2004-05, which was accepted by the Assessing Officer. The Tribunal held that the disallowance lacked legally sustainable merits and ordered the deletion of the disallowed claim amounting to ?64,04,327.