2016 (8) TMI 1499 - AT - Income Tax

Deduction u/s 80IB(11A) denied - non satisfying the conditions laid down - as per revenue assessee, not being an integrated undertaking, is not entitled for the relief u/s 80IB(11A) AND transport and handling activities claimed by the assessee are merely incidental and not integrated to its main activity - HELD THAT - We find that the assessee has filed detailed paper book containing AY 2005-06 order u/s 143(3) of the Act in which claim was allowed u/s 80IB(11A) - We further find that against Ld. CIT(A) s order of AYs 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 in which CIT(A) allowed the claim u/s 80IB(11A) of the Act, the Department has not preferred any appeal meaning thereby that it has accepted the decision of Ld. CIT(A) in assessee favour - we are of the opinion that assessee is entitled for the claim allowed u/s 80IB(11A) and find no reason to interfere in the order of Ld. CIT(A). - Decided against revenue.

Summary

Issues:
- Disallowance of deduction claimed under Section 80IB(11A) of the Act
- Assessment of total income based on disallowance
- Eligibility of the assessee for deduction under Section 80IB(11A) of the Act

Analysis:
1. The appeal was filed by the assessee against the order of the Ld. CIT(A), Ahmedabad regarding the disallowance of a deduction claimed under Section 80IB(11A) of the Act. The assessee claimed a deduction of ?41,05,138, but the Assessing Officer disallowed it on the grounds that the company did not satisfy the conditions laid down for the deduction. The Assessing Officer observed that the company had not earned any income from the business of storage and transportation of food grains, which was a requirement for claiming the deduction.

2. The brief facts of the case revealed that the assessee was engaged in the business of Grinding and trading of Moong and Moong dal. The assessee claimed the deduction under Section 80IB(11A) of the Act based on the integrated business of handling, storage, and transportation of food grains. The Assessing Officer disallowed the deduction as the assessee could not provide evidence of engaging in all aspects of the integrated business as required by the Act.

3. The CIT(A) considered the case and found that the assessee was indeed involved in handling food grains by purchasing raw moong dal and selling processed dal to various parties. The CIT(A) noted that the assessee did not own transportation facilities but used third-party services for transportation. The CIT(A) concluded that the assessee satisfied the conditions of an integrated business of handling, storage, and transportation of food grains, making it eligible for the deduction under Section 80IB(11A) of the Act.

4. The Departmental Representative disagreed with the CIT(A)'s decision, arguing that the assessee was not an integrated undertaking and therefore not entitled to the relief under Section 80IB(11A) of the Act. The representative contended that the transport and handling activities of the assessee were merely incidental and not integrated into the main business activity.

5. The Tribunal reviewed the records and orders of the authorities below and noted that in previous assessment years, the CIT(A) had allowed similar claims of deduction under Section 80IB(11A) of the Act for the assessee. The Tribunal observed that the Department had not appealed against those decisions, indicating acceptance of the CIT(A)'s decisions in favor of the assessee. Therefore, the Tribunal upheld the eligibility of the assessee for the deduction under Section 80IB(11A) of the Act and dismissed the appeal of the Department.