2014 (10) TMI 1047 - AT - Income Tax

Revision u/s 263 by CIT - As per CIT AO has wrongly granted deduction u/s 80IC - HELD THAT - On perusal of the above paragraph in the assessment order, coupled with the facts that in the earlier assessment year the same AO denied the exemption u/s 80IC to the assessee on the very same grounds and the facts that the CIT (Appeals) has reversed such addition, we are of the opinion that the AO has properly applied his mind and hence take a plausible view. Thus applying the proportions laid down in the case of CIT vs. Max India Ltd. 2007 (11) TMI 12 - SUPREME COURT and case of Malbar Industries Co. Ltd. Vs. CIT 243 ITR 83 (SC) 2000 (2) TMI 10 - SUPREME COURT we conclude that order passed u/s 263 is bad in law. - Decided in favour of assessee.

Summary

Issues:
1. Validity of deduction u/s 80IC of Income Tax Act, 1961.
2. Jurisdiction of the Commissioner of Income Tax invoking powers u/s 263.
3. Correctness of AO's decision to grant deduction u/s 80IC.

Analysis:
1. The appeal concerned the validity of deduction u/s 80IC of the Income Tax Act, 1961. The Commissioner of Income Tax held that the deduction granted by the Assessing Officer (AO) in the assessment order was wrongly granted as the assessee was deemed to be only assembling and trading LCDs, not manufacturing goods, and the unit was not in a notified area. The assessee contended that similar issues were resolved in their favor in previous years.

2. The jurisdiction of the Commissioner of Income Tax under section 263 was challenged by the assessee. The assessee argued that the Commissioner's powers were invoked erroneously. However, the Commissioner upheld their decision, concluding that the assessee wrongly claimed the deduction u/s 80IC. The assessee raised various contentions, including challenging the jurisdiction of the Commissioner.

3. The ITAT referred to a previous judgment related to the same assessee for the assessment year 2009-10. In that judgment, the ITAT found that the assessee was eligible for the claimed deduction u/s 80IC, which had been wrongly denied by the AO. The ITAT upheld the decision of the first appellate authority, directing the AO to accept the deduction claim. The ITAT also noted that the AO had properly applied their mind in granting the deduction.

4. The ITAT considered the documents submitted by the assessee, including a detailed paper book, which supported their claim for deduction u/s 80IC. The ITAT found that the AO had rightly granted the deduction, and the order of the Commissioner of Income Tax was deemed to be bad in law. Consequently, the ITAT allowed the appeal of the assessee, upholding the deduction u/s 80IC.

In conclusion, the ITAT ruled in favor of the assessee, holding that the AO's decision to grant the deduction u/s 80IC was valid, and the order of the Commissioner of Income Tax was considered incorrect. The judgment emphasized the importance of proper application of law and consideration of all relevant documents in determining tax deductions.