2014 (9) TMI 1249 - AT - Income Tax

Deduction u/s 80IB - sale of scrap was eligible for the deduction u/s. 80IB for the Pimpri Unit-II and Goa unit of the assessee company - AO disallowed the claim of the assessee for deduction u/s. 80IB in respect of the Pimpri Unit-II holding that the said Unit was not a new independent undertaking - HELD THAT - It was the common point between the parties that the issue relating to eligibility of sale of scrap for Sec. 80IB benefits is no longer res-integra but has been decided by the Tribunal in the assessee s own case for assessment year 2002-03 2011 (7) TMI 1153 - ITAT PUNE in favour of the assessee. It was also a common point between the parties that the said precedent continues to hold the field as it has not been altered by any higher authority. In view of the aforesaid precedent we uphold the stand of the CIT(A) and as a result the Grounds of appeal nos. 1 and 2 raised by the Revenue stand dismissed. Pre-payment of deferred sales tax loan liability - assessee has availed of the deferred sales tax scheme of the Govt. of Maharashtra in earlier years - HELD THAT - Ostensibly, the issue which was raised by the assessee for the first time before the CIT(A) involved a point of law and the necessary facts to adjudicate the same, were already on record. In other words, the adjudication of the new claim sought to be raised by the assessee for the first time before the CIT(A) did not require any fresh investigation of facts. Therefore, in terms of the judgment in the case of National Thermal Power Co. Ltd 1996 (12) TMI 7 - SUPREME COURT the CIT(A) made no mistake in admitting such Additional Ground of appeal. It is pertinent to note that before adjudicating on the Additional Ground of appeal, the CIT(A) duly called for the comments of the Assessing Officer, and only after considering the comments, he has admitted the additional Grounds of Appeal for all the above reasons, the action of the CIT(A) is hereby affirmed. In so far as the merits of the claim is concerned, it was a common point between the parties that the controversy is to be adjudicated in the light of the decision of the Special Bench of the Tribunal in the case of Sulzer India Limited 2010 (11) TMI 728 - ITAT, MUMBAI - Decided against revenue.

Summary

Issues:
1. Eligibility of income from sale of scrap for deduction u/s. 80IB of the Income-tax Act.
2. Exclusion of surplus credited by the assessee in its income on account of pre-payment of deferred sales tax loan liability.

Eligibility of income from sale of scrap for deduction u/s. 80IB:
The Revenue appealed against the CIT(A)'s decision allowing the deduction u/s. 80IB for income from sale of scrap for the Pimpri Unit-II and Goa unit of the assessee company. The Assessing Officer initially disallowed the deduction, stating that the income from the sale of scrap was not derived from the industrial undertaking. However, the CIT(A) referred to past judgments and allowed the deduction, emphasizing the direct nexus of scrap generation with the industrial undertaking. The Tribunal upheld the CIT(A)'s decision based on past precedent, dismissing the Revenue's appeal.

Exclusion of surplus from taxable income:
The Revenue challenged the CIT(A)'s decision to exclude a surplus of Rs. 12,73,99,650 from the taxable income, which arose from the pre-payment of deferred sales tax loan liability. The assessee initially treated this surplus as income but later contended it was a capital receipt not chargeable to tax, citing a Tribunal decision. The CIT(A) admitted this additional ground and directed the exclusion of the surplus from income, relying on the Tribunal's decision. The Revenue argued against this, stating that the surplus was already credited as income by the assessee. However, the Tribunal upheld the CIT(A)'s decision, citing the competence of the CIT(A) to admit the additional ground and the applicability of the Tribunal's decision in the case. Consequently, the Revenue's appeal was dismissed.

In conclusion, the Tribunal affirmed the CIT(A)'s decisions regarding both issues, upholding the eligibility of income from sale of scrap for deduction u/s. 80IB and the exclusion of the surplus from taxable income. The appeal of the Revenue was dismissed, and the Tribunal pronounced the order on 29th September 2014.