2019 (4) TMI 1516 - AT - Income Tax

Deduction u/s 80IA - Assessee's eligible undertaking - HELD THAT - Assessee's eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed cannot be reconverted into the same position. Its utility gets changed. We find the issue raised in this appeal by the Revenue has been discussed by the Coordinate Bench of this Tribunal 2016 (11) TMI 1470 - ITAT KOLKATA and by following principle of consistency, confirmed the order of CIT(A) in allowing deduction u/s 80IE. Ground of Revenue are dismissed Addition made on account of additional depreciation - HELD THAT - The additional depreciation u/s 32 (1) (iia) of the I.T. Act is allowable as the plant machinery is wholly engaged in the manufacturing of poultry cattle feeds. Disallowance u/s 14A - assessee earned dividend income and by invoking the method of Rule 8D(2) for the purpose of calculating the disallowance u/s 14A - CIT(A) by placing reliance on the decision of the case of REI Agro Ltd. 2013 (9) TMI 156 - ITAT KOLKATA restricted the disallowance taking into consideration the investment which yielded the dividend - HELD THAT - Admittedly this exercise was not done before the AO and with the consent of both parties, we deem it proper to remand the matter to the file of AO for his fresh consideration to recompute the disallowance taking into consideration the investments which yielded the dividend income. Thus, Ground raised by the Revenue are allowed for statistical purposes. MAT - Addition u/s 14A relevant to book profit u/s 115JB - CIT(A) while dealing the issue in first appellate proceedings, held the disallowance/computation for section 14A r.w. Rule 8D is not applicable for the purpose of calculation of income u/s 115JB - HELD THAT - We find force in the arguments of Ld.DR since there was no calculation in this respect by the AO in assessment proceedings, we deem it proper to remand the matter to the AO for his fresh consideration as indicated above. Thus, Ground No.7 raised by the Revenue is allowed for statistical purposes. Addition made on account of late deposit of employees contribution to PF ESIC - HELD THAT - AO added the impugned amount for not depositing employees contribution before the statutory due date. The CIT(A) deleted the said amount by placing reliance in the case of Alom Extrusion Ld. 2009 (11) TMI 27 - SUPREME COURT by holding no disallowance is maintainable if the deposit is made before the due date of filing the return of income. We find the CIT(A) examined the record and found that said employees contribution was deposited before filing the return of income. Therefore, we find no infirmity in the order CIT(A), accordingly it is justified.

Summary

Issues:
1. Deletion of addition made on account of deduction u/s 80IA of the Income Tax Act, 1961.
2. Deletion of addition made on account of additional depreciation.
3. Deletion of addition made on account of disallowance u/s 14A of the Act.
4. Deletion of addition made on account of section 14A relevant to book profit u/s 115JB of the Act.
5. Deletion of addition made on account of late deposit of employees' contribution to PF & ESIC.

Issue 1: Deletion of addition made on account of deduction u/s 80IA:
The appeal was filed by the Revenue against the order passed by CIT(A)-20, Kolkata for AY 2014-15. The Tribunal found that the issue raised by the Revenue was already discussed in a previous order where deduction u/s 80IE of the Act was allowed. The Tribunal confirmed the order of CIT(A) based on the principle of consistency, stating that the process of producing poultry feeds involved manufacturing, and the disallowance made by the Assessing Officer was not justified. Consequently, Ground Nos. 1 to 4 raised by the Revenue were dismissed.

Issue 2: Deletion of addition made on account of additional depreciation:
The Tribunal noted that the AO disallowed additional depreciation on the allegation that the assessee was not engaged in any manufacturing activity. However, it was established that the plant & machinery was wholly engaged in the manufacturing of poultry & cattle feeds. The Tribunal upheld the order of CIT(A) and dismissed Ground No. 5 raised by the Revenue.

Issue 3: Deletion of addition made on account of disallowance u/s 14A of the Act:
The AO disallowed a certain amount under section 14A by invoking Rule 8D(2) for calculating the disallowance. The CIT(A) restricted the disallowance based on investments that yielded dividend income. The Tribunal remanded the matter to the AO for fresh consideration to recompute the disallowance. Ground No. 6 raised by the Revenue was allowed for statistical purposes.

Issue 4: Deletion of addition made on account of section 14A relevant to book profit u/s 115JB of the Act:
The AO added an amount under Rule 8D(2) for normal provisions and under MAT proceedings u/s 115JB of the Act. The CIT(A) held that the disallowance/computation for section 14A was not applicable for calculating income u/s 115JB. The Tribunal remanded the matter to the AO for fresh consideration. Ground No. 7 raised by the Revenue was allowed for statistical purposes.

Issue 5: Deletion of addition made on account of late deposit of employees' contribution to PF & ESIC:
The AO added the impugned amount for late deposit of employees' contribution. The CIT(A) deleted the amount, stating that no disallowance is maintainable if the deposit is made before the due date of filing the return of income. The Tribunal found no infirmity in the order of CIT(A) and dismissed Ground No. 8 raised by the Revenue.

In conclusion, the appeal of the Revenue was partly allowed, with different issues being decided in favor of or against the Revenue based on the detailed analysis and considerations provided by the Tribunal.