2022 (8) TMI 527 - AT - Income Tax

Deduction u/s 80IB(11C) - factual position found during search seizure proceedings u/s. 132 of the Act was not substantiate the claim of the assessee u/s. 80IB(11C) as the assessee was not satisfying all the conditions as laid down u/s. 80IB(11C) - CIT-A allowed deduction - HELD THAT - From the perusal of the documents submitted before the Assessing Officer as well as before the CIT(A) it can be seen that the local authority i.e. Vadodara Municipal Corporation has issued certificate after verifying all the aspects related to 100 beds capacity in the Hospital and granted registration and permission to run the Medical Facility Centre (Hospital). Thus, there was no doubt as to the required condition of 100 beds Hospital in assessee s case as per the conditions laid down under Section 80IB(11C) - Besides this, the assessee has also submitted the Minutes of Understanding in respect of additional supply of expertise such as Doctors and Nurses with other Hospital. Thus, merely on the basis of statement which were later on retracted cannot be taken into account for determining not to grant deduction under Section 80IB(11C) of the Act to the assessee. The CIT(A) has rightly deleted this addition. - Decided against revenue. Unexplained investment u/s 69A - unexplained bullion - As per assessee bullion was then converted into Gold Kada Jewellery and the making charges was also paid by the assessee in cash which is also duly accounted for - HELD THAT - It is pertinent to note that bullion purchased by the assessee has been properly reflected in the books of account and the Balance Sheet with the detailed explanation given in Schedule-D. From the perusal of records, it can be seen that all the purchases made is in the cash mode still the bills were properly maintained by the assessee and the said evidence were produced before the Assessing Officer as well as before the CIT(A). Thus, the assessee has explained investments and also explained the conversion of that investment into jewellery in the later years. Thus, this cannot be termed as unexplained investment under Section 69A - CIT(A) has overlooked the evidences produced by the assessee and hence appeal of the assessee is allowed.

Summary

Issues:
- Deduction under section 80IB(11C) for different Assessment Years
- Disallowance under Section 69A of the Act for Unexplained Bullion

Analysis:

Deduction under section 80IB(11C) for different Assessment Years:
1. The Revenue raised appeals against the CIT(A)'s decision to allow deductions under section 80IB(11C) for various Assessment Years. The Revenue contended that the factual position during search and seizure proceedings did not support the assessee's claim under section 80IB(11C) as all conditions were not satisfied.
2. The Assessee, in response, argued that they complied with all provisions of section 80IB(11C) and provided evidence to support their claim. The Municipal Corporation issued a certificate verifying the 100-bed capacity of the Hospital, a requirement for the deduction. Additionally, there was a Memorandum of Understanding for additional staff supply in emergency situations.
3. The Tribunal examined the evidence and found that the Municipal Corporation's certificate and the Memorandum of Understanding supported the assessee's compliance with the conditions of section 80IB(11C). The Tribunal concluded that the Revenue's appeals lacked merit, and the deductions were rightfully allowed by the CIT(A).

Disallowance under Section 69A of the Act for Unexplained Bullion:
1. The assessee appealed against the addition made under Section 69A of the Act for unexplained bullion purchases during a specific Assessment Year. The assessee argued that the purchases were properly accounted for in the books of account and supported by audited documents.
2. The Revenue, however, supported the Assessment Order's decision, claiming the bullion purchases were unexplained and lacked proper documentation.
3. The Tribunal reviewed the evidence presented, noting that the bullion purchases were reflected in the books of account with detailed explanations provided. The Tribunal found that the purchases were genuine, accounted for, and the conversion into jewelry was properly documented. Consequently, the Tribunal allowed the assessee's appeal, disagreeing with the CIT(A)'s decision to disallow the deduction under Section 69A of the Act.

Outcome:
- The Tribunal dismissed all three appeals filed by the Revenue related to deductions under section 80IB(11C) for different Assessment Years.
- The Tribunal allowed all three Cross Objections filed by the assessee, supporting the deductions claimed under section 80IB(11C).
- The Tribunal also allowed the assessee's appeal regarding the disallowance under Section 69A of the Act for unexplained bullion purchases.