2013 (5) TMI 106 - AT - Income Tax

Deduction u/s.80IB - manufacture - standardisation and pasteurization of milk - Held that - There is no dispute to the fact that the issue relating to pasteurization of raw milk amounts to manufacture or not stands decided against the assessee by the decision of the Special Bench of the Tribunal (Pune) in the case of B.G. Chitale Vs. JCIT reported in 2008 (6) TMI 303 Pune Therefore, the issue has to be decided against the assessee. Since the jurisdictional High Court in the case of the assessee for the preceding two years has already admitted the substantial question of law which has already been mentioned above, therefore, in view of the declaration u/s.158A(1) filed by the assessee in Form No.8, we direct the Assessing Officer to amend the order, if the issue is decided in favour of the assessee at a later date. We hold and direct accordingly. Disallowance out of the travelling, conveyance, repairs and maintenance of vehicles, postage and telephone etc. - Held that - After hearing both sides we find the assessee claimed an amount of Rs.13,35,085 towards travelling and conveyance, vehicle repairs and maintenance, guest entertainment and postage and telephone expenses etc. for the impugned assessment year. The Assessing Officer disallowed an amount of Rs.75,000 out of the said claimed expenses on estimate basis in absence of maintenance of log book for vehicles and telephone call register with the observation that possibility of their use for personal purposes cannot be totally ruled out. The Ld. CIT(A) has upheld the same. Since the assessee could not improve its case before the Tribunal, we are not inclined to interfere with the orders of the authorities below. Accordingly dismissed.

Summary

Issues:
1. Disallowance of deduction u/s.80IB for standardization and pasteurization of milk.
2. Disallowance of expenses for travelling, conveyance, repairs, and maintenance of vehicles, postage, and telephone.

Issue 1: Disallowance of deduction u/s.80IB for standardization and pasteurization of milk:
In the case for Assessment Year (A.Y.) 2004-05, the assessee appealed against the disallowance of deduction u/s.80IB by the CIT(A) claiming that standardization and pasteurization of milk constitute manufacturing. The Assessing Officer disallowed the deduction based on previous decisions. The assessee referred to a High Court order admitting an appeal on whether pasteurization of raw milk amounts to manufacture. The Departmental Representative agreed to pass an appropriate order due to the pending High Court decision. The Tribunal noted that the issue had been decided against the assessee by a Special Bench of the Tribunal. However, considering the pending High Court decision for previous years, the Tribunal directed the Assessing Officer to amend the order if the issue is decided in favor of the assessee later. The first ground raised by the assessee was decided in terms of the above directions.

Issue 2: Disallowance of expenses for travelling, conveyance, repairs, and maintenance of vehicles, postage, and telephone:
Regarding the disallowance of Rs.75,000 from claimed expenses for the A.Y. 2004-05, the Assessing Officer disallowed the amount on an estimate basis due to lack of proper records. The CIT(A) upheld the disallowance, which the Tribunal also affirmed. The assessee's argument that the expenses belonged to the company and should not be disallowed was rejected as there was no evidence that these expenses were part of employee perquisites. The Tribunal dismissed the second ground raised by the assessee.

Conclusion:
Both appeals filed by the assessee were dismissed by the Tribunal, upholding the disallowances of deduction u/s.80IB for standardization and pasteurization of milk, as well as the disallowance of expenses for travelling, conveyance, repairs, and maintenance of vehicles, postage, and telephone.