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2016 (7) TMI 572 - AT - Income TaxDeduction under section 80JJA - profits and gains from business of collecting and processing of bio-degradable waste - Held that - Reasons for disallowing the claim of the assessee is identical, as was considered in the Asstt.Year 2006-07. The ld.AO re-appreciated the certificate issued by SGS India Pvt.Ltd. and its correspondence. In the light of fresh assessment order, if we examine the assessment orders passed in these two years, then, it would reveal that there is a perceptional difference in appreciating the same certificate. Considering the stand of the AO in the year 2015, when he passed assessment order in 2006-07 afresh, we are of the view that orders of the ld.CIT(A) in both the years are not required to be interfered with. In view of the above discussion, we do not find any merit in these appeals - Decided in favour of assessee.
Issues Involved:
1. Rejection of books of accounts under section 145(3) of the Income Tax Act. 2. Disallowance of deduction under section 80JJA of the Income Tax Act. Issue-wise Detailed Analysis: 1. Rejection of Books of Accounts under Section 145(3): The Revenue appealed against the orders of the CIT(A), who had set aside the AO's decision to reject the assessee's books of accounts under section 145(3) of the Income Tax Act. The AO had rejected the books due to perceived discrepancies and defects, such as the inability to confirm purchases from two out of ten cow-dung suppliers and unexplained sales transactions. The CIT(A) found these reasons insufficient, noting that the AO accepted the book profits despite rejecting the books, which indicated inconsistency. The CIT(A) highlighted that the AO did not find any serious defects in the original records like purchase vouchers, sales bills, delivery challans, and transport receipts. Consequently, the CIT(A) allowed the appeal, stating that the rejection of books was not justified without pointing out serious defects. 2. Disallowance of Deduction under Section 80JJA: The AO disallowed the assessee's claim for deduction under section 80JJA, arguing that the product manufactured was not organic manure, based on a letter from SGS India Pvt. Ltd. However, the CIT(A) found that the AO's reliance on the SGS letter was misplaced, as the letter itself stated that the product could be approved as organic inputs for use in organic farming. The CIT(A) noted that the AO accepted the business profits shown by the assessee without questioning the authenticity of the supporting documents for purchases and sales of organic manure. The CIT(A) concluded that the assessee had indeed manufactured and sold organic manure, qualifying for the deduction under section 80JJA. The CIT(A) directed the AO to allow the deduction as claimed by the assessee. Tribunal's Decision: The Tribunal considered the rival contentions and the record, noting that the CIT(A) had recorded almost identical findings for both assessment years. The Tribunal observed that the AO, in a fresh assessment order for the assessment year 2006-07, had allowed the assessee's claim for deduction under section 80JJA. The Tribunal found that the reasons for disallowing the claim in the subsequent years were identical to those considered in the earlier year. Given the AO's acceptance of the claim in the fresh assessment for 2006-07, the Tribunal upheld the CIT(A)'s orders for the assessment years 2007-08 and 2008-09, rejecting the Revenue's appeals. Conclusion: The appeals of the Revenue were dismissed, and the orders of the CIT(A) allowing the deduction under section 80JJA and rejecting the AO's decision to reject the books of accounts under section 145(3) were upheld. The Tribunal emphasized consistency in the department's stance and found no merit in the Revenue's appeals. The judgment was pronounced on 11th July 2016 at Ahmedabad.
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