2017 (8) TMI 39 - HC - Income Tax

Deduction u/s.80IB - Held that - For the earlier assessment year, the Assessing Officer has accepted the claim of the assessee of carrying out independent business and the benefit under Section 80IB has been allowed. The present appeal pertains to assessment year 2000-2001. In the said year, Sachin Perfumery and Cosmetics had not come into existence. It had started its operation in the Assessment Year 2001-2002. In the light of the above, the admission of the Income Tax Appeal pertaining to assessment year 2001-2002 would not inure to the benefit of the present appellant and the same need not be considered. For earlier year the claim of the assessee of carrying out independent business has been accepted. Addition on account of business receipts from Shri Rasiklal Dhariwal - ITAT deleted the addition - Held that - The basis on which the Assessing Officer concluded that the present assessee has received amount from Rasiklal Dhariwal, that is, the statement of an accused in MOCA case, the said statement has not been confronted to the assessee to verify whether the amount was actually paid to the assessee. It is further observed that no corroborative evidence has been produced or brought on record to substantiate the fact of alleged payment. The Tribunal has also considered the statement of Mr.Ansari, the accused in MOCA case, that the transaction took place in Karachi. However, nothing is brought on record to show as to how the alleged amount was transmitted from Karachi to India. It is further observed by the Tribunal that though the amount stood invested in Karachi, the assessee is not doing any business in Karachi. It is further observed that the assessee s premises was searched under Section 132 of the Act. Even during the search operations, no such incriminating material was found from the business / residential premises of the assessee which could suggest that some settlement took place in Karachi. The reliance placed on the confessional statement without corroborating was certainly unsafe to be relied upon. No substantial questions of law

Summary

Issues:
1. Deduction u/s.80IB for business setup by splitting/reconstruction.
2. Deduction u/s.80IB for alleged bogus/fabricated transactions.
3. Deduction u/s.80IB on interest income not derived from manufacturing.
4. Addition of business receipts based on confessional statement under MOCA Act.

Analysis:
1. The first issue revolves around the correctness of allowing deduction u/s.80IB for a business set up by splitting or reconstruction. The appellant argued that the business met the criteria, emphasizing ongoing proceedings under Section 263. The respondent countered citing acceptance of similar claims in previous years and the absence of the new business in the relevant assessment year. The court dismissed the appeal, considering the lack of the new business in the year under review.

2. The second issue concerns the deduction u/s.80IB in light of alleged bogus transactions. The appellant contended that the Tribunal erred in confirming the deduction without addressing these transactions. However, the respondent highlighted previous acceptance of independent business claims and the genuineness of the transactions, leading to the dismissal of the appeal.

3. The third issue questions the allowance of deduction u/s.80IB on interest income not related to manufacturing activities. The appellant argued against this allowance, but the court noted previous decisions in favor of the assessee and dismissed the appeal based on past rulings.

4. The final issue involves the addition of business receipts based on a confessional statement under the MOCA Act. The appellant argued for the admissibility of the statement, while the respondent raised doubts about its validity and lack of corroborative evidence. The court sided with the respondent, highlighting inconsistencies and lack of proof regarding the alleged payment, ultimately dismissing the appeal due to insufficient legal grounds.

In conclusion, the court dismissed the appeal, finding no substantial questions of law based on the presented arguments and evidence.