2019 (1) TMI 284 - AT - Income Tax

Deduction u/s 80IA - return was filed in response to notice u/s 153A - entertainment of fresh claim - Held that - In the instant case, when the return was filed in response to notice u/s 153A, the assessee did not claim the deduction since the taxable income as per the computation of income was zero. If the scrutiny assessment results in to positive income it is obligation on the part of the AO to allow all the statutory deductions including the deduction u/s 80IA for arriving the taxable income. As during the pendency of proceedings, when it has come to the notice of the assessee that there was taxable income, the assessee itself had claimed the deduction and was entitled for deduction u/s 80IA. The assessee made the claim before the AO and even after allowing the deduction claimed by the assessee, the resultant income would not go to reduce the returned income originally. There is no dispute that the assessee is entitled for deduction u/s 80IA. Therefore, we are of the considered opinion that it is injustice to deny the claim by appellate authorities who are permitted to entertain the fresh claim, when assessee makes the bonafide claim. The assessee s case is squarely covered by the decision in the case of CIT Vs. G.M.Knitting Industries Pvt. Ltd. 2015 (11) TMI 397 - SUPREME COURT as well as the decision of Hon ble Delhi High Court in the case of Vedanta Ltd. 2018 (5) TMI 355 - DELHI HIGH COURT and we hold that the assessee is entitled for the deduction u/s 80IA. Accordingly, we direct the AO to allow the deduction u/s 80IA of the Act. For the quantum of deduction, compliance of statutory requirements for claiming the deduction u/s 80IA was not discussed in the assessment order. Therefore, we remit the matter back to the file of the AO for limited issue of deciding the quantum of deduction and for obtaining the required details such as audit report etc. before allowing the deduction. Accordingly we direct the AO to verify the documents placed by the assessee during the assessment proceedings and allow the eligible deduction u/s 80IA. - Decided in favour of assessee for statistical purpose.

Summary

Issues Involved:

1. Admission of additional ground.
2. Deduction under Section 80IA.
3. Consumption of husk expenditure for captive power plant.
4. Recomputing income without incriminating material.

Detailed Analysis:

1. Admission of Additional Ground:
The assessee filed an additional ground contending that the addition made by the Assessing Officer (AO) was not based on seized material and thus should be deleted. The Tribunal admitted this additional ground for adjudication as it was purely a legal issue requiring no further enquiry.

2. Deduction under Section 80IA:
The assessee originally filed the return for the A.Y. 2010-11 declaring a total income of ?67,08,152/- without claiming any deduction under Section 80IA. After a search under Section 132, the assessee filed a return declaring nil income and again did not claim the deduction. During the assessment proceedings, the AO observed a computation mistake and the assessee subsequently filed a revised return claiming the deduction under Section 80IA. The AO rejected this claim, stating that the revised return was barred by limitation. The CIT(A) upheld this decision, relying on Section 80AC and relevant case law. However, the Tribunal found that the assessee had filed the return within the due date but did not claim the deduction due to a computation error. The Tribunal held that the AO should allow the deduction under Section 80IA as the assessee is entitled to it for 10 consecutive years from the initial assessment year. The Tribunal directed the AO to verify the necessary documents and allow the eligible deduction.

3. Consumption of Husk Expenditure for Captive Power Plant:
The AO estimated the husk expenditure at 55% of total consumption, whereas the assessee estimated it at 10%. The Tribunal referred to its earlier order in the assessee’s own case for A.Ys 2012-13 and 2015-16, where the consumption of husk expenditure was estimated at 10%. Accordingly, the Tribunal directed the AO to recompute the income estimating the husk expenditure at 10%.

4. Recomputing Income Without Incriminating Material:
The additional ground raised by the assessee contended that the AO recomputed the income without any incriminating material. The Tribunal observed that the AO did not make any addition but only corrected the computation of income. Therefore, no incriminating material was necessary for this correction, and the Tribunal dismissed this additional ground.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes. It directed the AO to allow the deduction under Section 80IA after verifying the necessary documents and recompute the income estimating the husk expenditure at 10%. The additional ground regarding recomputing income without incriminating material was dismissed.