2019 (4) TMI 1154 - AT - Income Tax

Disallowance of deduction claimed u/s. 80IB in respect of gumbased unit - HELD THAT - In the assessment order under appeal, the AO did not make any analysis of the transfer price and has simply held that artificial profits in the case of Buddi Unit, have been created. Since it is a settled issue that the deduction 80IB is to be allowed, even if the goods produced by any eligible unit are capitively consumed, the AO observation that Buddi Unit is not eligible for deduction u/s. 80IB was not upheld by the Ld. CIT(A). As regards, section 80IA(8) and the transfer price of the goods, the facts in the year, under appeal, are same as in AY 2003-04. CIT(A) has by following the order of the Tribunal as well as the earlier order of the Ld. CIT(A) in respect of assessment year 2003-04, as aforesaid has rightly held that disallowance made by the AO was not confirmed even on the alternative reasoning which the AO had taken in AY 2003-04 and allowed the appeal of the assessee, which does not need any interference. There is no illegality or infirmity in the finding of the Ld. CIT(A) on the issues in dispute, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue.

Summary

Issues:
Appeal against deletion of deduction u/s. 80IB by Ld. CIT(A) - Assessment year 2005-06.

Analysis:

Issue 1: Deletion of deduction u/s. 80IB

The appellant Revenue challenged the Order of Ld. CIT(A) which deleted the addition made by the AO on account of disallowance of deduction from ?8,96,12,593 to ?4,97,57,537 claimed by the assessee u/s. 80IB of the I.T. Act, 1961. The AO reworked the deduction u/s. 80IB due to the allocation of profits among different units. The Ld. CIT(A) allowed the appeal of the assessee, leading to the Revenue's appeal before the Tribunal. The Ld. DR supported the AO's order, while the assessee's counsel relied on the Ld. CIT(A)'s decision. The Tribunal noted that the issue was previously dealt with for the assessment year 2003-04 and was decided in favor of the assessee by the ITAT. The Tribunal upheld the Ld. CIT(A)'s decision, stating that the disallowance made by the AO could not be confirmed based on alternative reasoning. The Tribunal found no illegality or infirmity in the Ld. CIT(A)'s findings and upheld the action of the Ld. CIT(A) on the issue, ultimately dismissing the Revenue's appeal.

Conclusion:
The Tribunal dismissed the Revenue's appeal against the deletion of deduction u/s. 80IB by the Ld. CIT(A) for the assessment year 2005-06. The decision was based on the previous ITAT ruling in favor of the assessee for the assessment year 2003-04, supporting the Ld. CIT(A)'s decision and finding no fault in the Ld. CIT(A)'s analysis.