2022 (5) TMI 850 - AT - Income Tax

Deduction u/s 80-IA - AO denied the same on the allegation that the assessee did not fulfil the conditions of Sec.80-IA(3) as well as Sec.80-IA(5). Another issue that cropped up was claim of higher depreciation while computing Book Profit u/s 115JB - As submitted that the erstwhile firm Meenakshi Distribution Service got converted into a corporate entity and it was not a case of splitting-up or reconstruction of business as wrongly understood by lower authorities - HELD THAT - CIT(A) has not rendered any independent findings and merely endorsed the view of Ld. AO. Keeping in view the submissions made before us, we deem it fit to set aside the impugned order and restore both the issues back to the file of Ld. AO for fresh consideration. The assessee is directed to demonstrate that it was entitled for deduction u/s 80-IA and also justify claim of higher depreciation u/s 115JB. Needless to add that adequate opportunity of hearing shall be granted to the assessee. Assessee appeal stand allowed for statistical purposes.

Summary

Issues:
1. Denial of deduction u/s 80-IA.
2. Claim of higher depreciation u/s 115JB.

Analysis:
1. The appeal by the assessee for Assessment Year 2013-14 concerns the denial of deduction u/s 80-IA. The main contention was that the conversion of the firm into a corporate entity was not a case of splitting-up or reconstruction of business as perceived by the lower authorities. The appellant requested the matter to be remanded to the Assessing Officer for fresh consideration due to the lack of independent findings in the impugned order. The details of the partnership and company were presented to support the argument. The Senior DR contended that relevant facts were not on record.

2. The assessee, a resident corporate entity engaged in wind energy generation and sale, was assessed under section 143(3) on 15.02.2016. The company, formed on 23.03.2012, claimed a deduction u/s 80-IA amounting to Rs.57.55 Lacs. However, the Assessing Officer denied the deduction citing non-compliance with the conditions of Sec.80-IA(3) and Sec.80-IA(5). Another issue arose concerning the claim of higher depreciation for computing Book Profit u/s 115JB, which was also disallowed. Despite the appeal to the first appellate authority, the Commissioner merely upheld the AO's decision without providing independent findings. Consequently, the matter has been brought before the Tribunal for further appeal.

3. Upon reviewing the impugned order, it was noted that the Commissioner did not offer independent findings but concurred with the Assessing Officer's stance. In light of the submissions made, the Tribunal deemed it appropriate to set aside the order and remand both issues to the Assessing Officer for fresh examination. The assessee is directed to substantiate its entitlement to the deduction u/s 80-IA and justify the claim for higher depreciation u/s 115JB. It was emphasized that the assessee must be given a fair opportunity to present its case during the reassessment.

4. The appeal was allowed for statistical purposes, with the order pronounced on 12th May 2022.