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2022 (8) TMI 776 - AT - Income TaxAddition made on account of disallowance of administrative services charged to TACO - HELD THAT - Respectfully following the Order of Hon ble Bombay High Court 2019 (5) TMI 200 - BOMBAY HIGH COURT and ITAT Pune in assessee s own case 2016 (4) TMI 993 - ITAT PUNE , the appeal of the revenue regarding Administrative service charges is dismissed. Thus, Ground Number 1 of the revenue is dismissed. Eligibility for deduction u/s.80IC - Whether assembly would constitute manufacturing? - HELD THAT - Revenue has not raised any ground of violation of rule 46A. AR argued that the Assessing Officer has never challenged the installation of machinery, but the AO has not allowed the deduction only on the ground that the Assessee is merely doing assembly and not manufacturing. DR could not rebut this fact. It is a fact that in the assessment order the assessee has not challenged the installation of machinery. The Audit Report filed under Rule 18BBB was before the AO and he has not pointed out any discrepancies in the Audit report. CIT(A) has allowed the appeal of the assessee stating that assembly would constitute manufacturing if new product is formed the clientele are different relying on various judicial pronouncement - CIT(A) has given the finding that both these conditions are fulfilled by the assessee. On perusal of the submission of the assessee we agree with the findings of the ld.CIT(A). It is observed that in the case of Tata Motors Locomotive company Ltd 1967 (2) TMI 22 - BOMBAY HIGH COURT has held that assembly of imported CKD parts into finished products constitute assembly. Therefore, we uphold the findings of the Ld.CIT(A) regarding assessee s eligibility for deduction u/s.80IC. Accordingly, the Ground No.2 of the Revenue is dismissed.
Issues:
1. Disallowance of administrative services charged to TACO 2. Deletion of addition made under section 80IC Analysis: 1. The case involved a dispute regarding disallowance of administrative service charges paid to TACO and the claim of deduction under section 80IC for a Pantnagar Plant. The Assessing Officer disallowed administrative service charges of Rs.7,37,35,000 and the claim of 80IC for the plant. 2. The Assessee appealed before the Commissioner of Income Tax (Appeals), where the appeal was partially allowed. Subsequently, both the Assessee and the Department filed Cross Objections/Appeals before the Appellate Tribunal. 3. The Assessee contended that the issue of payment to TACO had been previously decided in their favor by ITAT Pune and confirmed by the Bombay High Court. The Department accepted that the issue was in favor of the Assessee. 4. The Tribunal referred to previous judgments and upheld the decision in Assessee's favor, dismissing the Revenue's appeal regarding administrative service charges. The Tribunal found the facts of the case to be identical to previous decisions. 5. Regarding the claim under section 80IC for the Pantnagar Plant, the Department argued that the Assessee failed to substantiate the claim with necessary proofs. The Assessee, however, presented detailed documents and explanations supporting the manufacturing activities at the plant. 6. The Tribunal examined the documents provided by both parties and found that the Assessee had fulfilled the conditions for claiming deduction under section 80IC. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) regarding the Assessee's eligibility for the deduction. 7. The Assessee did not press the grounds raised in the cross appeal regarding education cess, leading to the dismissal of the grounds of appeal in the Cross Objection appeal. The Cross Objection appeal was then dismissed as withdrawn. 8. In conclusion, the Tribunal dismissed the appeal of the Revenue and the Cross Objection Appeal of the Assessee. The order was pronounced in open court on 10th June 2022.
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