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TMI Blog2012 (11) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... VNESH SAINI: Both the appeals by different assessees are directed against different orders of the learned CIT(A)- III, Ahmedabad dated 09-01-2009, for assessment year 2005-06. Both the parties argued in ITA No.893/Ahd/2009 and submitted that the issue is same in both the appeals, therefore, order in that case may be followed in ITA No.894/Ahd/2009. ITA No.893/Ahd/2009 (Meghmani Industries Ltd.) 2. The assessee filed concise grounds of appeal. The learned Counsel for the assessee did not press grounds No.1, 3 and 4 of the appeal of the assessee. Same are accordingly dismissed as not pressed. The only effective ground of appeal argued by the learned Counsel for the assessee is ground No.2 of the concise grounds of appeal which reads as under: 2. In law and in facts and circumstances of the appellant s case, the learned CIT(A) has grossly erred in upholding the learned Assessing Officer s action of granting deduction u/s. 10 B of the Income-tax Act, 1961 after excluding the additional business income of Rs.147.06 lacs which was part of the appellant s share of additional business income of Rs.275.00 lacs out of the income of Rs.590.00 lacs surrendered by the appellant Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom its EOU, compared to its total income. The argument of the AO that evidence of realization of export proceeds has not been submitted, was invalid because what had been offered as the additional income and not the additional turnover. The additional income offered was allocated on the basis of turnover and so no detailed working in form No.56 G was required. Similarly, it was not correct for the AO to state that the assessee was avoiding the disclosure of tax free income. The assessee had been earning its income from EOU and had sought proportionate deduction in absence of all the requisite details. The authenticity of its claim was established by the audit report in form No.56 G itself. The decision in case of Bhavani Gems of ITAT, Mumbai Bench dated 21-12-2006 was referred to in this regard. The initiation of penalty proceedings and charging of interest were also assailed. 4. The learned CIT(A) however, did not accept the contention of the assessee and confirmed the order of the AO in rejecting the claim of the assessee u/s 10 B of the IT Act. The findings of the learned CIT(A) in Para 7 and 8 of the appellate order are reproduced as under: 7. The contentions were caref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts and payments of his family members who are the directors/bhagidars of Meghmani Group concern. He has also referred to PB-31 which is translated version of Annexure A-4/page- 93 under reference to prove that the seized paper contains the details of receipts and payments. The learned Counsel for the assessee also referred to PB-28 which is the bifurcation of the undisclosed income of Rs.5.90 Crores out of which Rs.2.07 Crores is surrendered in the case of the present assessee and Rs.2 Crores in the case of the other assessee M/s. Meghmani Dyes and Intermediates Ltd. The learned Counsel for the assessee submitted that the AO considering the facts of the case computed the income of the assessee from business only even by adding the additional income of Rs.2.75 Crores and also granted benefit to the assessee for exempt business income u/s 10B of the IT Act, but the additional income was not considered for the purpose of granting deduction u/s 10 B of the IT Act. He has submitted that the assessee has offered additional income on account of business which is also accepted by the AO under the head business income and the assessee has no other source of income. Therefore, the AO s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from the business of the company. If it was income derived from the business then such income was to be considered while working out the deduction allowable under section 80-IB. Since the entire profits of the business were entitled for 100 per cent deduction, the addition on account of such discrepancy would only result in the enhancement of the income of the business and would be entitled for such deduction. 5.2 He has further submitted that the Hon ble Gujarat High Court in the case of CIT Vs Suman Paper and Boards Ltd. 314/ITR/119 held that in the block assessment on undisclosed income deduction is admissible u/s 80 I/80 IA of the IT Act . In this it was held as under: The assessee claimed deduction under section 80-I/80-IA of the Income-tax Act, 1961, in respect of the total undisclosed income for the block period commencing from 1986-87 to January 6, 1996. The Assessing Officer rejected the claim of the assessee. The Tribunal on an interpretation of the provisions of sections 158BB(1), 158BB(4) and 158BH as applicable to the facts and circumstances of the case held that the assessee was entitled to deduction under section 80-I or section 80-IA in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directors/partners of Meghmani Group concern. In his further statement he has further explained that the amounts of receipts and payments noted in the seized paper belonged to both the assessees concern as well as misc. expenses of the said Companies (assessees). The details of the noting contained in the seized paper are mentioned at page 31 of the paper book which support the contention of the learned Counsel for the assessee that the details contained in the seized paper pertained to the unaccounted expenses which were ultimately surrendered for the purpose of taxation. The assessee submitted complete details before the AO at the assessment stage and made the claim of deduction u/s 80 IB of the IT Act. It is not in dispute that the assessee earned income from exports of goods eligible for deduction u/s 10B of the IT Act. The assessee surrendered the additional income on account of business income which is also accepted by the AO in computation of business income in the assessment order. The AO also granted exemption to the assessee in respect of income earned from business of exports u/s 10 B of the IT Act in computation of income. Therefore, the AO was not justified in hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted above in the light of the above discussions and the case laws referred to above, we are of the view the assessee is entitled for deduction u/s 10 B of the IT Act on pro-rata basis. We accordingly, set aside the orders of the authorities below and direct the AO to allow deduction to the assessee u/s 10B of the IT Act on pro-rata basis. In the result, concise ground No.2 of the appeal of the assessee is allowed. 8. In the result, appeal of the assessee in ITA No.893/Ahd/2009 is partly allowed. ITA No.894/Ahd/2009 (Meghmani Dyes Intermediates Ltd.) 9. The learned Counsel for the assessee did not press grounds No.1, 3 and 4 of the concise grounds of appeal. The same are dismissed as not pressed. Ground No.2 of the concise grounds of appeal reads as under: 2. In law and in facts and circumstances of the appellant s case, the learned CIT(A) has grossly erred in upholding the learned Assessing Officer s action of granting deduction u/s. 10 B of the Income-tax Act, 1961 after excluding the additional business income of Rs.108.74 lacs which was part of the appellant s share of additional business income of Rs.200.00 lacs out of the income of Rs.590.00 lacs surrendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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