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TMI Blog2013 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) is required to see whether on the basis of the return or, the accompanying documents as filed before the assessing officer, any prima facie adjustment could be made. It is further not open to the CIT(A) to remit set aside the matter to the file of the assessing officer. The CIT(A) may either delete or sustain the prima facie adjustment - Decided against the Revenue. Also, reliance is placed upon the case Khatau Junkar Ltd Vs. K.S. Pathania [1992 (2) TMI 67 - BOMBAY High Court ], wherein it was observed that in the absence of any specific provision in the Income Tax Act which disallows a deduction because a specific document specified in that section is not annexed to the return, the Income-tax Officer cannot, under clause (iii) of the proviso to section 143(1)(a), disallow a claim or a deduction because, in his view, adequate evidence in support of such a claim or deduction is not before him. He can disallow a claim for deduction only if he is satisfied, on the basis of the material which is before him, that the assessee is not entitled to such a deduction - Use of the phrases "prima facie admissible" in clause (ii) to the proviso and "prima facie inadmissible" in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.6,63,12,862/- was excluded from the gross total income while working out the deduction u/s 80-HH. The deduction u/s 10-B was not allowed on the ground that copy of approval of the Board appointed by the Central Government in exercise of the powers conferred by Section 14 of the Industries (Development and Regulation) Act 1951, was not filed along with the return of income, and further the copy of balance sheet indicated that no separate unit, which may be called as newly established 100 % export oriented undertaking had come in existence, and as such the conditions under sub-section (2) of Section 10-B are not fulfilled. So far as deduction u/s 80 HHC, the AO found that, as held by CIT (A) Meerut in Appeal No. 389/97-98/MRT dated 25.3.1998, the other income should be excluded for computing the profit u/s 80 HHC. For deduction u/s 43-B, it was observed that Section 44-AB stipulates to get the accounts of relevant previous year audited by an Accountant before the specified date (i.e. 30th September) and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant. Since the certificate submitted by the assesseee was from the acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected to the action of the CIT ( Appeals) and submitted that the CIT ( Appeals) could either sustain or delete the adjustment. It was not open to him to set aside the matter. It was further submitted that there is no requirement in the Act or Rules, framed thereunder to file donation receipt and approval letter along with the returns of income to substantiate the claim of deduction under section 80(G) and the every facts that the CIT ( Appeals) required further evidence from the assessee during the appellate proceedings, would show that in the absence of information along with the returns and accompanying documents no prima facie adjustment in respect thereof could be made. 7. In respect of the deduction under section 80HH of the Act, it was pointed out that the assessee is a multi-unit company having three distinct activities namely, (a) industrial undertaking manufacturing photo-copiers (b) industrial undertaking manufacturing toner developer and photo - receptors and (C) service/ trading activities. 8. It was submitted on behalf of the assessee that the assessee had claimed deduction under section 80HH on the profits of the toner unit only as per computation at page 43 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on surplus funds was held to be income from industrial undertaking for purposes of sec. 80HH and sec. 80I of the Act. 12. Vide ground of appeal no. 4 the assessee has assailed the prima facie adjustment made in respect of deduction claimed under section 10B of the Act. The assessing officer, while making the aforesaid adjustment, has held that the copy of approval was not filed alongwith the return and that the copy of balance sheet filed alongwith the return of income clearly indicated that no separate 100% EOU came into existence. The CIT (A) held that in order to claim deductions under section 10B of the Act the approval under sec. 10B of the Act was required to be filed alongwith the return of income. He however, held on the basis of details filed during the course of appellate proceedings that no unit was set up in STP area and that profits in the alleged unit were generated by inter-unit transfer only. The learned counsel for the assessee vehemently argued that there is no statutory requirement of filing approval under sec.10B along with the return of income and that the assessing officer could not have come to a prima facie conclusion that no EOU Unit was set up on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all for further details from the assessee before the assessing officer could reach a conclusion that the claim was prima facie inadmissible. 16. With regard to the ground of appeal no. 8 the assessee submitted that the CIT(A) erred in sustaining the levy of interest under sec. 234B and 234C of the Act. While praying for consequential relief, the assessee alleged that the CIT(A) erred in (a) not directing the assessing officer to compute the interest under sec. 234C of the Act with reference to the returned income and not the assessed income and thus not directing the assessing officer to verify whether payment of the first installment of advance tax was made on or before 15th June, 1996 for computation of interest under sec. 234C. 17. The learned DR relied on the orders of the lower authorities. 18. We have very carefully considered the rival submissions. The scope of section 143(1)(a) of the Act is by now well settled. The assessing officer can make prima facie adjustments only in respect of issues which are not debatable and for which no further information required from the assessee other than that contained in the return of income and the accompanying documents. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional details from the assessee. In that view of the matter too, the prima facie adjustment could not be sustained. Accordingly, grounds of apepal nos. 2, 2.1, 2.2, 3 and 3.1 stand allowed in favour of the assessee. 20. There is no requirement in law for approval under sec. 10B of the Act to be filed along with the return of income. The prima facie adjustment made on this ground cannot, therefore, be sustained. Further, the ground taken by the assessing officer that there is no separate unit under sec. 10B, which has come into existence cannot be judged on the basis of the balance-sheet alone without calling for further details from the assessee. The CIT(A) was in error in callining for additional details during the course of appeal and seeking to sustain prima facie adjustment on the basis of the appreciation of such further details. The ground is accordingly decided in favour of the assessee. 21. The prima facie adjustments under sec. 50HHG excluding other income and under section 43B for payment of superannuation fund, again cannot be sustained on the basis of the information contained in the return and other documents. We accept the submissions on the side of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given sufficient reason, for disallowing the deductions on all the heads viz., u/ss 80 G, 80HH, 10-B, 80-HHC, 43-B and royalty. He submits that ITAT was not legally correct in allowing the appeal against prima facie adjustments made by the AO, which were not supported by materials for allowing the return. The CIT (A) had gone though the details, for confirmation of the deductions and allowances. 6. Sri Rupesh Jain, learned counsel appearing for the respondent assessee, on the other hand, submits that under Section 143 (1) (a) of the Act, prima facie adjustments could not be made by the AO in respect of debatable issues on which there may conceivably be two opinions and issues in respect of which further information was found necessary, other than that the information and material contained in the return of income with supporting documents. He has relied on the opinion of Delhi High Court in S.R.F. Charitable Trust Vs. Union of India [193 ITR 95 (Del)], in which it was held that AO did not have power to disallow the claim for the reason that there is no proof in support of the claim. In such a case, it was open to the AO, to call upon the assessee, to furnish proof. The relevant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r claimed at a figure which is less than or in excess of the permissible limit. (ii) While computing income under the head 'Income from house property', deduction for 1/6th for repairs or for a new unit under the proviso to section 23(1) is not claimed, or claimed at a figure which is less than or is in excess of the permissible amount. (iii) While computing income under the head 'Profits and gains of business or profession', depreciation is claimed at rates lower or higher than those provided for in the Income-tax Rules. (iv) While computing capital gains, deduction of Rs.10,000 under section 48(2) is not claimed or claimed less or in excess of this amount. (v) Carried forward speculation loss set off against income from business or profession or against income under any other head. (vi) Loss under any head, other than under the head 'Profits and gains of business or profession', carried forward and set off against the current income. (vii) Carried forward loss of business set off against income of the current year under other heads. (viii) Old loss of more than eight assessment years set off against the current business income, if the information is available in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be granted because the section of the Income Tax Act itself says so. We, however, have not examined this aspect of the matter as it does not arise in the cases which are before us. But, in any event, in the absence of any specific provision in the Income Tax Act which disallows a deduction because a specific document specified in that section is not annexed to the return, the Income-tax Officer cannot, under clause (iii) of the proviso to section 143(1)(a), disallow a claim or a deduction because, in his view, adequate evidence in support of such a claim or deduction is not before him. He can disallow a claim for deduction only if he is satisfied, on the basis of the material which is before him, that the assessee is not entitled to such a deduction. The use of the phrases "prima facie admissible" in clause (ii) to the proviso and "prima facie inadmissible" in clause (iii) to the proviso also lend support to this interpretation. In its literal sense, "prima facie" means on the face of it. Hence, on the face of the return and the documents and accounts accompanying it, the deduction claimed must be inadmissible. Only then, can it be disallowed under the proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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