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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 ..... e learned ITAT is legally justified in allowing relief to the assessee holding that the ld. CIT (A) cannot call for additional details and also cannot set aside the claimed deduction to the AO for further verification in a case u/s 143 (I) (a)?" 3. Brief facts giving rise to the appeal, are that the assessee company filed its return of income, for the assessment year 1997-98 under Section 139 of the Income Tax Act 1961, on which assessment was made under Section 148 (1) of the Act. The AO in his explanatory sheet for adjustment under Section 143 (1) (a) of the Act, adjusted deduction under Section 80-G claimed at Rs.22,25,000/- u/s 143 (1) (a); the deduction u/s 80-HH was allowed with reference to gross total income and not with reference to the income of the undertaking, as claimed. The other income of 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on the ground that in the absence of details of the donees, it was not possible to verify whether the conditions laid down in section 80G(5)(v) were fulfilled. The CIT ( Appeals) had held that unless CIT's approval letter was filed along with the return of income, the assessing officer could not allow deduction under section 80G. The CIT ( Appeals) also referred to CBDT Circular No. 669 dated 25.10.1993, and held that such donation receipt / approval letter could be filed by the appellant even at a later date by moving an application under Section 154 of the Act. 5. The CIT ( Appeals) after obtaining the details of the donation from the assessee, set aside the prima facie adjustment made to the file of the assessing officer for deciding afresh. 6. The learned counsel for the assessee strongly objected 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at similar adjustment made in that year was deleted by the CIT ( Appeals) and there was no reason for the CIT to have come to a different conclusion in the order in appeal. According to the learned counsel the matter was clearly debatable and outside the purview of section 143(1)(a) of the Act. 11. With regard to the exclusion of other income, it was submitted on the side of the assessee that in the unitwise working the other income was excluded. In any case, according to the learned counsel, the assessing officer had to obtain further details and look into the nature of other income before deciding on the inclusion/ exclusion thereof from the profits derived from the industrial undertaking. The counsel drew our attention to the various cases decided by the Benches of the Tribunal wherein interest 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 alongwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal no.7 the assessee has objected to the setting aside of the prima facie adjustment of royalty amounting to Rs.6,13,98,998/- by the CIT(A) with the direction to allow the same after verifying the evidence regarding deduction and deposit of tax at source. The objection of the learned counsel for the assessee was to the basic approach of CIT(A) in setting aside the matter for a fresh verification. The counsel also pointed out that the assessing officer erred in making prima facie adjustment of Rs.3,93,18,297/- by wrongly taking the figure of royalty debited to the profit and loss account of Rs.10,28,92,768/- whereas the correct figure was Rs.613.99 lakhs only. It was once again submitted that in order to make prima facie adjustment, it was incumbent on the assessing officer to call 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) no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, especially in view of the order of the CIT(A) in favour of the assessee in assessment year 1991-92. The adjustment made cannot therefore be sustained. The CIT(A) was clearly in error in taking into account the audited unitwise profitability statement submitted after passing of the intimation under sec. 143(1)(a) of the Act and advocating an altogether different approach thereby enlarging the controversy which had been raised by the assessing officer while making the prima facie adjustment. 19. The adjustment, in respect of other income is linked to the aforesaid issue. As pointed out by the assessee in the unitwise working, the other income is exclused. In any case such claim requires verification at the end of the assessing officer, necessitating the assessing officer to call for 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, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under sec. 234C with reference to the tax due on the returned income and not on the assessed income, as clearly mandated by the section. The assessing officer would also verify whether the first installment of advance tax was paid on or before 15.6.1996 and allow credit accordingly. 24. The appeal is allowed as indicated above in the view that we have taken. It is therefore, no necessary to deal with the application for admission of additional evidence filed by the assessee." 5. It is submitted by Sri R.K. Upadhyay, learned counsel appearing for revenue that under Section 143 (1) (a) of the Act, the AO is empowered to verify the assessment on the basis of material disclosed in the return. In the explanatory sheet for adjustment under section 143 (1) (a) of the Act , the AO had 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the understanding of the said provision by the Department itself. Learned counsel for the petitioner has drawn our attention to Circular No. 549 reported at [1990] 182 ITR (St.) 1, at page 21, issued by the Central Board of Direct Taxes wherein examples have been given of adjustments which can be carried out. The prima facie adjustments mentioned at (ii) above can be made only on the basis of information available in the return or the accompanying accounts or documents and not on the basis of the past records of the assessee. Some examples of such prima facie admissible or inadmissible in respect of which adjustments can be made to the returned income or loss are : (i) While computing income under the head 'Salaries', standard deduction under Section 16(1) is not claimed, or 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 busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f no proof in support of the claim was available with the Income-tax Officer, he could have issued a notice under section 143(2) but he could not have unilaterally made this disallowance by seeking to invoke the provisions of the first proviso to section 143(1) because the said provisions were not applicable in the present case." 7. In Khatau Junkar Ltd Vs. K.S. Pathania [196 ITR 55 (Bom)], after extracting the CBDT circular dated 31.10.1989, it was observed :- "We are not here concerned with a case where, under any specific section of the Income Tax Act, a certain deduction or allowance cannot be granted unless certain specified documents are annexed to the return. In such a case, it may be possible to say that, in the absence of such a document, the deduction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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