9911796707
TMI Blog2014 (11) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... matter before CIT(A), CIT(A) vide order dated 15.01.2010 partly allowed the appeal of the Assessee. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us and has raised the following grounds:- 1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the deduction u/s.80IB of the Act stating that disallowance of claim of deduction u/s.80IB of the Act on the sole ground that the assessee was not having factory license before it started manufacturing activities is without any merits. 2. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in not considering the point that the assessee has failed to prove that it has commenced the manufacturing activity on or before 31.03.2004, as stipulated in Section 80IB of the Act. 3. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the capital introduced by the assessee as the credit worthiness and genuineness of cash introduction is not proved by the assessee. 4. On the facts and circumstances of the case and in law, the learned CIT (A) has erred in deleting the addition made of Rs. 1,37,280/- on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligible for claiming as the same will not be considered as a substantiate proof and evidence as required to be eligible for claiming such a deduction. 1.2) The AO also stated that provisional certificate issued by the DIC for the purpose to complete the formalities before setting up the industry and commencement of production. Thereby the permanent DIG certificate is an authentic document on the basis of which the deduction could be claimed. 1.3) On this, the appellant has submitted that there is no specification under any law making a mention for the requirement of a permanent registration in order to claim 80IB deduction. The purpose of provisional certificate is the meet the requirements and other legal compliances from various authorities along with the commencement of the production activities of the unit and the same shall continue for a period of 5 years subject to the discretionary powers of the DIC authority for the same. 1.4) Thereby on proper analysis of the case, it can be observed that the contention of the appellant holds good and that the said ground raised by the AO cannot be held as a basis of disallowance. 1.5) Further, the AO has stated in the order that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resented in the hearing, the contention of the appellant seems to be correct. And I hereby delete the disallowance made by the AO of the deduction U/s. 80IB of the IT Act. 1.8) As a result, as regard ground no. 1, the appeal is allowed. 5. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 6. Before us, ld. D.R. supported the order of A.O and further submitted that the power was released to the Assessee on 29.12.2004 and hence it was not possible for the Assessee to start production before 31.03.2004 as stipulated by the provisions of Section 80IB of the Act. He further submitted that Assessee got DIC certificate on 29.12.2004 and the Assessee did not have factory licence as on 31.03.2004. He thus submitted that A.O was fully justified in disallowing the claim of the Assessee. The ld. A.R. on the other hand submitted that the year under appeal was third year of manufacturing activity. In the earlier 2 assessment years the claim of Assessee of deduction under 80IB was allowed in appeal by CIT(A). He also placed on record the copy of the order CIT(A) in the Assessee's own case for A.Y. 04-05 & 05-06 to demonstrate that Assessee has already been granted deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h into firm's account or otherwise would never challenge the color of the money and the character of the transaction. 2.1) Further, the appellant is with the argument that the AO cannot put himself in the arm of the businessmen to decide the mobilization of the funds/or organization of the profits; as; he may have thousands of reasons for the same. In the instant case of the appellant, mobilizing cash through transfer to a bank account cannot be the issue for making any addition U/s. 68 of the I.T Act. 2.2) Also that, a question as to the introduction of cash vis-a-vis the nexus of the past savings and credibility of the businessmen does not hold good; out of the fact that; a prudent businessman has a right to mobilize his funds in a manner to his choice and therefore, the addition on the basis of such reasoning is unwarranted. 2.3) Whereas on perusal of the order issued by the AO, the AO has treated such a capital infusion as unexplained U/s. 68 of the IT Act and added to the total income of the assessee. The AO has supported his judgment with the fact that neither proper satisfactory justification nor explanation were given, nor any documentary evidence or statement was be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confirmation and in the absence of confirmation the identity, creditworthiness and the genuineness of the transaction could not be proved and he accordingly treated the unsecured loan of Rs. 1,37,280/- as unexplained u/s. 68 of the Act. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) deleted the addition made by A.O by holding as under:- 6. With regard to ground no. 6, the appellant raised his contention that the AO has erred in levying penalty U/s. 271(1)(c) for the addition to the unsecured loan amounting to Rs. 1,37,280/-. 6.1) On perusal of the order as issued by the AO, it is observed that the AO has imposed penalty proceedings U/s. 271(1)(c) questioning the genuineness of the transaction so undergone by way of addition to unsecured loan. 6.2) On the other hand; the appellant has stated the fact that the appellant could not produce the confirmation of the party from whom the additional loan was been taken at the time of scrutiny and had assured the AO for addendum submission of the same on receipt of the same. But the same was not taken into consideration and the whole amount was added back. 6.3) Further, the lender of the amount is the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atistical purposes. 5th ground is with respect to deletion of prior period expenses. 16. A.O noticed that Assessee had debited prior period expenses of Rs. 40,093/-. In the absence of justification from Assessee, A.O disallowed expenses. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) deleted the addition by holding as under:- 4. With regard to ground no. 4; the appellant has raised his contention that the assessing officer has erred in disallowing the expenses to the extent of Rs. 40,093/- treating the same to be a prior period expense. 4.1) On perusing the order given by the AO, it is observed that the expenses amounting to the Rs. 40,093/- is disallowed as the same is related to the prior period and disallowed the same and added to the total income of the assessee as the same are not pertaining to the business activities of the year under consideration. 4.2) On the other hand, the appellant has submitted the fact of the case that these expenses are incurred as electricity expenses and the same are paid in the year under consideration out of the fact that the bills issuance is very much uncertain. So in such cases, payment basis of accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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