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TMI Blog2015 (12) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplier. In view of the over whelming evidences furnished by the assessee to support the claim of manufacture and sale of goods, we are of the view that the tax authorities are not justified in holding that the assessee was not manufacturing goods.Accordingly, we set aside the order of Ld CIT(A) and direct the AO to allow the claim for deduction u/s 80IB of the Act to the assessee. - Decided in favour of assessee. Disallowance of interest expenditure on unsecured loan - Held that:- This disallowance was made by following the decision taken by the AO for AY 2003-04. The Ld CIT(A) has also observed that there has been no fresh assessment in the set aside proceedings. However, he proceeded to examine this issue of genuineness of laons in AY 2004-05. However, there is no dispute with regard to the fact that the assessee had availed loans in the year relevant to AY 2003-04 and hence the disallowance of interest expenditure would depend upon the decision taken in AY 2003-04 on examination of loans in terms of sec. 68 of the Act. Accordingly, we are of the view that the Ld CIT(A) was not justified in examining the loans in AY 2004-05, which were taken in AY 2003-04. Accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Ld CIT(A) and then to the ITAT. The Tribunal, vide is order dated 25-11-2008 passed in ITA No.7144/Mum/2006, restored all the matters to the file of the assessing officer on the reasoning that the assessee was not given proper opportunity. When the appeal filed by the assessee for AY 2004-05 also reached the ITAT, the Tribunal, vide its order dated 26-06-2009 passed in ITA No.990/Mum/2008, restored all the matters again to the file fo the assessing officer by following the order passed by the Tribunal for AY 2003-04. Hence the impugned assessment order was passed by the AO in the set aside proceedings. 4. Since the assessing officer had made the impugned disallowances by following the order passed for assessment year 2003-04, a specific query was posed to both the parties as to the position of the assessment order passed by the AO in the set aside proceedings. The Ld A.R submitted that the assessee has not received any assessment order for AY 2003-04 so far. Hence the Ld D.R was directed to ascertain the factual position in this regard. In response, the Ld D.R filed a letter dated 02-11-2015 before the bench, wherein he has stated that the assessing officer has not furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en substituted. Provided also that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2006, and during the course of the proceedings for the fresh assessment of total income, a reference under sub-section (1) of section 92CA- (i) was made before the 1st day of June, 2007 but an order under sub-section (3) of section 92CA has not been made before such date; or (ii) is made on or after the 1st day of June, 2007, the provisions of this sub-section shall, notwithstanding anything contained in the second proviso, have effect as if for the words one year , the words twenty-one months had been substituted. Since the order was passed by the Tribunal for AY 2003-04 on 25.11.2008, the second proviso to sec. 153(2A) shall be applicable and hence the assessing officer should have passed the assessment order within nine months from the end of the financial year in which the order under section 254 is received by the Chief Commissioner or Commissioner etc. Since the notice u/s 142(1) had been issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is correct address and hence the Ld CIT(A) requested the AO to furnish remand report again, but the AO did not furnish any report. Hence the Ld CIT(A) proceeded to examine the additional evidences and adjudicate the issues. 10. With regard to the deduction claimed u/s 80IB of the Act, the Ld CIT(A) took the view that the assessee has failed to prove that he was manufacturing the goods. The Ld CIT(A) has also accepted the view of the AO that the assessee s unit has been established by reconstruction, since the partnership firm has been converted into a proprietary concern. He also accepted the view of the AO that the assessee could not have purchased machinery from M/s Mahavir Mercantile Co., since the supplier has denied the sale to the assessee. The Ld CIT(A) also took the view that the assessee did not furnish any other evidence to support the claim of machinery. Accordingly, he upheld the rejection of claim for deduction u/s 80IB of the Act. 11. It is noticed that the undertaking eligible for deduction u/s 80IB of the Act was initially formed as a partnership concern consisting of the assessee herein and another person. That other person retired from partnership and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s personal name, whereas the machinery was purchased in the concern s name M/s Master metals. This explanation of the assessee was not examined by the Ld CIT(A). 13. Since the machinery was held as not purchased, the tax authorities have taken the view that the assessee has not actually manufactured goods and hence the assessee was not eligible for deduction u/s 80IB of the Act. However, a perusal of the documents filed in paper book would show that the assessee has obtained permanent SSI certificate, which is normally given after commencement of production only that too after physical inspection. Further, the assessee has also furnished copies of registration made under Central Excise Act, Sales tax Act, Pollution control committee, import export code, electricity payment bills, labour register etc. Further, the books of accounts also support the claim of manufacture of goods. With regard to the purchase of machineries, the assessee has furnished copies of relevant bills supporting the claim of purchase of machinery and also the particulars of payments made. We notice that none of these evidences were not examined by the tax authorities. 14. Thus, we notice that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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