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TMI Blog2016 (9) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... ds manufactured by the assessee on its own is eligible for deduction, but not job work done for others. We do not agree with the stand taken by the A.O., for the reason that once the assessee is involved in the business of manufacture of goods or articles which is eligible for claiming deduction u/s 80IB of the Act, job work done in the spare capacity available also eligible for deduction u/s 80IB of the Act. We further observed that the said section does not place any restriction on job work receipts. Once, assessee proves that it is involved in the eligible business i.e. manufacturing of goods or article which is eligible for claiming deduction, it is immaterial whether it manufactures on its own or manufactures for others. So long as it is in the business of manufacturing of goods or articles, it is eligible for deduction u/s 80IB of the Act. - Decided in favour of assessee - I.T.A.No.197/Vizag/2012, I.T.A.No.596/Vizag/2014 - - - Dated:- 29-7-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri M.Bhupal Reddy, DR ORDER PER G. MANJUNATHA, Accountant Member: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cability of the provisions of section 44AB of the Act, even though gross receipts from the business exceeds threshold limit for getting accounts audited from a Chartered Accountant and furnished his report. It was further observed that the A.O. has failed to reconcile the gross receipts and tax deducted at source and also failed to examine correctness of payment of fringe benefit tax and applicability of disallowance of expenditure under the provisions of section 40a(ia) of the Act, for non-deduction of tax at source on various expenditures debited to P L account. The A.O. without examining the above issues, simply accepted the income declared by the assessee, therefore, the assessment order passed by the A.O. u/s 143(3) of the Act, is erroneous in so far as prejudicial to the interest of the revenue. With these observations, issued a show cause notice and asked to explain why the assessment shall not be set aside under the provisions of section 263 of the Act. 4. In response to show cause notice, the assessee submitted that the assessment order passed by the A.O. u/s 143(3) of the Act dated 20.11.2009 is not erroneous in so far as it is prejudicial to the interest of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty proceedings u/s 271B of the Act and applicability of the provisions of section 40(a)(ia) of the Act, the A.O. has examined all the issues at the time of assessment by calling for the details. Therefore, the assessment order passed by the A.O. is not erroneous in so far as prejudicial to the interest of the revenue. 5. The CIT, after considering the submissions of the assessee held that the assessment order passed by the A.O. u/s 143(3) of the Act dated 20.11.2009 is erroneous in so far as it is prejudicial to the interest of the revenue, as the A.O. has failed to verify the basic details in respect of allowability of deduction u/s 80IB of the Act. The CIT, further, observed that it is a mandatory requirement to file the audit report in form no.10CCB for allowing deduction u/s 80IB of the Act, however, the A.O. has failed to obtain the audit report and also failed to verify the claim made by the assessee in respect of job work receipts. The CIT, further, held that the activity undertaken by the assessee is not a manufacturing activity which is eligible for claiming deduction u/s 80IB of the Act. Though, the department has allowed deduction in the earlier years, it is a well s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submitted that as regards the eligibility of deduction u/s 80IB of the Act towards job work charges, it is a settled position of law that job work charge is eligible for deduction u/s 80IB of the Act. There is no bar in the provisions of section 80IB of the Act to claim deductions for job work charges. The assessee is into the business of manufacturing of goods and articles, which is eligible activity for the purpose of claiming deduction u/s 80IB of the Act. In addition to manufacturing activity, it has taken up the work of processing of goods for others in view of spare capacity available, therefore, the CIT was not correct in assuming jurisdiction by stating that job work charges are not eligible for deduction u/s 80IB of the Act. As regards other issues pointed out by the CIT, the A.R. submitted that all the issues pointed out by the CIT in the show-cause notice has been examined by the A.O. by issuing a specific questionnaire on two occasions dated 19.11.2009 and 27.11.2009. The assessee has furnished complete details with regard to the applicability of the provisions of section 40(a)(ia) of the Act, reconciliation of gross turnover to TDS and fringe benefit tax paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of assessment. The assessee further submitted that after e-filing of income returns made it mandatory, the filing of physical copy of audit report has been done away with, therefore, the CIT is not correct in stating that the assessee has not filed the audit report along with return of income. 8. We find force in the argument of the assessee, for the reason that the A.O. has examined the issue of deduction u/s 80IB of the Act at the time of completion of assessment. The A.O. has called for necessary details by a specific questionnaire dated 19.11.2009 and 27.11.2009. The assessee has filed complete details along with copy of audit report and also explained how job work charges is eligible for deduction u/s 80IB of the Act. The A.O. after considering the explanations furnished by the assessee and also taken into note of judicial judgments relied upon by the assessee allowed the claim of deduction u/s 80IB of the Act. Therefore, we are of the view that the CIT was not correct in coming to the conclusion that the A.O. has not conducted proper enquiry of the issues before completion of assessment. We further observed that as regards the eligibility of deduction u/s 80IB of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n perusal of the details filed by the assessee, we find that the A.O. has issued a specific questionnaire with regard to the issues pointed by the CIT which was addressed by the assessee to the A.O. at the time of completion of assessment. The A.O. after satisfied with the details furnished by the assessee chosen to accept the income declared by the assessee. Therefore, the CIT was not correct in coming to the conclusion that the A.O. has not conducted proper enquiry of the issues before completion of assessment. 10. The CIT, assumed jurisdiction to revise the assessment order on the sole ground that there is a lack of enquiry on the part of the A.O. in examining the issues referred to in the show cause notice. The CIT questions the issues right from the deduction u/s 80IB of the Act to the applicability of the provisions of section 40(a)(ia) of the Act for nondeduction of TDS on expenditure debited to the P L account. The assessee filed a paper book which contains the details furnished to the A.O. at the time of assessment. On perusal of the paper book filed by the assessee, we find that the A.O. has issued a detailed questionnaire in respect of deduction claimed u/s 80IB of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct dated 20.11.2009 it is not erroneous in so far as it is prejudicial to the interest of the revenue. 12. Now it is pertinent to discuss the case laws relied upon by the assessee. The assessee relied upon the decision of coordinate bench of this Tribunal, in the case of Sai Contractors Vs. ITO in ITA No.109/Vizag/2012. The coordinate bench of this Tribunal, after considering the ratio laid down by the Hon ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Limited (2011) 332 ITR 167 held that once the A.O. examined the issues, the CIT cannot assume jurisdiction on the same issues which is already examined by the A.O. by stating that the A.O. has conducted inadequate enquiry or there is a lack of enquiry. The relevant portion of the order is reproduced as under: 10. To invoke the provisions of section 263 of the Act, the twin conditions must be satisfied i.e. the order of the assessing officer is erroneous and further it must be prejudicial to the interest of the revenue. Unless both conditions are satisfied, the CIT cannot assume jurisdiction to pass order u/s 263 of the Act. It is not necessary that every order which is prejudicial to the interest of revenue is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgement and discretion on the basis of information available before him. In the present case on hand, the Assessing Officer after considering vouchers, made an round some addition of ₹ 1,00,000/- which is one of the possible view available for him, which the CIT shall not term it as lack of enquiry or non application of mind. Thus, it cannot be said that it is a case of lack of enquiry or non application of mind. 13. Considering the facts and circumstances of this case and also applying the ratio of the coordinate bench, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act dated 20.11.2011 is not erroneous in so far as it is prejudicial to the interest of the revenue. Therefore, we quash the order passed by the CIT u/s 263 of the Act and restore the assessment order passed by the A.O. u/s 143(3) of the Act dated 20.11.2011. 14. In the result, the appeal filed by the assessee is allowed. ITA 596/Vizag/2014 : 15. This appeal filed by the revenue, challenging the order of CIT(A), Visakhapatnam against the consequential order passed by the A.O. u/s 143(3) r.w.s. 263 of the Act. The assessing officer has passed consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X
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