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TMI Blog2016 (11) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... , entitled to the benefit of deduction under Section 80 IA. Finding of the CIT(A) is that the AO having accepted, on the basis of the assessee's books of account, that there was a loss in respect of the trading activities while dealing with the case under Section 80 HHC could not come to a contrary conclusion while dealing with the claim under Section 80 IA. The loss in the trading activities is still a loss. We are unable to hold that this finding which is essentially one of fact is perverse or absurd The Tribunal has upheld the findings of the CIT(A) on the same basis. Having done so, the Tribunal rightly remanded the issue to the AO to recalculate the deductions under Section 80 IA. - ITA No. 253 of 2007(O&M) - - - Dated:- 19-10-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than Rs. 20 lacs and therefore, the appeal is not maintainable in view of circular No. 21/2015 dated 10.12.2015 issued by the Central Board Direct Taxes under Section 119 of the Act. 5. It is admitted by the parties that the aggregate tax effect of all the questions raised in this appeal is more than Rs. 20 lacs. It is also agreed that the tax effect in respect of question No. 2 itself is less than Rs. 20 lacs. The question that falls for consideration is whether the tax effect for the purpose of the said circular is to be determined on the basis of the aggregate tax effect in the appeal or only on the basis of the value of the tax effect of the question on which the appeal is admitted. 6. In support of his contention that the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax effect' is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which 'tax effect' exceeds the monetary limit prescribed. In case where a composite order/judgment involves more than one assessee, each assessee shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issues against which the appeal is intended to be filed by the Revenue. The sustainability of the Revenue's case is not relevant at that stage. What is relevant is the tax effect in respect of the issues that the Revenue intends carrying in appeal. Moreover, paragraph 4 refers to the tax on the total income assessed and not the tax on those issues on which the Revenue succeeds or is even likely to succeed. When the Revenue decides to file an appeal, it is reasonable to presume that it expects to succeed in the appeal. It is axiomatic then that the tax effect must be determined with reference to the appeal as a whole and not to any particular issue in the appeal. 8. Paragraph 5 of the circular also supports Mr. Katoch's submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et out above in respect of which alone the appeal has been admitted. 11. The assessee admittedly carries on trading as well as manufacturing and export activities. Admittedly, the manufacturing activity is an eligible activity under Section 80 IA. The assessee is, therefore, entitled to the benefit of deduction under Section 80 IA. 12. The AO, however came to the conclusion that the sale price is not verifiable. In view thereof, he observed that the assessee's claim that it had incurred a loss qua its trading activities was not acceptable. He came to the conclusion that the profit earned by the assessee's eligible unit was not only on account of its manufacturing activities but also from its trading activities. It is difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial undertaking. The CIT(A) also accepted the contention that the AO had estimated the profits on mere guess work and that there would be no justification for applying a different yardstick and method for computing the results of the trading activities while dealing with claims under Sections 80 IA and 80 HHC. In other words the finding of the CIT(A) is that the AO having accepted, on the basis of the assessee's books of account, that there was a loss in respect of the trading activities while dealing with the case under Section 80 HHC could not come to a contrary conclusion while dealing with the claim under Section 80 IA. The loss in the trading activities is still a loss. 14. We are unable to hold that this finding which is ess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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