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TMI Blog2017 (8) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are used for lifting and shifting work and ascending on the DG set and ignored the other machines used by the assessee for various purposes deployed by the assessee in its manufacturing process. After careful consideration, the CIT(A) held that the assessee is entitled to claim deduction u/s 80 IB of the Act. There is no need to interfere with the detailed finding on record given by the CIT(A) TDS u/s 194C - addition u/s 40(a) (ia) - Held that:- The provisions of Section 194C (a) does not become applicable in the instant ase because the assessee is an individual being the proprietor of M/s GSP Power Projects and M/s Cromwell Industries with the Assessment Year involved under reference is 2007-08 i.e after 1/6/2007 since for the year under consideration no liability for deduction of TDS u/s 194C (1) is attracted in the present case. The Assessing Officer’s attempt in disallowing the amount u/s 40(a)(ia) is unwarranted. There is no need to interfere with the said findings. Therefore, this ground of appeal for Assessment Year 2007-08 taken by the Revenue is dismissed. Excise Duty refund - Held that:- CIT(A) has rightly relied upon the Hon'ble Supreme Court decision in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reason as to how any of the circumstances mentioned in clause (a) to (d) of Rule ' 46A(1) had been found to exist so as to justify admission of the new additional evidence, therefore, it is evident that the new additional evidence had been admitted by the Commissioner of Income Tax (Appeals) contrary to the provisions of Rule 46A of the Income Tax Rules, 1962. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition in question by relying upon fresh evidence without complying with the provisions of Rule 46A and as a consequence, the order of the Ld. CIT(A) be restored back to his file to be decided de novo as per law after complying with the provisions of Rule 46A of the Rules allowing the Assessing Officer a reasonable opportunity of being heard and thereafter pass an order in accordance with law. I.T.A. No. 5683/DEL/2012 (A.Y. 2009-10) 1. The Ld. CIT(A) has erred on the facts and in the circumstances of the case in allowing the deduction of ₹ 20,88,47,617/- ₹ 12,61,26,152/- claimed by the assessee u/s 80IB 80IC of the Act out of profit derived from units set up in J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by the assessee u/s 80IB and ( ii) deduction of ₹ 2,05,80,440/- u/s 80IC of the Income Tax Act, 1961 even though the assessee was not manufacturing any article or thing. The deductions-claimed by him u/s 80IB and 80IC of the Income Tax Act, 1961 of profits in respect of a unit set up in Jammu and Kashipur amounting to ₹ 20,12,90,524/- and ₹ 2,05,80,440/- respectively were not allowable as it does not satisfy the requirements of the aforesaid sections . 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in allowing deductions u/s 80IB and 80IC of the Income Tax Act, 1961 disregarding the fact that the units is not doing manufacturing but is doing assembling of inputs such as engine, battery, alternator and the end product i.e. D. G. Set is combination of above inputs and thus no new product has come into existence and thus was not entitled to deduction u/s 80IB and 80IC of the Income Tax Act, 1961 . 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in allowing deductions u/s 80IB of the Income Tax Act, 1961 on the excise duty refund received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08, the Assessee furnished its return u/s 139 (1) of the Act on 31.10.2007 declaring a taxable income of ₹ 49,13,508/- after claiming a deduction of ₹ 24,66,58,751/- u/s 80IB out of the gross total income of ₹ 25,16,91,009/- which was subsequently processed u/s. 143(1) at the returned income. In the assessment u/s 143(3), the final taxable income was determined at ₹ 26,19,22,380/- in which the A.O. denied the assessee s claim of deduction u/s 80IB on the ground of the last year that the assessee was not manufacturing DG sets at Jammu Unit, (and adding it in the computation of total income, which is evidently not appropriate and cogent, as chapter VI deductions are made out of the Gross Total Income) and also effected an addition u/s 40(a)(ia) of the Act amounting to ₹ 1,03,50,120/-. 5. For A.Y. 2008-09, the return of income declaring income of ₹ 1,16,14,460/- was filed by the assessee on 30.09.2008. The assessee claimed deduction of ₹ 20,12,90,524/- u/s 80IB of the Act in respect of profits derived from two undertakings at Jammu in the name of M/s GSP Structures and M/s. GSP Power Projects. M/s. GSP Power Projects, Jammu was functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of deduction u/s 80IB and 80IC and in alternative, if the exempt units are held to be eligible to claim of such deduction. The assessee claimed deduction u/s 80IB of the Act in respect of Excise Duty refund of ₹ 4,20,70,384/- received by M/s GSP Power Projects, Jammu and ₹ 17,16,878/- received by M/s GSP Structures, Jammu. The AO relying on the decision of Liberty India vs. CIT 317 ITR 218 (SC) held that the excise duty refund as profits not derived from the industrial undertaking and not eligible for deduction u/s 80IB of the Act. 6. For A.Y.2009-10, on the similar lines of A.Y. 2008-09, the AO made additions. 7. The assessee preferred an appeal before the CIT(A) against the order passed u/s 143(3) dated 31-12-2008 for A.Y. 2006-07. During the course of appellate proceedings, the assessee filed an application for admission of additional evidences dated 12-02-2009 under Rule 46(1)(d) of the Income Tax Rules, 1962. The application alongwith the relevant documents in the paper book were forwarded to the Assessing Officer for her comments vide letter No. 1602-03 dated 13-02-2009 for compliance by 24-02-2009. The Assessing Officer vide letter No. 978 dated 24-02-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turer of both DG sets and pre-fabricated shelters, and there is no trading of the D.G. Sets and prefabricated shelter, assessee is entitled for deduction u/s. 80IB of the Act and granted the same. 9. For A.Y. 2007-08, the CIT(A) allowed the deduction u/s. 80IB to the assessee. As relates to issue of disallowance u/s 40(a)(ia) of the Act, the CIT(A) allowed the same by holding that for the year under consideration, no liability for deduction of TDS u/s. 194C(1) was attracted, therefore, the same disallowance was deleted by the CIT(A). 10. For A.Y. 2008-09, the CIT(A) allowed the deduction u/s 80IB of the Act on the basis of the earlier CIT(A) s orders for A.Ys. 2006-07 2007-08. The CIT(A) held that the facts and circumstances of the case for A.Y. 2008-09 are identical to earlier years in as much as the business activity during this year remains same as that of manufacturing of DG sets and pre-fabricated shelters, therefore, the assessee is held eligible for claim for deduction u/s 80IB of the Act in respect of its profits derived from M/s. GSP Power Projects, Jammu. The CIT(A) also allowed the claim of deduction u/s 80IB in respect of profits from M/s. GSP Structures, Jammu. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g DG sets at Jammu Unit, (and adding it in the computation of total income, which is evidently not appropriate and cogent, as chapter VI deductions are made out of the Gross Total Income) and also effected an addition u/s 40(a)(ia) of the Act amounting to ₹ 1,03,50,120/-. For A.Y. 2008-09 and 2009-10, relating to Excise Duty Refund, the AO rightly relied upon the decision in case of Liberty India vs. CIT 317 ITR 218 (SC) wherein it was held that the excise duty refund as profits not derived from the industrial undertaking and not eligible for deduction u/s 80IB of the Act. As relates to the other issues the Ld. DR relied upon the Assessment Orders. 13. The Ld. AR relied upon the orders of the CIT(A) in all the Assessment Years. The Ld. AR also pointed out that there was nothing to show by the Assessing Officer that Jammu Unit was only for the billing. In fact, the Assessee has given all the documentary proofs to submit that the manufacturing activity carried out by the Jammu Unit. The Ld. AR submitted that the CIT(A) has rightly allowed the 80IB and 80IC claims made by the Assessee as well as the refund of excise duty. The Ld. AR submitted that in respect of disallowance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enquiries from M M is concerned, there is only one order-sheet entry dated 15/4/2009 whereby the requisite documents were furnished by it and were placed on record by the A.O. I have perused these documents on record regarding M M which clearly establish the case of the appellant in disproving the unfounded inferences of the A.O from the analysis of the information (which was not at all desirable or necessary for conducting the verification aimed at by the A.O). It is established that both the documents No: 1580 1588 stand rather authenticated as nothing goes against the appellant from the material gathered on record by the A.O. Therefore, despite the fact that the A.O has made extensive enquiries beyond the scope of Rule 46A(3), these documents being supportive of the assessee stand admitted as verified. 10. As far as the document No: 1581, 1582-87 and 1589 of the paper book are concerned, the A.O has not made any effort for their verification as is apparent from the assessment folders in Volume II. Therefore, her silence on them establishes their authenticity abundantly, even though they are the records of various government functionaries. It is then presumably infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant before me, it is apparent that there is no infirmity in the above facts and it stands proved from the assessee's own books that the appellant was involved in a manufacturing process. Besides proving this fact from his own books, the appellant has also filed third parties (governmental authorities) evidences in the form of registration with SSI, Sales Tax authorities at Jammu, directorate of Industries and Commerce, Jammu and Kashmir and excise registration certificate which clearly state that the appellant has been registered with the statutory authorities for manufacturing of DG Sets/ Pre-fabricated shelters. These evidences speak by themselves that the appellant was manufacturing DG sets. For example, the analysis of the document No. 1520 pertaining to Central Excise Registration Certificate (Form RC), shows that in the registration number, AFVPP5777 KXMOOZ, the letter M stands for manufacture; it would have been D , if the assessee was a dealer , i.e. trader. Moreover, this document sufficiently shows that the unit is located in SIDCO Industrial Complax, Phase-II, Bari Brahmana Ind. Complex, Jammu, where there can't legally be any trading activity, but only indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of Central Excise, (1990) 183 ITR 577 (SC), CIT Vs. N.C. Budhiraja Co. Another, (1993) 209 ITR 412 (SC), and Arthur E. Newell Vs. CIT (1997) 223 ITR 776. The A.O's reference to the words manufacture , manufacture/produce and article or thing explained in para 4.2, 4.3 and 4.4 of her order, is only general, and rather proves the case of the assessee in all respects, and entitles the assessee to claim deduction u/s 80 IB of the I.T. Act, 1961. It can be seen that the assessee has produced certain additional evidence before the CIT(A) which was rightly admitted by the CIT(A). As per the facts and circumstances it cannot be held that CIT(A) violated Rule 46A, he had acted in a judicious and proper manner and his order being based on proper appreciation of facts and record cannot be called violative of a procedural provision. The CIT(A) is statutory first appellate authority and has independent power of calling for information and examination of evidences and poses conterminous power of assessment apart from appellate powers. Thus, the CIT(A) s order is to be upheld. The matter should not be set aside on general ground as it amounts to causing the assessee injustic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year involved under reference is 2007-08 i.e after 1/6/2007 since for the year under consideration no liability for deduction of TDS u/s 194C (1) is attracted in the present case. The Assessing Officer s attempt in disallowing the amount u/s 40(a)(ia) is unwarranted. There is no need to interfere with the said findings. Therefore, this ground of appeal for Assessment Year 2007-08 taken by the Revenue is dismissed. 17. As related to issue relating to Excise Duty refund, the CIT(A) has rightly relied upon the Hon'ble Supreme Court decision in case of Liberty India 317 ITR 218 wherein it is held that the payment f Central Excise Duty had a direct nexus with the manufacturing activity and similarly of the refund of Central Excise Duty also had a direct nexus with the manufacturing activity. The issue of payment of Central Excise Duty would not arise in the absence of any industrial activity. There is inextricable link between the manufacturing activity, payment of Central Excise Duty and its refund. Therefore, the CIT(A) has rightly directed the Assessing Officer to allow deduction u/ s 80IB on the Excuse Duty refund received by the assessee. There is no need to interfere with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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