9911796707
TMI Blog2010 (6) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... peal after hearing the Learned Departmental Representative and taking into consideration the materials available on record. 3. Ground No.1 of the appeal of the revenue reads as under:- 1. The Ld.CIT(A) erred in law and on the facts of the case in allowing the assessee s claim of deduction u/s.80IB at Rs.2,35,043/- rejected by the A.O. as the mandatory audit report under section 80IA(3) r.w.s.80IB(13) was not submitted along with its return of income but, it was obtained on 19.12.2005 i.e. after the date of filing the return of income, ignoring the fact that the delay in filing of report can be considered procedural in nature and not the delay in getting the audit report as held in the case of Shivanand Electronics 209 ITR 63(BOM). 4. The Learned Commissioner of Income Tax(Appeals) has decided the issue as under:- 2. Ground no.1 is against the rejection of claim under section 80IB for Rs.2,35,043/-. The AO has discussed in para 4.4 of his order that the audit report under section 80IA(3) r.w.s. 80IB(13) was filed during the course of assessment proceedings and not within the due date under section 139(1). Relying on the decision of the Hon'ble Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the appeal of the assessee and directed the Learned Assessing Officer to allow deduction under section 80IB of the Act. 6. The contention of the Learned Departmental Representative before us was that in the above cited decision, there was merely delay in furnishing the Audit Report but the same was obtained within the prescribed time whereas in the instant case, the Audit Report was not obtained within the prescribed time and therefore, the above decisions were not applicable in the instant case and the Learned Commissioner of Income Tax(Appeals) was not justified in admitting the above Audit Report. 7. In our considered opinion, the crux of the issue is that whether the Audit Report was available before the Learned Assessing Officer at the time of the finalization of the assessment or not. The Audit report is required to be obtained for some purpose and that being to assist the Learned Assessing Officer in computing the liability of the assessee in accordance with the law. Thus, in our considered opinion, even if in cases, where Audit report was obtained with certain delay but was made available to the Learned Assessing Officer at the time of the finalization of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard. The AO has specifically noted that the income from installation and service charges was shown under Other Income and if the same were excluded then the profit of the undertaking would be a minus figure. It is seen from the records that Schedule-I shows the income from installation and services at Rs.27.08 lacs whereas schedule-J - Manufacturing Expenses include installation and services expenses of Rs.4.03 lacs. It is not made specific as to what amount of installation and service income include any other income as relatable to sales as per the terms in this regard. The expenditure claimed on installation and service being only Rs.4.03 lacs the entire income of Rs. 27.08 lacs for installation and services cannot be said to be linked to sale of manufacturing items. Obviously service income not connected with sale of the articles manufactured by the undertaking cannot be treated as derived directly from the business undertaking in the light of the decision of the Hon'ble Supreme Court in the case of Sterling Foods 237 ITR 579 and Pandian Chemicals Ltd. 262 ITR 278, However, the expenditure at Rs.4.03 lacs on installation and services being taken as manufacturing expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of the Hon'ble Supreme Court in the case of Sterling Foods 237 ITR 579 and Pandian Chemicals Ltd. 262 ITR 278, However, the expenditure at Rs.4.03 lacs on installation and services being taken as manufacturing expenditure, the same cannot be ignored as not attributable to manufacturing activity. In view of the facts set out above, the following directions are given to the AO in recomputing the deduction u/s. 801B : (i) The exact amount of installation and service charges shown as receipts and connected with the sale of manufacturing items as per the terms of sale shall be treated as pan of the profit derived from the industrial undertaking. (ii) The appellant shall furnish bifurcation of installation and service charges relatable to sale of manufactured items and those not connected with sale of manufactured items. (iii) The expenditure at Rs.4.03 lacs shown as installation and service charges shall be treated as pail of manufacturing expenses as shown in Schedule-J. (iv) Income shown under Other Income and not connected with the main activity of the industrial undertaking will not be eligible for deduction u/s. 80IB in the light of the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering services and therefore, cannot be held as integral part of sale of manufactured goods, therefore, in our considered opinion, income derived from such service charges cannot be treated as income derived from the industrial undertaking and the Learned Commissioner of Income Tax(Appeals) was not justified in directing the Learned Assessing Officer to allow deduction under section 80IB in respect of income from service charges relating to the manufactured goods of the assessee s industrial undertaking. Our above view finds support from the decision of Delhi Tribunal in the case of Sony India (P) Ltd. Vs. DCIT (2008) 114 ITD 448. We therefore, modify the order of the Learned Commissioner of Income Tax(Appeals) to the above extent and direct the Learned Assessing Officer to recompute deduction allowable under section 80IB in light of the discussion made hereinabove and also direct the assessee to provide bifurcation of installation charges and services charges of own manufactured goods separately before the Learned Assessing Officer as and when asked by the Learned Assessing Officer. Thus, this ground of appeal of the revenue is partly allowed. 13. Ground no.3 of the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) held as under:- 4.2 It is seen from the details furnished, which are claimed to have been furnished before the AO also on the relevant account copies that some of the cases were with Permanent Account Numbers and specific address whereas the payments were made through account payee cheques with specific address, the same can be taken as adequate proof there being PAN and complete address and rest of the cases where payments were by cash and address details are not available, the same cannot be taken as proved beyond doubt. In this view of the matter, I am to hold that all the cash payments where address of the payees are not furnished to be disallowed as not proved. The appellant shall furnish the necessary details to arrive at the relevant allowable expenses. This ground is treated as partly allowed. 16. The Learned Departmental Representative contended that the Learned Commissioner of Income Tax(Appeals) was not justified in deleting the addition without giving any clear finding on the issue and the Learned Commissioner of Income Tax(Appeals) has actually restored the issue back to the file of the Learned Assessing Officer which he was not permitted after 1.06.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und No.1 of the Cross objection reads as under:- 1. The Learned C.I.T.(Appeals) erred in not quantifying the deduction available u/s.80-IB of the Income Tax Act. The assessee submits that so far as the income arising out of the installation charges on which no supply of machineries have been made should have been considered for qualifying the profit. In this respect the assessee submits that the Net Profit received by the assessee be considered as profit not eligible for deduction u/s.80-IB of the I.T.Act. 21. We have heard the Learned Departmental Representative and perused the materials available on record. The above issue has also arisen out of the direction of the Learned Commissioner of Income Tax(Appeals) which has been quoted above while deciding ground no.2 of the appeal of the revenue. In our considered opinion, the issue is squarely covered by the decision of the Hon'ble Special Bench of the Tribunal in the case of Lalsons Enterprises Vs. DCIT (2004) 89 ITD 29 (Del)(SB), wherein it was held that if any receipt is to be taken out of the profits of the business on the footing that it is not derived from the industrial undertaking, it seems only fair and reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
