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TMI Blog2025 (3) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... the afore-said, grounds are dismissed. Disallowance made u/s. 69A - FAA held that assessee had not received any cash compensation as alleged by the A.O., deleted the addition - HELD THAT:- The email communication cannot be considered as an evidence, demonstrating cash compensation transaction between the assessee and another Indian company. We have further observed, the first appellate authority has recorded a factual finding that in course of assessment proceeding, the A.O. had not made any independent enquiry either with Biacon Textile Ltd. or its parent company in Italy. When the assessee has denied of receiving any cash compensation, the logical thing to do for the A.O. was to make enquiry and bring enough corroborative evidence on record to prove receipt of cash compensation by taking up enquiry with the other party, who, allegedly paid cash compensation. Admittedly, no such enquiry has been taken up by the AO, to elicit the actual facts. Thus, in absence of any corroborative evidence on record to back his finding that the assessee has actually received the cash compensation no addition can be made merely on conjectures and surmises. Therefore, we uphold the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- under the normal provisions of the Act and book profit of Rs. 3,81,32,06,474/- u/s. 115JB of the Act. In course of assessment proceeding, the Assessing Officer (AO) noticed that the assessee had made substantial investment in assets capable of generating exempt income. Whereas, the assessee had not made any disallowance u/s. 14A read with Rule 8D. He, therefore, called upon the assessee to show cause why disallowance should not be made u/s. 14A read with Rule 8D. In response to the query raised, the assessee submitted that in the year under consideration it had shown exempt income of Rs. 4/- only. Thus, it was submitted that no disallowance in excess of the exempt income can be made. The assessee further submitted that since it had not incurred any expenditure for earning exempt income, no disallowance should be made. The A.O. however, did not accept the contentions of the assessee. Applying Rule 8D(2)(iii), he disallowed 0.5% out of the average value of investment towards expenses incurred for earning exempt income, in terms u/s. 14A of the Act. Ultimately, he worked out the disallowance at Rs. 5,19,76,494/-. 4. The assessee contested the aforesaid disallowance before first ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed that Rs. 48,50,000/- was received in two installments from Biacon Textiles India Pvt. Ltd. towards cash compensation for a defective machine purchased from its parent company in Italy. In this context, the A.O. further observed that the fact of receipt of cash compensation was also corrborated by an email communication received from Shri Dhaval Gandhi. Though, the assessee completely denied of having entered into any such transaction, however, rejecting assessee's explanation, A.O. proceeded to add the amount of Rs. 48,50,000/- u/s. 69A of the Act. 7. The assessee contested the afore-said addition before first appellate authority. 8. After considering the submissions made and evidences available on record, the first appellate authority, being convinced with the fact that the assessee had not received any cash compensation as alleged by the A.O., deleted the addition. 9. We have considered rival submissions and perused the materials available on record. It is evident that the A.O. has made the disputed addition primarily based on the statement recorded from Shri Amit Bhandari working as VP (Projects) with the assessee company and an email communication between the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of slump sale. Therefore, he held that the assessee is not eligible to claim deduction in respect to such undertaking. Accordingly, he disallowed assessee's claim. Subsequently, the A.O. having been appraised of the fact that the delay in filing the return of income was condoned by Central Board of Direct Taxes (CBDT), allowed the assessee's claim of deduction u/s. 80JJ /80JJA of the Act. However, he stuck to his decision of disallowing the deduction u/s. 80IA of the Act on the ground that the undertaking /unit was acquired by the assessee through a slump sale. 11. Being aggrieved with such disallowance, the assessee challenged it before the first appellate authority. 12. While considering assessee's submission in context of facts and materials on record, ld. CIT(A) being convinced that the conditions of section 80IA are fulfilled, allowed assessee's claim of deduction. 13. We have considered rival submissions and perused the materials on record. As discussed earlier, the A.O. disallowed assessee's claim of deduction u/s. 80IA of the Act primarily on two grounds. Firstly, the return of income for the year under consideration was filed belatedly and secondly, the plant an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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