M/S EAGAL SEEDS & BIOTECH LIMITED,INDORE vs. THE ACIT, 2(1), INDORE

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ITA 752/IND/2018Status: DisposedITAT Indore22 October 201917 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the issue of Section 80IA deduction to the AO for verification, noting it was allowed in subsequent years. The ad-hoc disallowances were deleted due to lack of specific reasons and evidence from the authorities below.

What were the facts?

The assessee claimed deduction under Section 80IA for profits from a windmill unit, which was disallowed by the AO and CIT(A). The AO also made ad-hoc disallowances for certain expenses. The assessee appealed the CIT(A)'s order.

What were the issues?

Whether the claim for deduction under Section 80IA made during assessment proceedings is admissible, and whether ad-hoc disallowances of expenses without proper justification are valid.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 143(3),Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI KUL BHARAT & SHRI MANISH BORAD

For Appellant: Shri Ajay Tulsiyan &, Smt. Shalini Mehta, A.Rs
For Respondent: Shri Rajiv Jain, Sr.D.R
Hearing: 15.10.2019Pronounced: 22.10.2019

Appellant by Shri Ajay Tulsiyan & Smt. Shalini Mehta, A.Rs Respondent by Shri Rajiv Jain, Sr.D.R. Date of Hearing: 15.10.2019 Date of Pronouncement: 22.10.2019 आदेश / O R D E R PER KUL BHARAT, J.M: This appeal by the assessee against order of the Ld. CIT(A)-1 Dated 20.7.2018 pertaining to the assessment

[ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] year 2012-13. The assessee has raised following grounds of appeal:

1. That the Ld. CIT(A) erred in not allowing the claim of deduction made under section 80IA in respect of the profits of Rs.30,60,276/- derived from the eligible power generation business through Wind Mill unit of the appellant. That on the facts and in circumstances of the case the claim of deduction having been made during the course of assessment proceedings is legally allowable to the appellant, which has also been allowed in subsequent years, is prayed to be now allowed.

2. That the Ld. CIT(A) erred in upholding the action of A.O. in disallowing the following expenses on adhoc basis. i. Rs.50,000/- out of expenses incurred on account of Processing Expenses. ii. Rs.50,000/- out of expenses incurred on account of Postage, Telegram and Telephone Expenses. iii. Rs.50,000/- out of expenses incurred on account of General Expenses. That on the facts and in the circumstances of the case, the above adhoc disallowances made without pointing out any defect in the claim of the appellant, are wrong and are prayed to be deleted. 3. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises.

2.

The facts giving rise to the present appeal are that case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was framed vide order

[ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] dated 10.3.2015. While framing the assessment, the A.O. made addition on account of disallowance of excessive depreciation of Rs.3,93,876/-. The A.O. also made disallowance by invoking provisions of section 14A of the Act of Rs.1,058/-. The A.O. further made adhoc disallowance of Rs.1,50,000/-. Thus, assessed income at Rs.5,47,99,199/- against the income declared in the tax return at Rs.5,42,54,265/-. Further, the A.O. did not entertain claim of deduction u/s 80IA of the Act. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions, dismissed the appeal, thereby sustained the finding of the A.O. Aggrieved against the order of the Ld. CIT(A), assessee is in present appeal.

3.

Ground No.1 of the appeal is against rejecting claim of deduction u/s 80IA of the Act as made during the assessment proceedings. Ld. Counsel for the assessee reiterated the submissions as made in the written synopsis. Ld. Counsel further submitted that in the subsequent years, claim has been duly allowed by the revenue authorities. The submissions of the assessee are reproduced as under:

[ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore]

4.

On the contrary, Ld. D.R. opposed these submissions and supported the orders of the authorities below. The Ld. D.R. submitted that assessee has not claimed in the return of income. Therefore, the claim made during the course of assessment would not be admissible and hence the authorities below have rightly rejected the same.

5.

We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. Undisputedly, the claim of deduction u/s 80IA of the Act has been allowed in the subsequent years. Ld. CIT(A) rejected the claim on the [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] basis that A.O. has not made any disallowance. The assessee himself while filing the return of income offered the same for tax. The assessee has relied upon various case laws. The judgement of the Hon'ble Supreme Couirt rendered in the case of CIT Vs. Mahalakshmi Sugar Mills Ltd. 58 CTR 138 to buttress the contention that it is the duty of the assessing authority to determine the true figure of the taxable income and consequential tax liability.

Further reliance is placed upon decision of the coordinate benches of this Tribunal rendered in the case of DCIT Vs. Lab India Instruments Pvt. Ltd. 93 ITD 0120. We do not agree with the reasoning given by the Ld. CIT(A) that the assessee himself had offered the impugned claim of deduction for taxation in the light of the judgement of the Hon'ble apex court rendered in the case of CIT Vs. Mahalakshmi Sugar Mills Ltd. (supra). The Ld. CIT(A) ought to have examined the issue of taxability if the [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] amount was not taxable by offering the same would not close the doors for the assessee to claim deduction if subsequently it is realised that the assessee was entitled for deduction u/s 80IA of the Act. We therefore, considering the totality of the facts and circumstances restore the issue of deduction to the file of the A.O. to verify the correctness of the claim if it is found that assessee has rightly claimed deduction u/s 80IA of the Act and has been allowed in subsequent years. Under the identical facts, the assessing officer would allow deduction as claimed by the assessee u/s 80IA of the Act. This ground of the assessee’s appeal is allowed for statistical purposes.

6.

Ground No.2 is against disallowance of the expenses on adhoc basis amounting to Rs.1,50,000/-. Ld. Counsel for the assessee has reiterated the submissions as made in the written synopsis. The submissions of the assessee are as under: 12

[ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore] [ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore]

7.

Ld. D.R. opposed these submissions.

8.

We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The A.O. disallowed this expenditure on adhoc basis on the basis that bills and vouchers and supporting documents were not found proper and were not made under the head of these expenses. The Ld. CIT(A) confirmed this addition by observing as under:

“4.2 The A.O. made the addition on the ground that supporting bills and vouchers were not found proper. It is obligatory on the part of the appellant to maintain proper bills and vouchers and to produce during the course of assessment proceedings. Since, the bills and vouchers are not properly maintained, the A.O. is justified in making the addition. Therefore, the addition made by the A.O. amounting to Rs.1,50,000/- is Confirmed. Therefore, the appeal on this ground is Dismissed.”

[ITA No.752/Ind/2018] [Eagle Seeds & Biotech Ltd., Indore]

9.

We find merit into the contentions of the Ld. Counsel for the assessee that there is a sweeping observation by the authorities below. No specific expenses have been pointed out to demonstrate the particular expenditure was not supported with evidence. Therefore, we direct the A.O. to delete this addition.

10.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order was pronounced in the open court on 22 .10.2019.

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