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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI R. K. PANDA & MS SUCHITRA KAMBLE
This appeal is filed by the Revenue against the order dated 21/01/2014 passed by CIT (A)-II, Faridabad for Assessment Year 2009-10.
The grounds of appeal are as under:-
“ On the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in allowing claim of deduction u/s 80IC without declaring or giving any finding as to the main issue involved in the case that whether assessee had done any manufacturing activity eligible for claiming deduction to the goods purchased by it from its sister concern in the relevant year or not.
2. On the facts and circumstances of the case, Ld. CIT(A) is not justified in allowing claim of deduction u/s 80IC merely relying on the assessment order for subsequent year and report of Inspector gathered in subsequent year, ignoring the facts brought on record by the AO particularly that no manufacturing activity was done in relation to the goods sold by the assessee in the relevant year.
That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal.”
3. The returned income of Rs.NIL was assessed at Rs.1,52,55,100/-, the main addition being on account of disallowance of deduction u/s 80IC of the Income Tax Act, 1961. The other addition of Rs.25,000/- on account of non-deduction of tax at source resulted in a disallowance of Rs.25,000/-.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. DR submitted that the Assessing Officer has rightly made an addition as there was no manufacturing activity in the present assessment year. The Ld. DR submitted that the CIT(A) erred in allowing claim of deduction u/s 80IC without declaring or giving any finding as to the main issue involved in the case that whether assessee had done any manufacturing activity eligible for claiming deduction to the goods purchased by it from its sister concern in the relevant year or not.
At the time of argument none appeared for the assessee despite notice has been served to the assessee through whatsApp by the Department. The service is completed we are taking of the submissions made before the CIT(A) as the assessee’s submissions before us.
We have heard both the parties and perused the material available on record. It is pertinent to note that the CIT(A) has called for remand report and the Assessing Officer has categorically held that SPM Automatic is engaged in the supply of raw material from their unit located at Rudrapur, Uttrakhand. The assessee also replied to the remand report that the manufacturing activities of the assessee are genuinely carried out at the factory premises of the assessee at Rudrapur. The CIT(A) held as under:-
3.5. I have considered the facts of the case together with the submissions of the appellant and the remand report of the AO. The AO disallowed deduction u/s 80IC of the Income Tax Act since he received information from one of the buyers of appellant's products that it had purchased goods amounting to Rs.2,58,40,801/- from the Gurgaon Unit of the appellant company where no manufacturing facilities were located. Since no manufacturing facilities were located at Gurgaon Unit, the AO held that the appellant, in its Gurgaon unit had done the job work by making purchases from its sister concern, M/s SPM Auto Ltd., Faridabad and selling the same to RSB Transmission India Ltd. This resulted in disallowance of deduction u/s 80IC amounting to Rs. 1,57,23,099/-. During the course of appellate proceedings; the appellant gave confirmations from RSB Transmission India Ltd. that the entire purchases made by it from the appellant company were from Rudrapur Unit, which was engaged in manufacturing. The case was remanded to the AO to examine M/s RSM Transmission India Ltd., who after considering the reply of M/s RSB Transmission India Ltd along with other relevant evidences came to the conclusion that the appellant company has made its entire sales from Rudrapur Unit. Furthermore, the appellant also gave a copy of its assessment order for the assessment year 2010-11 as per which the genuineness of manufacturing activity of the appellant company have been accepted based on on-spot enquiry conducted by the Inspector attached with the office of the AO. Accordingly, the entire claim of deduction u/s 80IC(a)(ii) has been allowed by the AO. After a careful consideration of these facts, it is held that the AO erred in disallowing the claim of deduction u/s 80IC of the Income Tax Act amounting to Rs.1,52,30,100/-. The disallowance made by the A.O is thus deleted. Ground No. 1 of the appeal is thus allowed.
Thus, from the perusal of the assessment order as well as the CIT(A)’s order it can be seen that the manufacturing activity was very much carried out by the assessee in the present Assessment Year. Therefore, there is no need to interfere with the findings of the CIT(A). The appeal of the Revenue is dismissed.
In result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 07th September, 2018.