M/S KRISHIVAL FOODS LIMITED (FORMERLY KNOWN AS M/S EMPYREAN CASHEWS PVT. LTD.,MUMBAI vs. ACIT, CIR-9(2)(2), MUMBAI

Facts

The assessee, M/s. Krishival Foods Ltd., claimed a deduction of Rs. 66,43,462/- under Section 80JJA for the assessment year 2016-17, related to the production of organic manure. The assessee used cashew shells, a bye-product of their cashew processing business, as a major raw material. The Assessing Officer (AO) disallowed the deduction due to lack of substantiation for the raw material cost and the genuineness of sales.

Held

The Tribunal noted that the AO had disallowed the deduction primarily due to the lack of documentary evidence for raw material costs and the genuineness of sales, as many parties to whom the organic manure was allegedly sold could not be contacted or did not respond to notices. The CIT(A) had confirmed the AO's order. However, the Tribunal found it appropriate to restore the matter to the CIT(A).

Key Issues

Whether the deduction claimed under Section 80JJA for the production of organic manure is allowable when the cost of raw materials (cashew shells) is not precisely ascertainable and the genuineness of sales transactions is not adequately substantiated.