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Income Tax Appellate Tribunal, DELHI BENCH “E”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
ORDER PER H.S. SIDHU, JM The Revenue has filed the present appeal against the impugned order dated 25/4/2013 passed by the Ld. Commissioner of Income Tax (Appeals)-IX, New Delhi on the following grounds:-
The DCIT, Circle 6(1), New Delhi is hereby directed to file an appeal in the above mentioned case before the Income Tax Appellate Tribunal, New Delhi on the following ground (s) of appeal:
1. Whether in the facts and circumstances of the case, the ld. CIT(A) erred in deleting the disallowance of deduction claimed u/s. 80IC, amounting to Rs. 76,02,262/- entirely on the submission of the assessee and completely ignoring the reasons given in the assessment order?
2. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law.
3. That the grounds of appeal are without prejudice to each other.
4. That the appellant craves leave to add, alter, amend or forego any ground(s) of the appeal raised above at the time the hearing.
The facts in brief are that the assessee company was engaged in the business of consultancy regarding design and development service to telecom manufacturing companies at its Delhi unit and in the manufacturing of printed circuit boards at the unit at Parwanoo.
The return of income for the AY 2007-08 was filed on 31.7.2007 declaring NIL income. The same was processed u/s. 143(1) of the I.T. Act, 1961. Subsequently, the case was selected for scrutiny through CASS and statutory notice u/s. 143(2) of the I.T. Act was issued and served. The assessment was completed u/s. 143(3) of the I.T. Act, 1961 vide order dated 11.12.2009 by the AO at the income of Rs. 48,84,220/-, making an addition of Rs. 1,31,250/- as deduction u/s. 80IC was not allowed.
Aggrieved with the assessment order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 25.4.2013 has allowed the appeal of the assessee.
Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal.
At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that Appeal of the Revenue may be allowed.
6. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records.
I have heard Ld. DR and perused the records, especially the impugned order passed by the Ld. CIT(A). I find that Ld. CIT(A) has elaborately adjudicated the issue raised in ground no. 1 in dispute vide para no. 5 to 6 from pages 8 to 9 of the impugned order as under:-
“5. The next ground of appeal is regarding disallowance of claim u/s 8OIC of Rs.76,02,262/-.
The Assessing Officer has relied on the assessment made for A.Y. 2005-06 wherein a similar claim u/s 8OIC was disallowed. The appellant has placed before me the order of CIT(A)-IX for A.Y. 2005-06.
Therein it has been held "9.0 I have carefully gone through the reasons for making the disallowance in the assessment order and have considered the written submissions as well as oral arguments of the Ld. AR. The basic issue involved in the appeal is disallowance of deduction u/s 8OIC. As mentioned earlier, the Id.
AO disallowed the said deduction holding that the Parwanoo unit was an extension of Delhi unit, the appellant had diverted the profits of Delhi unit to Parwanoo unit, in a period of 4 months with 4 employees only, the Parwanoo unit cannot' attain the production and revenue declared and that no remuneration was paid to Mr. Sankalp Srivastava, Director. It is seen that while stating the aforesaid findings in the assessment order, the Id. AO has neither given any basis therein for arriving at such conclusion nor has brought any incriminating material on record to support his stand. The Ld. AR has furnished satisfactory explanation to all the doubts raised by the Id. AO and has vehemently argued that the disallowance was made on surmises and conjectures without any basis. The Ld. AR has explained that the accounts of the two units are duly audited and the same show that both the units have entirely independent separate activities. It was averred by the Ld. AR that the Id. AO himself has accepted the figure of revenue and hence, his subsequent disallowance of deductions u/s BOIC is arbitrary. Even the discrepancies pointed out by the Id. AO as per the remand report, were satisfactorily explained by the appellant.
9.1 During the course of the appellate proceedings, the Ld. AR filed copies of various documents, e.g. rent agreement for the premises taken on lease in September, 2004 for the first time, new sales tax registration number obtained separately for the Parwanoo unit ESI and EPF registration got done for the employees of Parwanoo unit the first time invoices of the fixed assets purchased for Parwanoo unit and those of invoices, challans and gate passes for the sales. Quoting the provisions of section 80IC, the Ld. AR explained that all the conditions prescribed under the said section have been fulfilled by the appellant. It is further seen that the ratios of the decisions in the cases of CIT vs. Continental Engines Ltd., (2011) 60 DTR (Del) 40, and ACIT vs. Sobhagia Clothing Co., (2009) 125 TTJ (Del) 980, relied upon by the appellant are clearly applicable in its case.
9.2 In the aforesaid facts and circumstances of the case and in the light of the appellant's submission and the case laws relied upon by it. I am of the considered opinion that the disallowance of deduction u/s 80lC of the Act has been wrongly made by the Ld. AO. Accordingly, the ground nos. 1 to 5 are allowed to the appellant with the direction to the AO to grant deduction u/s 80lC to it."
5.1 As stated by the AO the facts of AY. 2007-08 were similar to the facts of AY. 2005-06. No further distinguishing or additional points regarding disallowance u/s 80lC were brought on record by the AO for this AY. As all facts have been considered by the predecessor in the order for AY. 2005-06, I shall be following the said order of AY. 2005-06 for the present appeal. The observations for AY. 2005-06 as given in para 5 above shall apply for AY. 2007-08 as well as no further facts were brought out by the AO in this AY. The addition of RS.76,02,262/- is accordingly deleted. Hence, the ground no. 2 is allowed.
In the result, the appeal is allowed.”
7.1 After going through the findings of the Ld. CIT(A), as aforesaid, we find that the facts of AY. 2007-08 were similar to the facts of AY. 2005-06. No further distinguishing or additional points regarding disallowance u/s 80lC were brought on record by the AO for this AY. As all facts have been considered by the then Ld. CIT(A) in his order for AY. 2005-06, therefore, the Ld. CIT(A) rightly followed the said order of AY. 2005-06 for the present appeal. The observations for AY. 2005-06 as given in para 5 above shall apply for AY. 2007-08 as well as no further facts were brought out by the AO in this AY. Therefore, in our considered opinion the addition in dispute was rightly deleted by the Ld. CIT(A) which does not need any interference on our part, hence, we uphold the same and dismiss the grounds raised by the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 10/02/2017.