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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’: NEW DELHI
Before: SHRI CHANDRA MOHAN GARG, & SHRI L.P. SAHU,
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
These three appeals have been filed by the assessee and directed against the order of the CIT(A)-I, New Delhi, dated 17/09/2013 passed in first appeal No. 459/2011-12 for AYs 2008-09 to 2010-11. Since all the three appeals pertain to same common order for the sake of convenience and brevity.
The assessee has raised the following grounds of appeal in all the three appeals:
A.Y. 2008-09
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] under section 153A/143(3) is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search.
3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making addition of Rs.15.91,792/- being income from sale of scrap treating the same as not eligible for deduction under section 80-IB of the Act.
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law'in not following the judgment of the jurisdictional Delhi High Court in the case of Sadhu Forgings Ltd. (2011) 336 ITR 444 (Del) which is squarely applicable to the facts of this case.
3 to 6793/Del/2013 5. On the facts and circumstances of the case! the learned CIT(A) has erred both on facts and in law in confirming the disallowance of Rs.1.25,000/- under Section 14A of the Act read with Rule 8D.
6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in ignoring the provisions of Rule 8D.”
A.Y. 2009-10
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] under section 153A/143(3) is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated and the order passed under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search.
3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making an addition of Rs.5,69,742/- being income from sale of scrap treating the same as not eligible for deduction under Section 80-IB of the Act.
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not following the judgment of the jurisdictional Delhi High Court in the case of Sadhu Forgings Ltd. (2011) 336 ITR 444 (Del) which is squarely applicable to the facts of this case.”
A.Y. 2010-11
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making an addition of Rs.2,64,039/- being income from sale of scrap treating the same as not eligible for deduction under Section 80-IB of the Act.
3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not following the judgment of the jurisdictional Delhi High Court in the case of Sadhu Forgings Ltd. (2011) 336 ITR 444 (Del) which is squarely applicable to the facts of this case.
Ground Nos. 1 & 2 A.Y. 2008-09
We have heard the rival submissions and have perused the relevant material on record, inter alia the assessment order, 4 Bench, New Delhi in assessee’s own case in for AY 2006-07 dated 27.05.2015, as relied upon by the assessee, to submit that the issue is covered in favour of the assessee. The ld. DR strongly supported the orders of the authorities below and submitted that the proceedings initiated u/s 153A r.w.s 143(3) of the Act are legal and valid. However, he could not controvert the fact that in the similar set of facts and circumstances, the Tribunal order dated 27.5.2015 [supra] the proceedings u/s 153A/143(3) of the Act has been declared as null and void. The relevant operative paras of the Tribunal order [supra] read as follows:
“3. Since the issue raised in ground nos. 2 to 6 is legal in nature and going to the root of the matter, we preferred to adjudicate it first.
We have heard and considered the arguments advanced by the parties on the issue, material available on record and the decisions relied upon in this regard.
5. The facts in brief are that the assessee belongs to Jakson Group of Companies headed by Shri S. K. Gupta and is in the area of assembly of DG Sets. The search operation was conducted on 10.02.2010 in the group. Notice u/s 153A was issued and in response the assessee filed return of Rs.25,72,304/- and assessment was framed u/s 153A r.w. s.143(3) of the Act. During the course of assessment proceedings the assessee questioned the validity of initiation of proceedings u/s 153A of the Act on the basis that no incriminating material 6 to 6793/Del/2013 was found during the course of search and the assessment u/s 143(3) was already framed before the date of search. The AO did not agree with the assessee and rejected the objection with this finding that there was no requirement that an assessment made u/s 153A of the Act should based on any material seized in the course of search. The AO also made disallowance of Rs.12,32,226/- on account of scrap sale for the purposes of deduction u/s 80IB of the Act and disallowance of Rs.61,412/- u/s 14A of the Act in the assessment framed.
6. The assessee questioned the validity of above assessment both on initiaon of proceedings u/s 153A of the Act in absence of incriminating material found during the course of search and in absence of pendency of the assessment on the date of search as well as the disallowances made, but could not succeed.
7. In support of legal issue raised in ground nos. 2 to 6, the ld. AR submitted that in the present case assessment was completed u/s 143(3) of the Act, where the issue of deduction u/s 80IB was elaborately investigated and discussed. He contended that the proceedings initiated u/s 153A are bad in law as no incriminating material belonging to the assessee being found during the course of search. In support he placed reliance on the following decisions: i) Al-Cargo Global Logistic Ltd. vs. ACIT - 137 ITD 287 (Mum.)- (S.B); ii) DCIT vs. Devi Dayal Petro-Chemical Pvt. Ltd. - ITA Nos. 5430 to 5436/Del/2013, C.O. Nos. 83 to 88/Del/14 dated 10.9.2014; 6 iii) SSP Aviation Ltd. vs. DCIT - 346 ITR 177; iv) Kusum Gupta vs. DCIT - ITA No. 4873/Del/2009 dt. 28.3.2013; v) ACIT vs. Asha Kataria - ITA No. 3105/Del/2011 dated 20.5.2013; vi) Sanjay Aggarwal vs. DCIT - ITA No. 3184/Del/2013 dt. 16.2.2014; vii) Jai Steel India vs. ACIT - 259 CTR 281 (Raj.); & viii) CIT vs. Anil Kumar Bhatia - 352 ITR 493 (Del.).
7 to 6793/Del/2013 ix) Jakson Engineering Ltd. Vs. ACIT & Ors. ITA Nos. 349/Del/2013 (2005-06) to 2007-08) & ors. Order dated 11.04.2014. x) Raj Kumar Chawla Vs. ACIT ITA Nos. 1682/Del/2013 and ors. (A.Ys. 2004-05 & ors) order dated 17.02.2015.
Learned CIT DR on the other hand submitted that there is no need of finding of incriminating material during the course of search to justify the validity of assessment framed under sec. 153A read with sec. 143(3) of the Income-tax Act, 1961 and the only requirement is that search has been conducted at the premises of the assessee under sec. 132 of the Act. In support, he placed reliance on the following decisions: i) CIT vs. Fila Tex India Ltd. - ITA No. 269/2014 dated 14.7.2014 (Del.); ii) Canara Housing Development Co. vs. DCIT - ITA No. 38/2014 dated 25.7.2014 (Karnataka). iii) CIT vs. Anil Kumar Bhatia 24 Taxman.com 98 (Del). iv) Promain Ltd. Vs. DCIT 95 ITD 489 (Del) (SB). v) M.B. Lal 279 ITR 298 (Del) vi) Dr. A.K. Bansal, 355 ITR 513 (All). vii) ITO vs. Varia Pratik Engineering 120 TTJ 1 (Ahd) viii) CIT vs. Raj Kumar Arora, ITA No. 56/2011 (All. H.C.) ix) DCIT vs. Apoorva Extrusion Pvt. Ltd. & ors. ITA Nos. 3308/Del/2010 (A.Y. 2002-03) & ors. Order dated 09.10.2014.
9. Having gone through the orders of the authorities below, we find that the Learned CIT(Appeals) has rejected the contentions of the assessee on the issue of validity of assessment framed under sec. 153A read with sec. 143(3) of the Income-tax Act, 1961 in absence of incriminating material found during the course of search and in the absence of the pendency of the assessment as on the date of search on the basis that for framing assessment under sec. 153A, no such requirement is there and the only requirement is that search has been conducted under sec. 132 of the Act. 7 8 to 6793/Del/2013 10. Having gone through the decisions cited by the learned AR including the decision of Special Bench of the ITAT in the case of AL Cargo Global Logestic Ltd. vs. CIT (supra), we find that the ratio laid down therein, supports the contentions of the assessee on the issue. It reads as under: "58. Thus, question No. 1 before us is answered as under :- (a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment year separately : (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means (i) books of account, other documents, found in the course of search but not produced in the course of original 8 assessment, and (ii) undisclosed income or property discovered in the course of search."
The issue raised before the Special Bench was as to whether scope of assessment u/s 153A encompasses additions not based on any incriminating material found during the course of search? 12. In the case of Kusum Gupta (supra) also the return was processed u/s 143(1) of the Act and time limit for issuance of notice u/s 143(2) had expired on the date of search and it was held that no assessment was pending in that case and thus there was no question of abatement of assessment. Therefore, the addition in the assessment u/s 153A would be made only on the basis of incriminating material found during the search. The Delhi Bench of the Tribunal in its recent decision on the issue in the case of Shri Kabul Chawla (supra) and others vide order dated 23.5.2014 has expressed the similar view. It has also discussed the decision of Hon'ble Jurisdictional Delhi High Court in the case of CIT vs. Anil Kumar Bhatia (2012) 211 Taxmann 453 (Del.), while deciding the issue. The relevant para No. 8 & 9 in this regard is being reproduced as under :-
9 to 6793/Del/2013 "8. We are unable to accept the contention advanced on behalf of the Revenue for the reason that if both the pending and completed assessment were to be taken on same pedestal, then there was no need to enshrine second proviso to sec. 153A( 1) providing that the pending assessments within the period of six assessment years shall abate. The Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra) dealt with a situation in which some incriminating material was found in respect of a non-pending assessment. It was in that background that the Hon'ble High Court held that sec. 153A applies if incriminating material is found even if assessments are completed. The question as to whether any addition can be made in respect of completed assessments when no incriminating material was found, was apparently left open. However, we find that there are sufficient indirect hints given by the Hon 'ble Delhi High Court in the case of Anil Kumar Bhatia (supra) about not making of any addition in respect of an assessment year for which the assessment is already completed unless some incriminating material is found during the course of search. This can be seen from the following observations of the Hon'ble High Court :- "20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search."
The above extracted observations of the Hon'ble High Court, which are though obiter dicta, make the point clear that where an assessment order has already been passed for a year(s) within the relevant six assessment years, then also the A.O is duty bound to reopen those proceedings and reassess the total income but by 'taking note of the undisclosed income if any, unearthed during the search'. The expression 'unearthed during the search' is quite significant to denote that in respect of completed or non-pending assessments, the Assessing Officer is albeit duty bound to assess or reassess the total income but there is a cap on the scope of additions in such assessment, being the items of 10 to 6793/Del/2013 income 'unearthed during the search'. In other words, the determination of 'total income' in respect of the assessment years for which the assessments are already completed on the date of search, shall not be influenced by the items of income other than those based on the material unearthed during the course of search. There is not and cannot be any quarrel over the proposition that the Assessing Officer has no option but to determine the total income of the assessee in respect of the relevant six assessment years. However, the scope of such determination of total income is different in respect of the years for which the assessments are pending vis-a-vis the years for which assessments are non-pending. In respect to the assessment years for which the original assessments have already been completed on the date of search, the total income shall be determined by restricting additions only to those which flow from incriminating material found during the course of search. If no incriminating material is found in respect of such completed assessment, then the total income in the proceedings u/s 153A shall be computed by considering the originally determined income. If some incriminating material is found in respect of 11 such assessment years for which the assessment is not pending, then the 'total income' would be determined by considering the originally determined income plus income emanating from the incriminating material found during the course of search. In the other scenario of the assessments pending on the date of search which would abate in terms of second proviso to sec. 153A( 1), the total income shall be computed afresh uninfluenced by the fact whether or not there is any incriminating material. In fact, this is the position which follows when we read the judgment of the Hon'ble Delhi High Court in Anil Kumar Bhatia (supra) in juxtaposition to the special bench order in the case of All Cargo Global Logistics Ltd. (supra). The other judgment relied by the Ld. DR in the case of Madugulu Venu (supra) also talks about the need for making fresh assessment in respect of the assessment years for which the assessments are not pending on the date of search but does not set out the scope of such assessment, which is the issue before us."
We, thus, find that the decision of the Hon'ble Jurisdictional Delhi High Court in the case of Anil Kr. Bhatia (supra) supports the case of the assessee that in absence of incriminating material found during the course of search an addition u/s 153A 10
11 to 6793/Del/2013 of the Act cannot be made in the assessment framed thereunder. The decisions relied upon by the ld. CIT, DR in the cases ofCanara Housing Development Company vs. DCIT (supra) of Hon'ble Karnataka High Court andFilatex India P. Ltd. vs. CIT (supra) of Hon'ble Delhi High Court having distinguishable facts are not applicable in the present case. In the case of Filatex India Pvt. 12 Ltd. (supra), the question raised on the applicability of provisions u/s 153A was that "whether the Tribunal erred on facts and in law in not holding that re- computation of book profit, de-hors any material found during the course of search in the order passed u/s 153A of the Act was without jurisdiction, being outside the scope of proceedings under that section?" The other question was, "whether on the facts and circumstances of the case, the Tribunal erred in law in upholding the action of the AO in denying set off, of book loss unabsorbed depreciation relatable to earlier assessment year in terms of clause (III) of Explanation 1 to section 115JB of the Act?" The relevant facts of that case noted in para no. 2 of the decision are that the AO in the proceedings u/s 153A of the Act, had made several additions, relying upon the incriminating material found in the course of search, which was conducted on 18.1.2006 and subsequent dates. In this paragraph of the decision it has been perused from the impugned order of the Tribunal that incriminating material including statement of Sanjay Agarwal, GM (Marketing) have resulted in additions, which have been upheld. The Hon'ble High Court has been pleased to note in this paragraph as "it is not the case of the appellant - assessee that initiation of proceedings u/s 153A was bad or unwarranted in law as no incriminating material was found during the search. The contention raised by the appellant - assessee is that the addition, which is the subject matter of questions no. (II) and (III), was/is not justified in the assessment order u/s 153, as no incriminating material was found concerning the addition u/s 115JB of the Act." The Hon'ble High Court has rejected this contention of the assessee with this finding that u/s 153A of the Act, the additions need not to be restricted or limited to the incriminating material, which was found during the course of search. Thus, it is clear from the facts of this case before the Hon'ble High Court that several additions relying upon the incriminating material found in the course of search were made by the AO in the assessment proceedings u/s 153A of the Act and addition u/s 115JB was made by the AO in absence 11 12 to 6793/Del/2013 of incriminating material concerning this addition. This addition was questioned by the assessee on the basis that there was no incriminating material found concerning the addition made in the assessment u/s 153A of the Act, which has been rejected by the Hon'ble High Court with the above finding. It was held by the Hon'ble High Court that there cannot be multiple assessments, once sec. 153A of the Act is applicable. Section 153A(1) postulates one assessment; putting the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition was made.
In para no. 3 of the judgment the Hon'ble Delhi High Court while discussing the cited decisions in the cases CIT vs. Chetan Das (2012), 254 CTR (Del) 292 and CIT vs. Anil Kr. Bhatia(2012), 2010-11 Taxman 453 (Del) cited by the ld. AR of the assessee appellant, has noted certain observations made and findings given by the Hon'ble Court therein. Thereafter in para no. 4 of the judgment, the Hon'ble High Court has held as under: "The first question, we notice was not raised by the appellant before the AO, CIT(A) and before the Tribunal. The appellant claims that the contention being legal can be raised at any stage. We have examined sec. 153A of the Act and find that the submission/contention has no merit".
When we peruse the facts of the case in the case of Filatax India Ltd. and the question raised therein it comes out that in that case admittedly during the course of search incriminating material including statements were found and resulted in additions and the addition made u/s 115JB of the Act was not based upon any incriminating material. Thus, the question raised before the Hon'ble High Court was as to whether the Tribunal has erred in law in not upholding that recomputation of book profit, de-hors any material found during the course of search in the order based u/s 153A of the Act was without jurisdiction, being outside the scope of proceedings under that section. The Hon'ble High Court after discussing the issue in detail has been pleased to decide the question against the assessee and has upheld the addition made u/s 115JB of the Act. Thus, having distinguishable facts this cited the decision in the case of Filatax India Ltd. (supra) is not helpful to the revenue.
13 to 6793/Del/2013 16. So far as, the decision of Hon'ble Karnataka High Court in the case of Canara Housing Development Company (supra) relied upon by the ld. CIT DR is concerned, the issue raised before the Hon'ble High Court was regarding validity of revisional order passed u/s 263 of the Act by the ld. CIT partly upheld by the Tribunal and during that course the Hon'ble High Court has also been pleased to discuss the decision in the cases of Anil Kumar Bhatia (supra) and the decision of Special Bench of the Tribunal in the case of All Cargo Global Logistic Ltd. (supra). It has been observed by the Hon'ble High Court that the condition precedent for application of sec. 153A is that there should be a search u/s 132 and initiation of proceedings u/s 153A is not dependent on any undisclosed income being unearth during the such search. The Hon'ble Rajasthan High Court in the case of Jai Steel (supra) has been pleased to hold that if any books of accounts or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search, such books of accounts or other documents have to be taken into consideration while assessing or re-assessing the total income under the provisions of sec. 153A of the Act. Even any undisclosed income or undisclosed property has been found after the conclusions of the search, same would also be taken into consideration. The requirement of assessment or re-assessment under the said section has to be read in the context of sections 132 or 132A of the Act, in much as, in case nothing incriminating is found on account of such search or requisition, then the question of re-assessment of the concluded assessment does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed.
In the case of SSP Aviation Ltd. vs. DCIT (supra) where the validity of assessment framed u/s 153C was challenged it was held that if the AO is satisfied that any money, bullion, Jewellery or other valuable article or thing or books of account or documents seized in the course of the search belongs to a person other than the person who was searched, then such assets or books of accounts or documents shall be handed over by him to the AO having jurisdiction over such other person. Once, that is done, the AO having jurisdiction over such other person shall proceed against him for making an assessment or reassessment of his income in accordance with the provisions of sec. 153A. The 13 14 to 6793/Del/2013 petitioner therein was not searched u/s 132 of the Act, however, some documents belonging to it were found during the search carried out in the premises of Puri Group of Companies.
We, thus, find that the ratio laid down by the Hon'ble Delhi High Court and Hon'ble Rajasthan High Court in the above cited and discussed decisions supports the case of the assessee that in absence of incriminating material found during the course of search no addition can be made u/s 153A of the Act where the original assessment was already framed on the date of search. The Hon'ble Karnataka High Court in the case of Canara Housing Development Company (supra) has, however, been pleased to express different view, however, as per the established proposition of law, we are bound to follow the decision of Hon'ble Jurisdictional Delhi High Court and since, the Hon'ble Karnataka High Court and the Hon'ble Rajasthan High Court have expressed different views on the issue, the view favourable to the assessee is to be followed. We, thus, reiterate that in absence of incriminating material found during the course of search no addition can be made in a case where original assessment was already framed on the date when search took place.
In absence of rebuttal of this material fact by the Revenue in the present case before us that no incriminating material was found during the course of search relating to the assessee for the assessment year under consideration to justify the additions made in the year by the Assessing Officer and assessment based on the original return of income filed under sec. 139 of the Act was not pending as on the date of search, we following the above cited decisions by the learned AR, discussed above, hold that the assessment framed under sec. 153A read with sec. 143(3) of theIncome-tax Act, 1961 for the assessment year under consideration is not valid and the same is accordingly held as null and void. The related ground nos. 2 to 6 on the issue is thus allowed.”
which emerges from the records is that no incriminating material has been found during the course of search relating to the assessee for A.Y. 2008-09 to justify additions made by the AO on account of sale of scrap and on account of disallowance u/s 14A of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] r.w.r 8D of the Income-tax Rules, 1962 [hereinafter referred to as 'the Rules'] and that too, that the assessment order based on the original return filed u/s 139 of the Act has not been pending and the same has been completed on the date of the search. Therefore, assessment framed u/s 153A r.w.s 143(3) of the Act for ay 2008-09 is not valid and we hold the same as null and void. Accordingly, the issue covered by the Tribunal order dated 27.5.2015 is decided in favour of the assessee and thus these legal grounds are allowed.
Ground Nos. 3 to 5
Since by the earlier part of this order the assessment order has been held as null and void, therefore, the other grounds of the assessee on merits have become academic and infructuous and thus we dismiss the same having become infructuous.
Since the facts and circumstances in the remaining two appeals are same and similar, our view taken in A.Y 2008-09 will also apply mutatis mutandis to AYs. 2009-10. Accordingly, the appeals for AYs. 2009-10 is allowed only on legal grounds as indicated above. for AY 2010-11 Ground Nos. 1 to 3 of the assessee
We have heard the rival submissions and have carefully perused the relevant materials placed on record of the Tribunal.
The ld. Counsel placing reliance on the decision of the Hon’ble Jurisdictional High Court of Delhi in the case of Sadhu Forging Ltd 336 ITR 444 [Del] contended that the issue is squarely covered in favour of the assessee by the ration of this decision. The ld. AR pointed out that the CIT(A) has erred both on facts and in law in confirming the addition made by the AO of Rs. 2,64,039/- being income from sale of scrap treating the same as non-eligible for deduction u/s 80IB of the Act. vehemently contended that the income from sale of scrap does not constitute profits or gains derived from an industrial undertaking for the purpose of qualifying as a deduction u/s 80IB of the Act. He also drew our attention to para 4.2 to 4.4 at pages 8 and 9 of the order of the CIT(A).
9. On careful consideration of the above, from the relevant operative part of the decision of the Hon’ble Jurisdictional High Court of Delhi in the case of CIT Vs. Sadhu Forging Ltd [supra], their Lordships have held as under:
“13. Keeping in view the activities of the assessee in giving heat treatment for which it had earned labour charges and job-work charges, it can thus be said that the appellant had done a process on the raw material which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. These receipts cannot be said to be independent income of the manufacturing activities of the undertakings of the assessee and thus could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under Section 80IB. These were gains derived from industrial undertakings and so entitled for the purpose of computing deduction under Section 80IB. There cannot be 18 to 6793/Del/2013 any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from industrial undertaking for the purpose of computing deducting under Section 80IB.”
In the present case, undisputedly the impugned amount received by the assessee has been derived from sale of scrap generated from the activities carried out by the assessee which are part and parcel of the manufacturing process of industrial undertaking and scrap was general from carrying out the said activities has been sold. Thus, in view of the above noted factum, the issue is squarely covered in favour of the assessee by the said decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Sadhu Forging Ltd [supra]. Accordingly, Ground Nos. 1 to 3 of the assessee are allowed and the AO is directed to grant deduction u/s 80IB of the Act partaking toe h amount received from sale of scrap and impugned addition is directed to be deleted. Consequently, the said grounds having sole effective issue are allowed. allowed.
The order is pronounced in the open court on 29.07.2016.