EDICON PNEUMATIC TOOLS CO. P.LTD,MUMBAI vs. ASST CIT CIR 10(3), MUMBAI
What did the Tribunal hold?
The Tribunal, considering the assessee's request and statement to provide relevant details, decided to remand the issue back to the AO for fresh adjudication. The AO is directed to consider the assessee's submissions and decide the matter afresh after providing a reasonable opportunity of being heard.
What were the facts?
The assessee claimed exemption under Section 10B on substantial profits from manufacturing mining tools. The Assessing Officer (AO) disallowed a significant portion of these profits, taxing it as income from other sources, due to the assessee's reluctance to provide details justifying the increased profits.
What were the issues?
Whether the assessee's claim for deduction under Section 10B was valid, and if the AO was justified in disallowing a portion of the profits due to lack of cooperation.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI C.N. PRASAD
सुनवाई की तायीख / Date of Hearing : 09.11.2016 घोषणा की तायीख /Date of Pronouncement : 18.11.2016 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 8.5.2012 is against the order of the CIT (A)-22, Mumbai dated 24.2.2012 for the assessment year 2009-2010. In this appeal, assessee raised the following ground which reads as under:- “The Ld AO has erred in disallowing an amount of Rs. 1,24,14,863/- out of the total net profit of Rs. 3,34,57,037/- from deduction/s 10B and taxing as income from other sources and further Ld CIT (A) has erred in confirming the disallowance made by the AO.”
2. At the outset, narrating the above facts leading to the above ground of the present appeal, Ld Counsel for the assessee submitted that the assessee is engaged in the business of manufacturing of mining tools and registered substantial turnover and profits unusually to the profits and turnover of the earlier assessment years. Assessee claimed exemption u/s 10B of the Act on these profits. Suspecting the inflation of exempt profits of the assessee‟s project, AO called for various details as per the dates mentioned in para 4 of the AO and noted that the assessee was deeply reluctant to file the details consistently. AO called for justifying the substantial increase in profits and the specific reasons in the same. AO was not satisfied with the general information attempted to be furnished by the assessee during the assessment proceedings. Consequently, Assessing Officer rejected the claim of deduction u/s 10B of the Act and proceeded to re-workout the eligible profits by applying the previous year‟s net profit ratio of 20% and the claim u/s 10B is restricted to such profits. The balance income was taxed as „income from other sources‟. An amount of Rs. 1,24,14,863/- is disallowed and the same is taxed as „income from other sources‟. CIT (A) discussed the above conclusions and the submissions of the assessee in paras 2.2. and 2.3 of the impugned order and for want of assessee‟s cooperation and furnishing of specific details, the conclusions of the AO were eventually confirmed. Aggrieved, assessee is in further appeal before the Tribunal.
3. During the proceedings before us, in the light of the above factual position and the developments, Ld Counsel for the assessee submitted that this issue may be remanded to the file of the AO for fresh adjudication. Further, Ld Counsel for the assessee made a statement at Bar mentioning that he shall file relevant details in support of the exempt profits and prove before the AO that there is no inflation of the profits of the undertaking.
4. On the other hand, Ld DR for the Revenue relied on the orders of the Revenue Authorities.
5. We have heard both the parties and perusal the orders of the Revenue Authorities as well as the relevant material placed before us. Considering the requirement of the relevant details in support of the assessee‟s claim for higher profitability as well as the statement of Ld AR before us, we are of the opinion, the request of the assessee should be considered. Accordingly, grounds raised by the assessee are remanded to the file of the AO for fresh adjudication. AO is directed to consider the submissions of the assessee and decide the issue afresh after affording a reasonable opportunity of being heard to the assessee as per the set principles of natural justice. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
6. In the result, appeal of the assessee is allowed for statistical purposes.
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