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13-02-2019, G.Surjiwear, Section 35(1)(iv), 74, 44AB, HIGH COURT OF ALLAHABAD
Hear Sri Suyash Agarwal, learned counsel for the appellant and Sri Praveen Kumar, learned counsel for the respondents.
Present appeal has been filed against the order dated 14.12.2011 passed by Income Tax Appellate Tribunal, Lucknow Bench "A" Lucknow in ITA No. 295/LKW/2011 for assessment year 2008-09 in which following substantial questions of law have been framed:-
"I. Whether the ITAT was right in holding that the Appellant was not entitled to claim deduction of Rs. 45,50,025 under Section 35(1)(iv) of the Act?
II. Whether the VAT Return of March 2008 and certificates dated 05.06.2010 and 13.08.2010 issued by the statutory Vat Authorities are Public Documents under Section 74 of Evidence Act, certifying the first date of production of food division on 25.03.2008, the ITAT rightly held as not valid piece of evidence to allow deduction amounting to Rs. 40,50,025/- u/s 35(1)(iv) of IT Act?
III. Whether the Assessment order for A.Y. 2007-08 (01.01.2008 to 31.03.2008) dated 31.01.2011 and rectification order dated 29.07.2011 passed by the Deputy Commissioner Commercial Tax Sector -3, Shahajahanpur confirming the commencement of production of Food Division as well as assessing the purchases/sales of Food Division, the ITAT was right in denying the deduction u/s 35(1)(iv) of IT Act?
IV. Whether the ITAT rightly allowed the Commissioner's Appeal on the issue which was not the subject matter of Appeal?
V. Whether the ITAT was right in setting aside the depreciation of Rs. 29,29,610/- on account of machinery and Rs. 5,63,110/- on building of Food Division granted by the CIT Appeal?" Brief facts of the case, which arise in the present appeal are that the assessee engaged in the manufacture of Implantable Surgical Devices and Disposable Drops and Dressup. During the year the appellant has alleged to have started new business of Food Division for manufacture of Ready to Cook Food and were producing following items:-
It alleged to made first sale of Food Division on 25.3.2008. The appellant in the disputed year has claimed the deductions of Rs. 45,50,025/- under Section 35(1)(iv) of the Income Tax Act, Rs. 29,29,610/- on machinery and Rs. 5,63,110/- on building of Food Division.
The Assessing Authority while framing the assessment order have noticed Form No. 3CD which gives statement of particulars required to be furnished under Section 44AB of Income Tax Act in which against column No. 8 the appellant has furnished information that it was engaged in manufacture of Implantable Surgical Devices and Disposable Drops and Dressup and there was no change in the nature of business or profession.
Further, it was also noticed by the Assessing Authority from profit and loss account of the assessee and the details of raw-materials consumed, nowhere appellant has made any reference with regard to production and profit from the Food Division. Further, from Auditor's Report, it also does not reveal any change in business activities as compared to the activities in the immediately preceding year.
The appellant was called to reply as to why the deduction claimed under Section 35(1)(iv) as well as the deduction in machinery and Food Division was on during the year under consideration may not be rejected .
In response to the notice, the appellant submitted that the preserved Ready to Cook Food Production was started from 25th March, 2008. A certificate issued by Commertial Tax Department certifying the date of starting production i.e. 25.3.2008 as well as cash purchase vouchers of M/s Sahai Traders from whom the appellant has purchased Dal, Haldi, Mirch, Dhania, Chola, etc., were also submitted .
Further a computerized generated sales voucher amounting to Rs. 13,000/- being sales of certain items to M/s Raju General Stores were also submitted. On the aforesaid information received from the appellant, the Assessing Officer made necessary inquiry from the above two parties. In absence of