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31-10-2019, La Opala R. G., Section 263, 80-IC, Tribunal Kolkata

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1 week 4 days ago #11297 by amit
Section - 263, 80-IC, 80HHC
Order Date - 31-10.2019
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - La Opala R. G. Ltd.
Respondent - ACIT
Justice - A. T. Varkey, JM & Dr. A. L. Saini, AM
Citation - 1119Taxpundit39
Appeal No. - I.T.A. No. 559/Kol/2018
Asstt. Year - 2013-14

Order

PER : A.T.Varkey, JM

This appeal preferred by the assessee is against therevision order of the Ld. Pr. CIT(A), Kolkata-4, Kolkata passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”)dated 28 02 2018for AY 2013-14.

2. Brief facts of the case are that the assessee company is engaged in the business of manufacturing of Opal & Crystal Glassware and generation and sale of electricity generated from wind mill. The AO notes that for assessment year 2013-14, the assessee filed its return of Income u/s 139 of the Act on 29.09.2013 declaring total income of Rs. 22,55,40,450/-. The return was revised by the assessee on 30.11.2013 at a total income of Rs. 22,55,40,450/- and the same was processed u/s 143(1) of the Act on 04.09.2014. Subsequently, the case of the assessee was selected for scrutiny u/s. 143(2) of the Act. In the return of income, the assessee company had claimed deduction u/s. 80IC and 80IA of the Act of Rs.3,48,57,221/- and Rs.26,08,253/- respectively. In the course of assessment the AO had issued several requisitions u/s 142(1) asking the assessee to furnish the details on various issues, which was furnished by the assessee from time to time. After examining the replies furnished, the AO finally show caused the assessee on several other issues viz. disallowance of forward contract loss of Rs.39,19,130/-, employee’s contribution towards PF/ESIC of Rs.1,91,996/- and disallowance of expenses u/s. 14A of the Act, requiring it to explain as to why these items of expenditure should not be disallowed. In response to the same the assessee filed its written reply dated 14.03.2016. Thereafter, the AO completed the assessment u/s. 143(3) of the Act on 28.03.2016 determining total income of Rs.22,96,82,980/-.

3. Subsequently, the Ld. Pr. CIT in exercise of his powers u/s. 263 of the Act was of the view that order of the AO dated 28.03.2016 passed u/s. 143(3) of the Act was erroneous and prejudicial to the interest of the revenue and he was pleased to set aside the assessment order by passing the impugned order as under:

“4. The submission of the assessee is considered. The assessee contended that the issue of
eligibility u/s. 80IC was raised at the time of assessment and the assessee has furnished reply on this point. However, on perusal of relevant record it appears that the relevant questionnaire of the AO refers to query pertaining to deduction u/s. 80lA and not 80IC. The possible plea that there could be typographical error appears to be far­fetched. It is also relevant to point out that the assessee has separately claimed deduction u/s. 80IA and prima facie, the plea of the Ld. AR that the query regarding deduction u/s. 80IC has been raised by the AO is not supported by the fact on record clearly suggests that this is a case of lack of enquiry on the ground of deduction u/s. 80IC. The plea of the assessee that in its reply before the Assessing Officer there is reference to fulfillment of condition of provision u/s. 80IC, it is observed that reference is of no conse uence because the AO has neither raised the query and even if it is presumed that the assessee made submission in respect of its fulfilling conditions for claim u/s. 80IC, the AO neither examined it nor conducted any enquiry regarding the genuineness of the claim of the assessee on this count. There is no evidence to suggest that there is application of mind on the part of the AO and hence the issue has not been judicially examined by the AO.

In fact the provision u/s. 80IC envisages that the deduction is allowable from Income which is derived from eligible business and there are prima facie many items which have been specifically mentioned in Para­2 of this order which appear to be not includible in income which is derived from eligible business. The applicability of case law relied upon by the assessee could be examined only after ascertaining the nature of interest income. In absence of the relevant material fact the applicability of the case law relied upon by the Ld. AR cannot be examined.

Similarly, the Ld. AR has placed reliance' on various case law in support of assessee's claim that exchange fluctuation is includible in the income derived from eligible business and hence deductible u/s. 80IC. However, without enquiring and examining the transaction details the issue. cannot be judicially examined and applicability of case law cannot be decided. Similarly no enquiry has been made by the AO under the head provision for doubtful receivable/advances recovered/written back to determine whether the same is eligible for deduction u/s. 80IC. The amount under the head unclaimed balance adjusted also call for further enquiry to determine its nature and determine its allowability/includibility in the income eligible for deduction u/s. 80IC.

Similarly the treatment for 'unclaimed balance adjusted’ also needs further enquiry and examination to ascertain whether the same is includible in the income derived from eligible business in terms of provision u/s. 80IC. Needless to say the issue of applicability of various case law relied upon by the Ld. AIR could be examined only after enquiring the nature of the transaction under the head "unclaimed balance adjusted".

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