×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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01-03-2019, Navas M. Meeran, Section 80-IB, 80HH, Tribunal Cochin
These appeals filed by the assessee are directed against separate orders of the CIT(A)-I, Kochi and pertain to the assessment years 2005-06 and 2006-07.
2. The assessee raised the following grounds of appeal:
1. The learned Commissioner (Appeals) erred in sustaining the disallowance made by the Assessing Officer in respect of deduction u/s 80IB of the Income Tax Act
2. The learned officer ought to have held that income by way of subsidies, job work charges and sale of scap amounts to profit of business for the purpose of deduction u/s. 80IB of the Act. .
3. The learned officers failed to note that the above receipts are directly connected to the manufacturing activity of the appellant and therefore qualified for deduction u/s 801B of the Income Tax Act.
4. The learned officers ought to have appreciated that all the receipts for which deduction u/s 801B of Income Tax Act was claimed are based on the activities of the appellant firm and that the industrial undertaking though leased out, carried out manufacturing activity, which is sufficient compliance of law for the purpose of 80IB of the Income Tax Act.
5. The learned Commissioner (Appeals) erred in concluding that other income amounting to Rs. 99,097/- does not qualify for deduction u/s 801B. It is incidental to business.
6. The learned Commissioner (Appeals) erred in sustaining the addition of Rs 10,08,618/- in respect of alleged bogus purchases having been made by the appellant out of undisclosed sources. The findings of the Commissioner of Income Tax (Appeals) is bad in law. However, the Ld. AR did not press grounds relating to denial of deduction of job work charges and sale of scrap and hence, they are dismissed as not pressed.
2.1 The only argument of the Ld. AR was with regard to denial of deduction u/s. 80IB of the Act on subsidies. The assessee claimed deduction u/s. 80IB on receipt of subsidies but the same was rejected by the Assessing Officer and the CIT(A).
3. Against this, the assessee is in appeal before us.
4. After hearing both the parties, we are of the view that a similar issue was considered by the Supreme Court in the case of Meghalaya Steels Ltd. (383 ITR 217) wherein it was held that when income from cash assistance received against export schemes are included as income under the head profits and gains of business or profession, it is obvious that subsidies which go to reimbursement of cost in the production of goods of a particular business would also have to be included under the head profits and gains of business or profession and not under the head income from other sources. Therefore, the asssessee is entitled to deduction u/s. 80IB of the Act. In view of the above judgment, subsidies is to be considered for deduction u/s. 80IB of the Act. Accordingly, we allow this ground of appeal taken by the assessee.
5. Ground No. 5 relating to denial of deduction of other income amounting to Rs.99,097/- was not pressed and hence the same is dismissed as not pressed.
6. Ground No. 6 is with regard to sustaining the addition of Rs 10,08,618/- in respect of alleged bogus purchases made by the assessee out of undisclosed sources.
7. The facts of the case are that the Assessing Officer made addition u/s. 69 of the Act of the differentials between the amounts being expenses debited in the