Case Law Details
Brief of the Case
In the case Manoj Garg Vs. ITO the Hon’ble Kolkata ITAT held that both Central Excise Refund and Sales Tax Remission are eligible deductions u/s 80IC and that the CIT was not justified in initiating proceedings u/s 263 of the Act in the instant case on the ground that the income by way of Central Excise Refund and Sales Tax remission were not eligible for deduction u/s. 80-IC of the Act. It also held that where two views were possible and the AO had taken one view with which the CIT did not agree, the assessment order could not be treated as an order prejudicial to the interest of Revenue and therefore the CIT could not take recourse to action u/s. 263 of the Act.
Facts of the Case
The assesse is an individual and derives income mainly from two sources viz., commission from dealing in paddy and proprietorship business ion manufacturing PVC pipes and related articles. The assessee filed his return of income showing taxable income at Rs.1,45,654/- after claiming deduction of Rs.53,55,332/- under Chapter VI-A of the Act for AY2009-10. After examining the books of accounts, the AO completed assessment u/s 143(3) of the Act on total income of Rs.1,45,654/-. After completion of the assessment, the CIT examined the assessment record and found that the entire business since from the manufacturing business was claimed as deduction by the assessee u/s. 80-IC of the Act. And details of business since as shown in Schedule-G of the account disclosed a total amount of Rs.35,38,534/ consisting of Central Excise refund of Rs.12,93,302/- and sales tax remission of Rs.22,45,232/-.
The CIT issued SCN dated 12.02.2013 and pointed out that the aforesaid two amounts should not be considered as profit derived from the manufacturing business and therefore the deduction u/s. 80-IC allowed by the AO in respect of these two items was wrongly allowed. Further, according to CIT, no certificates of the Auditors in Form No.10CCB was furnished along with the Tax Audit Report as per Rule 18BBB of the I.T. Rules for granting benefit u/s 80-IC of the Act. In view of these defect, he was of the view that the deduction u/s. 80-IC of the Act to the extent of Rs.35,38,534/- representing Central Excise refund and sales tax remission as stated above was wrongly allowed and therefore the assessment order passed by the AO was erroneous and prejudicial to the interest of the Revenue.
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