PCIT Vs S. S. Bakkesh (Karnataka High Court)
Tax Deduction Upheld: Consistency Principle Applies to Section 80JJA for Bio-Fuel Business; Deduction for Eco-Industry Confirmed: HC Rejects Rectification Plea on Section 80JJA; HC Upholds Bio-Waste Tax Benefit: No Error to Deny 80JJA Deduction Allowed Previously; Karnataka HC dismisses Revenue’s appeals – Section 80JJA deduction upheld for bio-fuel & bio-fertilizer business
Revenue filed two appeals u/s 260A against Tribunal’s orders dated 21.06.2019 in MP Nos. 265 & 266/Bang/2018 (arising out of ITA Nos. 226 & 229/Bang/2013) for AYs 2007-08 & 2008-09. The Tribunal had dismissed Revenue’s miscellaneous petitions & upheld partial relief granted to Shri S.S. Bakkesh, proprietor of Bakkesh Rice Industries, Davanagere, engaged in manufacture of rice, trading in seeds, fertilizers & bio-products.
AO completed assessments u/s 143(3) determining incomes of ₹15.40 crores (AY 2007-08) & ₹17.99 crores (AY 2008-09), disallowing deduction u/s 80JJA for bio-fuel pellets while allowing it for bio-fertilizers. AO also made additions towards sundry creditors, u/s 14A interest, u/s 68 cash credits & treated sale proceeds of bio-compost as unaccounted. CIT(A), Hubli confirmed additions holding the order “cryptic”.
On further appeal, Tribunal observed that similar deduction u/s 80JJA had been accepted in earlier years on identical facts. Hence AO could not deny it now merely on change of opinion. It remitted certain other issues (sundry creditors & 14A disallowance) to AO for de novo examination. Revenue’s miscellaneous petitions seeking rectification u/s 254 were dismissed.
