This article provides an in-depth analysis of the case ITA No. 507/DEL/2019, where Bharatsons HUF, New Delhi, appealed against the order of the ACIT, Circle-46(1), New Delhi. The case pertains to the assessment year 2014-15 and involves the denial of a deduction under Section 80IC of the Income Tax Act, 1961.
Case Number: ITA 507/DEL/2019
Appellant: Bharatsons HUF, New Delhi
Respondent: ACIT, Circle-46(1), New Delhi
Assessment Year: 2014-15
Case Filed on: 2019-01-24
Order Type: Final Tribunal Order
Date of Order: 2020-06-02
Pronounced on: 2020-06-02
The appellant, Bharatsons HUF, a Hindu Undivided Family (HUF), filed its return of income on 30th November 2014 for the assessment year 2014-15, declaring ‘NIL’ income and claiming a deduction under Section 80IC amounting to Rs. 44,86,232/-. This claim was denied by the Assessing Officer (AO) during the assessment proceedings conducted under Section 143(3) of the Income Tax Act.
The primary issue raised in this case was the denial of the deduction under Section 80IC. The AO disallowed the deduction on the grounds that the machinery and electric consumption did not support the production claims made by the appellant. Additionally, the AO found the evidence provided for the movement of goods to be insufficient, particularly the absence of toll tax receipts.
The appellant argued that the deduction under Section 80IC had been allowed in previous years after thorough scrutiny under Section 143(3). The appellant provided evidence of production commencement from the excise department, VAT department, and Department of Industries. Furthermore, the appellant argued that the machinery purchases were genuine and the goods were transported as claimed, supported by VAT forms and excise gate passes.
The respondent, represented by the Senior Departmental Representative (DR), supported the AO’s findings, arguing that the claims made by the appellant were not substantiated by the available evidence. The respondent emphasized the discrepancies in the machinery purchase invoices and the lack of toll tax receipts for the movement of goods.
The Income Tax Appellate Tribunal (ITAT) bench, comprising Ms. Suchitra Kamble, Judicial Member, and Shri Prashant Maharishi, Accountant Member, carefully examined the facts and submissions presented by both parties.
The ITAT noted that the machinery purchase invoices were genuine and the purchases were made through banking channels. The tribunal rejected the AO’s contention that the invoices were non-genuine due to minor discrepancies.
The tribunal found that the electric consumption was consistent with the nature of the production activities undertaken by the appellant. The tribunal highlighted that the appellant produced smaller containers requiring minimal electricity compared to the high-capacity containers produced by Unit II.
The ITAT accepted the appellant’s explanation regarding the movement of goods, supported by VAT form 26A and excise gate passes. The absence of toll tax receipts was not considered sufficient grounds to disallow the deduction.
The ITAT concluded that the denial of the deduction under Section 80IC was not justified. The tribunal emphasized that the eligibility conditions and the quantum of production had been verified in previous assessment years and allowed under Section 143(3). Therefore, the tribunal reversed the AO’s and CIT(A)’s orders and directed the AO to grant the deduction under Section 80IC for the assessment year 2014-15.
The appeal filed by Bharatsons HUF was allowed, and the deduction under Section 80IC amounting to Rs. 44,86,232/- was granted for the assessment year 2014-15.
This case highlights the importance of consistent application of tax laws and the need for thorough verification of facts and evidence by tax authorities. The ITAT’s decision underscores the principle that once the eligibility of a deduction is established in previous years, it should not be denied in subsequent years without substantial reasons.
ITA No. 507/DEL/2019: Bharatsons HUF vs. ACIT, Circle-46(1), New Delhi
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