Manoj Kumar Johri v. Dy.CIT

INCOME TAX ACT, 1961

--Deduction under section 10BA--AllowabilityIn earlier years deduction allowed by Tribunal--The assessee was a proprietorship concern known as M/s. Art Palace which was claimed to be an industrial undertaking engaged in the manufacturing and exporting of handmade articles which required the use of Wood as main raw material. The sales were mainly export and small portion in India. The assessee was allowed 100% deduction from eligible manufacturing activities under section 10BA in earlier years. A survey was carried out in the premises of the assessee on 22-9-2008. Assessment for assessment year 2006-07 was framed by the AO on 12-12-2008 disallowing the assessee's claim under section 10BA of the Act. Assessments for assessment years 2007-08 and 2008-09 were framed on similar lines by disallowing assessee's claim under section 10BA. The assessee filed appeals for assessment years 2006-07 and 2007-08. The CIT(A) was pleased to allow the claim of the assessee under section 10BA by giving part relief in respect of trading addition and disallowance of expenses. The department filed second appeals before ITAT, which was dismissed in ITA Nos. 315 & 316/JP/2011 by consolidated order on 31-10-2011. In the year in question, the CIT(A) following his earlier orders allowed deduction under section 10BA on profits and gains of industrial undertaking of assessee excluding the receipts of duty drawback and further gave part relief in trading addition and holding that disallowed trading additions were in respect of eligible business of the assessee and they were included in working out the deduction under section 10BA. Held: The Tribunal had held that the appellant fulfilled the conditions/ requirements of clauses (a), (b), (c) & (d) of sub-section (2) of section 10BA and hence, the appellant was entitled to the claimed deduction under section 10BA. In the earlier years, assessees activities had been held to be eligible for deduction. Following the ITAT judgement of this Bench (supra) in the case, the assessee was entitled to deduction under section 10BA.

Income Tax Act, 1961 Section 10BA

Followed:ITAT Jaipur Bench ITA No. 315 & 316 (JP)/2011, dt. 31-10-2011.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

--Business expenditure--AllowabilityC&F agent expenditure--The assessee contended that the entire C&F Agent expenditure paid to M/s. SC Movers, was supported with proper debit note and no defect had been pointed out. The C&F Agent M/s. S Cargo Movers was regularly assessed to tax and is holder of a valid PAN. The AO without pointing out any specific item of expenditure disallowed this amount of Rs. 47,74,561. The CIT(A) deleted the disallowance made by the AO by following observation. 'There is no justification in applying the ratio of similar expenses of the previous year to the figure of C & F expenses of the current year; as such yardstick is not an acceptable principle to determine the reasonableness of an expense. Moreover, the courts have also held that the reasonable-ness of such decision or expenses claimed has to be adjudged from the assessee's point of view. Held: The C&F Agent expenditure was a controlled expenditure, inasmuch as it was relatable to particular export consignments. The AO had not pointed out any particular item of expenditure or export consignments or any mismatch therein. In view thereof, the order of the CIT(A) was upheld and it was held that relief had been given on just and proper consideration. Thus, ground of the revenue was dismissed.

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