IT APPEAL NOS. 434 (JP.) OF 2013 
706, 707, 771, 800 & 801 (JP.) OF 2014
[ASSESSMENT YEARS 2008-09 TO 2011-12]

BHAGCHAND, ACCOUNTANT MEMBER 
AND LALIET KUMAR, JUDICIAL MEMBER

Rajiv Sogani and Rohan Sogani, CA for the Appellant. 
R.A. Verma, Addl. CIT for the Respondent.

ORDER

Laliet Kumar, Judicial Member - These are the cross appeals filed by the assessee and revenue arise against the orders dated 10/09/2014, 26/02/2013 and 30/09/2014 passed by the learned CIT(A)-III, Jaipur for A.Y.'s 2008-09, 2009-10, 2010-11 and 2011-12. The effective grounds of all the appeals are as under:-

Grounds of ITA No. 706/JP/2014 (assessee's appeal) A.Y. 2008-09

"1.	In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld. AO in reopening the assessment by recourse to section 147 of the I.T Act 1961. The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings being illegal and without any basis.
2.	In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld. AO in charging tax on the book profits of 11,47,82,752/- under section 115JB of the I.T. Act 1961. The assessee-company is not liable for tax on its book profits in respect of its income eligible for 100% deduction under section 80-IC. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by excluding the income fully deductible under section 80-IC from the purview of applicability of tax under section 115JB of the I.T. Act 1961.
3.	In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in reducing the deduction u/s 80-IC to the extent of Rs. 93,56,777/- out of total reduction of Rs. 2,08,48,484/- made by the ld. AO. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction under section 80-IC as claimed by the assessee-company.
4.	In the facts and circumstances of the case in law the ld.CIT(A) has erred in confirming the action of the ld. AO in further reducing the deduction u/s 80-IC in respect of the under noted income and taxing them separately:-

	Particulars	Amount
	Interest on FD and others	38,219/-
	Interest against sale	6,711/-
	Total	44,930/-

The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction u/s 80-IC in respect of the above incomes as claimed by the assessee-company."

Grounds of ITA No. 800/JP/2014 (revenue's appeal) A.Y. 2008-09

"1.	On the facts and circumstances of the case and in law the ld. CIT(A) has erred in restricting the disallowance to Rs.93,56,777/- as against the disallowance of Rs.2.08.48,484/- made by the AO out of claim of deduction u/s 80-IC on account of purchases of raw material, packing material and trade goods from its sister concern.
2.	On the facts and circumstances of the case and in law the ld.CIT(A) has erred in allowing the claim of deduction of Rs.5,14,372/- u/s 80-IC treating the sale of scarp as profit from eligible business.
3.	On the facts and circumstances of the case and in law, the ld.CIT(A) has erred in restricting the disallowance to Rs.6711/- as against disallowance of Rs. 1,34,228/- made by the AO out of claim of deduction u/s 80-IC on account of interest against sale invoices."

Grounds of ITA No. 734/JP/2013 (assessee's appeal) A.Y. 2009-10

"1.	That on the facts and in the circumstances of the case and in law, the action of the CIT(A) in not allowing relief in imposing Minimum Alternate Tax under section 115 JB on book profit of Rs. 15,97,00,872/- and imposing tax liability of Rs. 1,80,94,109/- is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the tax liability of Rs.1,80,94,109/-.
2.	That on the facts and in the circumstances of the case and in law, the action of the CIT (A) in not allowing any relief against the action of the AO in disallowing rebate u/s 80-IC to the extent of Rs.23,45,281/- is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing deduction under section 80-IC as claimed by the assessee.
3.	For that the assessee denies liability to pay the tax assessed and interest charged under section 234B, 234C and 234D.

Grounds of ITA No. 707/JP/2014 (assessee's appeal) A.Y. 2010-11

"1.

In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld.AO in charging tax on the book profits of Rs. 22,65,01,252/- under section 115JB of the I.T. Act 1961 and in imposing total tax liability of Rs. 5,39,64,730/-. The assessee-company is not liable for tax on its book profits in respect of its income eligible for 100% deduction under section 80-IC. The action of the ld CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by excluding the income fully deductible under section 80-IC from the purview of applicability of tax under section 115JB of the IT Act, 1961 and quashing the tax liability of Rs. 5,39,64,730/-.

2.

In the facts and circumstances of the case in law the ld.CIT(A) has erred in confirming the action of the ld. AO in further reducing the deduction u/s 80-IC in respect of the under-noted income and taxing them separately:-

	Particulars	Amount (In Rs.)
	Interest against sale invoices	258/-
	Sundry Creditors Balance written back	48,875/-
	Total	49,133/-

The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction u/s 80-IC in respect of the above incomes as claimed by the assessee-company."

Grounds of ITA No. 771/JP/2014 (assessee's appeal) A.Y. 2011-12

"1.	In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld. AO in charging tax on the book profits of 26,83,06,155/- under section 115JB of the I.T. Act 1961. The assessee-company is not liable for tax on its book profits in respect of its income eligible for 100% deduction under section 80-IC. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by excluding the income fully deductible under section 80-IC from the purview of applicability of tax under section 115JB of the I.T. Act 1961.
2.	In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in reducing the deduction u/s 80-IC to the extent of Rs. 17,49,276/- out of total reduction of Rs. 26,95,292/- made by the ld. AO. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction under section 80-IC as claimed by the assessee-company.
3.	In the facts and circumstances of the case in law the ld.CIT(A) has erred in confirming the action of the ld. AO in further reducing the deduction u/s 80-IC in respect of the under-noted income and taxing them separately:-

	Particulars	Amount
	Interest against sale invoices	680/0
	Sundry Creditors Balance written off	70,670/-
	Total	71,350/-

The action of the ld. CIT(A) is illegal, unjustifiable, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction u/s 80-IC in respect of the above incomes as claimed by the assessee-company."

Grounds of ITA No. 801/JP/2014 (revenue's appeal) A.Y. 2011-12

"1.	On the facts and circumstances of the case and in law the ld. CIT(A) has erred in restricting the disallowance to Rs.17,49,276/- as against the disallowance of Rs.26,95,292/- made by the AO out of claim of deduction u/s 80-IC on account of purchases of raw material, packing material and trade goods from its sister concern.
2.	On the facts and circumstances of the case and in law the ld.CIT(A) has erred in allowing the claim of deduction of Rs.4,39,076/- u/s 80-IC treating the sale of scarp as profit from eligible business.
3.	On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in restricting the disallowance to Rs.680/- as against disallowance of Rs. 23,40,05/- made by the AO out of claim of deduction u/s 80-IC on account of interest against sale invoices."

2. All the appeals have been heard together, therefore, for the sake of convenience, a common order is being passed in all these appeals.

3. We shall decide the ground No. 1 of the assessee's appeal for A.Ys. 2009-10, 2010-11, and 2011-12 and also the ground No. 2 of the appeal for assessment year 2008-09. Before that we discuss the brief facts, it would be relevant to give brief dates and events in the present set of appeals.
The assessee-company filed the return of income on 30/09/2008 for the assessment year 2008-09. The ld Assessing Officer issued notice u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred as the Act) on 29/09/2009. Thereafter further notice u/s 142(1) of the Act was issued on 23/2/2010. The assessee vide writ petition No. 02/2010 had challenged the applicability of Section 115JB of the Act before the Hon'ble High Court of Uttrakhand and in the said writ petition, the Hon'ble High Court of Uttrakhand has granted following interim order:-

"Mr. A.K. Mitra and Mr. S.N. Mitra, Senior Advocates with Mr. Tishi Dipankar and Mr. D. Barthwal, Advocates appears for the petitioner.

Mr. K.P. Upadhyay, Additional Chief Standing Counsel appears for respondent No. 1.
Mr. Arvind Vashisth, Advocate appears for respondent Nos. 2 & 3.

Heard learned counsel for the parties, we feel that the matter requires consideration and, accordingly, admit the writ petition.

As suggested by the learned counsel for the parties; let this writ petition be listed at the top of the daily cause list on 08/11/2010.

Until the matter is heard thus finally, we request the Income Tax Department not to take any final decision in relation to the petitioner before us pertaining to its liability to pay tax under Section 115JB of the Income-tax Act, 1961.

In the event the State expresses its mind pertaining to the issue under consideration in this petition, it shall be open to the State to file a counter-affidavit."

The assessee filed the reply to the writ petition in pursuance to the notice dated 23/2/2010. However, the assessment proceedings were not finalized. The ld Assessing Officer for the assessment year 2008-09 had issued another notice requiring the assessee to file reply to the following questions:

(i)	Produce books of account for verification.
(ii)	Furnished chart showing yield percentage of production.
(iii)	Furnish details of following expenses along with supporting evidences.

	(A)	Consumption trade goods.	Rs. 1,95,93,942/-
	(B)	Manufacturing expenses.	Rs. 75,33,567/-
	(C)	Personnel Expenses	Rs. 1,95,31,753/-
	(D)	Advertisement expenses	Rs. 87,12,737/-
	(E)	Statutory expenses	Rs. 41,83,881/-
	(F)	Selling & Distribution expenses	Rs. 14,74,80,692/-

(iv)	Furnished list of unsecured loans amounting to Rs. 5,99,55,848/- which have been webbed off during the period under consideration along with made of repayment of unsecured loan.
(v)	Furnish details of miscellaneous income of Rs. 6,86,819/-
(vi)	Furnish details of evidences in respect of fixed assets as under:

	(A)	Land	Rs. 3,82,803/-
	(B)	Building	Rs. 1,75,37,657/-
	(C)	Furniture & Fittings	Rs. 29,15,948/-
	(D)	EDD Units (Computer)	Rs. 1,27,804/-
	(E)	Office Equipments	Rs. 3,62,777/-
	(F)	Plant & Machinery	Rs. 36,88,874/-

	Explain in brief the deletion in respect of building under consideration amounting to Rs. 5,52,905/-
(vii)	Explain as to why the deduction claimed @ 100% u/s 80-IC at Rs. 10,53,01,215/- may not be disallowed as the project does not fulfil all the conditions as laid down under the provisions of Section 80-IC(4)."

Before the said notice was issued to the assessee, the Hon'ble Uttrakhand High Court vide order dated 26/11/2010 has dismissed the writ petition filed by the assessee vide reasoned order. It was held that Section 115JB of the Act will apply to the assessee being a company if it is entitled to deduction mentioned in section 80-IC of the Act. The reasoning of the Hon'ble Uttrakhand High Court is as under:-

"14. The first thing that is required to be considered is whether in the matter of construction of the provisions of the Act, one can take notice of the policy. The policy talked about giving of exemption of Income-tax. The policy has been made by the Executive Government. The Act nowhere authorises the Government or the Executive Government to exempt Income-tax. In other words, the Legislature, while making the Act, did not authorise the Executive Government to exempt any assessee from paying Income-tax. The policy to exempt Income-tax, propounded by the Executive Government, was, therefore, subject to acceptance thereof by the Legislature. The policy also made the same clear.

15. The Legislature, while enacting section 80-IC, made it a part of Chapter VI-A of the Act, where provisions have been made for deductions to be made in computing total income. Section 80-IC also, in so many terms, allows deductions to be made in computing total income. If the assessee is a company and comes within the purview of section 80-IC, it is entitled to deductions, to the extent specified therein, to be made in computing its total income. Section 80-IC does not exempt an assessee, covered by the said section, from paying Income-tax. In the premises, action of the Legislature, while inserting section 80-IC, should be deemed to be an action contrary to what had been provided in the said policy of the Executive Government. In the premises, while interpreting section 80-IC of the Act, the contents thereof cannot be influenced by the provisions of the said policy.

16. On and after insertion of section 80-IC, the companies, which are entitled to the benefits thereof, became entitled to deduct the income made by them from the profits and gains derived by them from an undertaking or an enterprise of the nature mentioned in the said section. As a result of such deduction, if a company has only such profits and gains as mentioned in section 80-IC, that company would not be liable to pay any Income-tax, but by virtue of section 115JB, if the same is applicable to the company, it will be liable to pay such tax as mentioned in section 115JB. The contention appears to be that in such view of the matter, section 80-IC and section 115JB cannot be read harmoniously and as the incorporating part of section 80-IC is clear, the same should be taken to control section 115JB.

17. Section 80-IC deals with a matter totally alien to section 115JB and, accordingly, there cannot be any question that both cannot be read harmoniously. Section 80-IC allows deduction. Section 115JB says that if allowing such deduction, Income-tax payable is less than what has been mentioned in section 115JB, the assessee, if it is a company, will be liable to pay Income-tax to be ascertained in the manner and to the extent prescribed in section 115JB. Since these two sections deal with two different situations, they play their role in two different situations and, accordingly, should be read to ascertain the purpose thereof as depicted by the clear words mentioned therein. Whereas section 80-IC grants deduction to all assessees and, accordingly, a company is also entitled to such deduction; section 115JB applies only to a company and comes into play only when, after such deduction, Income-tax payable by it is less than what has been mentioned therein and thereupon fastens a totally new Income-tax liability to the extent mentioned therein.

18. It is true that when section 115JB was inserted, there was no contemplation that, in future, section 80-IC would be inserted. Therefore, at the time when section 115JB was inserted, it was not intended to control section 80-IC. However, a look at section 115JB would make it amply clear that, from the day one, section 115JB controlled Income-tax payable on the total income as computed under the Act and, in the matter of computing Income-tax on the total income, after insertion of section 80-IC, all assessees, including a company, became entitled to deductions prescribed in section 80-IC. Therefore, even after insertion of section 80-IC, when the total income, as computed after taking into consideration all deductions, including the deductions available under section 80-IC of the Act, is less than what has been mentioned in section 115JB, it would be the obligation of the assessee-company to pay such tax as mentioned in section 115JB.

19. Had the Legislature exempted an assessee from paying Income-tax, the matter would have been different. But that has not been done. The Legislature allowed a deduction. If, after such deduction, Income-tax payable is less than what has been mentioned in section 115JB, by reason of the plain words used in section 115JB, an assessee, being a company, is liable to pay such tax as mentioned in section 115JB. In the circumstances, I am of the view that if by virtue of section 80-IC, no Income-tax is payable by an assessee, being a company, it would be liable to pay Income-tax to the extent as mentioned in section 115JB and that was and still is the very object of inserting section 115JB in the Act.

20. It was urged that the Central Government is estopped by principles of promissory estoppel to claim any Income-tax after having expressly granted 100 per cent exemption from paying income-tax for the first five years. A promise made contrary to statute is not enforceable. At the time such promise was made, the Executive Central Government had no authority to exempt payment of Income-tax by any class of assessee. The promise, to that effect, was subject to acceptance thereof by the Legislature, as was clearly depicted in the policy. The Legislature did not accept the same. To that extent, the promise is not enforceable.

21. It was contended that a company will be liable to pay tax despite getting 100 per cent deduction, but as against that, any other assessee will not be liable to pay any tax, that is discrimination. However, the vires of section 115JB, on that ground, has not been challenged. I would, therefore, not venture to go into that question except noting that on and from the date of insertion of section 115JB, an assessee, being a company, became liable to pay the tax mentioned in the said section, but not any other assessee.

22. We would, thus, conclude the matter holding that section 115JB will apply to an assessee, being a company, if it is entitled to the deductions mentioned in section 80-IC of the Act.

3.1 The assessee in reply to the notice issued by the Assessing Officer dated 29/11/2010 had submitted reply, which is as under:-

"1.	The products of the assessee-company don't require any license from the Government authority, which is evident from the schedule 27(M) of the Balance sheet.
	The assessee-company is having manufacturing drug license No. 01/UA/HPM/2006 dated 27/3/2006 issued by Drug Controller, Uttrakhand for manufacturing the Homeopathic medicine in Uttrakhand State. We have already submitted copy of the same.
2.	The computation and balance sheet of SBL Pvt. Ltd. Delhi which is sister concern of the assessee-company, for the relevant assessment year is enclosed.
3.	It is submitted that the Hon'ble High Court of Uttrakhand, Nainital Bench has admitted the assessee company's writ petition in their order dated 16/09/2010 requesting the Department not to take any final decision in relation to its liability to pay tax under section 115JB (Minimum Alternate Tax (MAT) until the matter is heard. Copy of order is enclosed."

The ld Assessing Officer has passed assessment order u/s 143(3) of the Act.

3.2 After passing of the order for the assessment year 2008-09, the ld CIT(A) vide notice dated 28/3/2012 has issued show-cause notice u/s 263(1) of the Act stating therein that the order passed by the ld Assessing Officer was erroneous and prejudicial to the interest of the revenue as the ld Assessing Officer has failed to impose the liability of MAT u/s 115JB of the Act amounting to Rs. 1.113 crores approximately. The ld CIT(A) has dropped the proceedings u/s 263 of the Act with the following reasons:

"The contents of your letter dated 09.05.2012 filed in the above-mentioned proceedings, along with copies of the letters/filed during assessment proceedings i.e. dated 8th, 14th, 16th, & 27th Dec. 2010, have been considered. The copy of the decision of the Hon'ble High Court of Uttarakhand dated 13.09.2010 in the writ petition of 2010 has also been perused. On a holistic consideration of the explanation/details/ clarification furnished during the assessment proceedings and in the proceedings under sec. 263, the proceedings under sec. 263 in respect of the order under sec. 143(3) dated 30.12.2010 for the assessment year 2008-09, are hereby dropped."

It will be useful to mention here that the assessee feeling aggrieved by the order passed by the Hon'ble Uttarakhand High Court, had preferred an SLP before the Hon'ble Supreme Court bearing No. 6319/2011. The Hon'ble Supreme Court had disposed off the SLP with the following observation :

"In our view, the writ petition ought not to have been filed before the High Court by the petitioner and the petitioner ought to have gone by the normal statutory remedy. Be that as it may, liberty is given to the petitioner to argue the points raised in this petition before CIT(A). We are informed that appeal has been filed before CIT(A) and the same is pending. CIT(A) will decide the matter uninfluenced by observations made by the High Court in the impugned judgment. Accordingly, the special leave petition stands disposed of."

3.3 The ld Assessing Officer for the assessment year 2008-09 had issued a notice u/s 147 to the following effect:

"The assessee-company is assessed to tax with this ward. It has e-filed its return of income for the A.Y. 2008-09 on 20.09.2008 declaring total income of Rs. 44,11,630/-. Assessment u/s 143(3) was completed on 30.12.2010 at the return income.

On going through the assessment records, it has been observed that the assessee-company was liable for MAT u/s 115JB of the Income-tax Act on its book profit. The provisions of sec. 115JB of the Income-tax Act for the relevant period, are as under:

"in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2007, is less than ten per cent of its book profit, such book profit shall be treated to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of ten per cent."

The assessee-company has shown book profit of Rs. 11,47,82,752/- on which MAT of Rs. 1,30,04,885/-including surcharge, Education Cess & Higher Education Cess was payable. However, the records reveal that no MAT has been paid by the assessee for the A.Y. 2008-09.

In these facts and circumstances, I have reason to believe that income of Rs. 11,47,82,752/- chargeable to tax under the provisions of sec. 115JB of the Income-tax Act, 1961, has escaped assessment within the meaning of Sec. 147 of the Income-tax Act, 1961, in the case of the assessee for the A.Y. 2008-09."

The assessee has filed a detailed reply stating that the notice issued by the ld Assessing Officer for reopening is not maintainable as the ld Assessing Officer while passing the order u/s 143(3) dated 30/12/2010, was having the occasion to examine provision of MAT and despite having opportunity to examine and apply the provisions of MAT has not imposed provision of MAT on the assessee and has accepted the return of income as filed by the assessee. It was also submitted that the reassessment of the proceedings arising out of the notice, is only a change of opinion as the assessee has already been stated to scrutiny assessment and the Assessing Officer has applied his mind to the facts and circumstances of the case. The ld AR for the assessee relied upon the judgment of the Full Bench of the Hon'ble Delhi High Court in the case of CIT v. Usha International Ltd. [2012] 348 ITR 485/210 Taxman 188/25 taxmann.com 200, H.K. Buildcon Ltd. v. ITO [2011] 339 ITR 535/[2012] 21 taxmann.com 83 (Guj.), GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19/[2002] 125 Taxman 963 (SC). The ld Assessing Officer was not convinced with the reasoning given by the assessee and therefore, the ld Assessing Officer had held that the reopening was in accordance with the provisions of the Act vide order dated 08/1/2014. The observation of the ld Assessing Officer is reproduced as under:-

The objections raised by the assessee have been considered and are disposed off as under:-

1.	Notice u/s 148 has been timely issued as per provisions of section 149(l)(b) which provides that notice can be issued for the relevant assessment year up to six years from the end of the relevant previous year after obtaining necessary approval/satisfaction u/s 151(2) of the I.T. Act, 1961. Necessary approval /satisfaction of the Joint Commissioner of Income-tax, Range-7, Jaipur was conveyed vide letter no. JCIT/R-7/JPR/2012-13/1054 dated 12/12/2012.
2.	The PAN of the assessee is lying with this office and assessment completed in other years. The assessment for the A.Y. 2008-09 was completed u/s 143(3) of the Income-tax Act on 30/12/2010 at the Return Income. Later on it was found that the assessee-company was liable for MAT u/s 115JB of the IT Act 1961 on its book profit. However, the records reveal that MAT of Rs. 1,30,04,885/- was not paid by the assessee for the A.Y. 2008-09 on its book profit of Rs. 11,47,82,752/-. Accordingly the case was reopened as income of Rs. 11,47,82,752/- chargeable to tax under the provision of section 115JB of the IT Act 1961 has escaped assessment within the meaning of section 147 of the IT Act 1961. This issue was never considered in full during the course of assessment proceedings u/s 143(3) of the IT Act for the A.Y. 2008-09. Further, it is pertinent to mention here that in the case of assessee-company itself, the Hon'ble High Court of Uttrakhand, Nainital has held as under C.W.P. No 2 of 2010 dated 26/11/2010:
	"30. In the circumstances, the writ petitions are disposed of by declaring that an assessee, being a company and entitled to deductions u/s 80-IC, should be liable to pay income tax, if it comes within the provisions of Section 115JB to the extent mentioned therein. There shall be no order as to cost."
	Therefore, in view of the above and provisions of the Sec. 115JB of the IT Act, the assessee was liable for MAT for the A.Y. 2008-09 on the book profit calculated as per P&L A/c prepared in accordance with the provisions of the Companies Act, 1956.
3.	Hence, the objections raised by the assessee-company are disposed or considering the facts as mentioned above."

4. Being aggrieved by the order passed by the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who after considering the legal position has also upheld the order passed by the ld Assessing Officer and held that the reopening/reassessment was in accordance with law.

5. Feeling aggrieved by the order passed by the ld CIT(A), the assessee has challenged his finding before us and has submitted that the reopening made by the ld Assessing Officer after passing the original assessment order is not maintainable as it will amount to change of opinion. Further the assessee relied upon the judgment of the Full Bench of Hon'ble Delhi High Court in the case of Usha International Ltd. (supra) stating that it is presumed that the Assessing Officer should apply its mind on the documents before it after taking into accounts all the provisions of the law. Further, it was submitted that the power under section 263 of the Act had already been exercised by the officer and thereafter the proceedings were dropped, therefore, now it will be not be proper and absurd for the Assessing Officer (a subordinate) to set aside the order of the superior [CIT(A)] by invoking the provisions of Section 147 of the Act on the pretext of alleged escaped assessment. It was submitted that if the incorrect proposition of law has been applied then it is not a case of escapement of income rather it is the case where an erroneous order prejudicial to the interest of revenue has been passed by the ld Assessing Officer. On the basis of the submission, it was submitted that once the order has been tested by the superior authority u/s 263 of the Act and had dropped the proceedings, there was no occasion for the Assessing Officer to reopen the reassessment on the pretext of escapement of the assessment by not applying the provisions of Section 115JB of the Act.

6. On the other hand, the ld DR has submitted that the action of the ld Assessing Officer was in accordance with law and has relied upon the various decisions, which is as under:-

(i)	Kalyanji Mavji & Co. v. CIT [1976] 102 ITR 287 (SC)
(ii)	Ess Kay Engg. Co. (P.) Ltd. v. CIT [2001] 247 ITR 818/[2002] 124 Taxman 491 (SC)
(iii)	ITO v. Purushottam Das Bangur [1997] 224 ITR 362/90 Taxman 541 (SC)
(iv)	Consolidated Photo & Finvest Ltd. v. Asstt. CIT [2006] 281 ITR 394/151 Taxman 41 (Delhi)
(v)	Gruh Finance Ltd. v. Jt. CIT [2000] 243 ITR 482/[2002] 123 Taxman 196 (Guj.)

7. We have heard the rival contentions of both the parties, perused the material available on record and also perused the case laws cited by both the parties. We have reproduced the various dates and events, which have taken place in the present matter. We found that the misconduct of the assessee in filing the incorrect and wrong information before the ld Assessing Officer, CIT(A) was conspicuous and shows a total disrespect to the assessment proceedings and to the revision proceedings. The abovesaid comment is based on the following analyses made by us on the facts reproduced hereinbelow:

The assessee with a view to gloss over and with an intention to mislead had filed a reply before the ld Assessing Officer dated 16/12/2010 wrongly stating therein that the Hon'ble High Court of Uttarakhand in the writ petition order dated 16/9/2010 had requested the department not to take any final decision in relation to its liability to pay tax u/s 115Jb of the Act (Minimum Alternate Tax) until the matter is heard. As a matter of fact, the Hon'ble High Court vide order dated 26/11/2010 i.e. before reply was submitted by the assessee had already dismissed the writ petition of the assessee. Therefore, there was no interim order on the date of filing the application on 16/12/2010 in favour of the assessee. The assessee has deliberately brazenly and in total disregard of law has submitted incorrect, untrue and false reply to the Assessing Officer whereby they had wrongly relied upon the interim order dated 16/9/2010 whereas by the date and time, the writ petition itself had already been dismissed by the Hon'ble Division Bench on 26/11/2010, therefore, there was no reason for the assessee to file reply before the ld Assessing Officer and to impress upon her not to pass order u/s 115JB of the Act as the Hon'ble High Court has already restrained the department to invoke the provisions of Section 115JB of the Act. Moreover, the assessee had filed an SLP before the Hon'ble Supreme Court and the Hon'ble Supreme Court vide order dated 06/1/2012 had permitted to withdraw the SLP with some observation as reproduced hereinabove. However, the assessee, in total disrespect to the purity and sanctity of law had again filed a reply before the ld CIT(A) on 09/5/2012 wherein again wrongly illegally relied upon the interim order dated 13/9/2010 passed in the writ petition by the Hon'ble High Court of Uttarakhand and the ld CIT(A) had dropped the proceedings u/s 263 after going through the order passed by the Hon'ble High Court dated 13/9/2010. The ironically when then letter dated 09/5/2012 was filed before the ld CIT(A) by the assessee, by that time, the SLP of the assessee has already been dismissed/disposed off by the Hon'ble Supreme Court vide order dated 06/1/2012. Thus, the assessee has been perpetuating and relying upon the order dated 13/9/2010 even after the dismissal of the writ petition on 26/11/2010 and disposal of SLP on 06/1/2012. Thus, in our view, the conduct of the assessee was far away from the truth and the action of the ld Assessing Officer, in our view was justified as the assessee at the time of proceedings u/s 143(3) as well as u/s 263 of the Act, have stated incorrect and untrue facts before the authorities. The reliance of the assessee on the judgment in the case of Usha International Ltd. (supra) is misplaced and is not applicable in favour of the assessee. Our reading of the said judgment along with other judgments shows that in the present set of facts and circumstances, the ld Assessing Officer was right in reopening the assessment proceedings. Similar fact has recently been decided by this Bench in the case of Shree Durga Marbles v. ITOorder dated 16/08/2016 passed in ITA No. 277/JP/2015 has occasion to go through the various cited case laws on the reopening and thereafter has held as under:

"6. We have heard the rival contentions of both the parties and perused the material available on the record. For the purposes of deciding this issue, it is necessary to reproduce the judgment of Full Bench of Hon'ble Delhi High Court in the case of CIT v.. Usha International Ltd. [2012] 348 ITR 485 wherein the Hon'ble Court has held as under:

35. In A.L.A. Firm (supra), the Supreme Court specifically dealt with propositions (2) and (4) quoted in paragraph 34 above and thereafter elucidated and explained that there was no difference between observations of the Supreme Court in Kalyanji Mavji & Co. (supra) and Indian & Eastern Newspaper's case (supra), as far as proposition (4) is concerned. It was held that:

"We have pointed out earlier that Kalyanji Mavji (supra) outlines four situations in which action under Section 34(1)(b) can be validly initiated. The Indian Eastern Newspaper Society's case has only indicated that proposition (2) outlined in this case and extracted earlier may have been somewhat widely stated; it has not cast any doubt on the other three propositions set out in Kalyanji Mavji's case. The facts of the present case squarely fall within the scope of propositions 2 and 4 enunciated in Kalyanji Mavji's case. Proposition (2) may be briefly summarised as permitting action even on a "mere change of opinion". This is what has been doubted in the Indian Eastern Newspaper Society's case (supra) and we shall discuss its application to this case a little later. But, even leaving this out of consideration, there can be no doubt that the present case is squarely covered by proposition (4) set out in Kalyanji Mavji & Co. (supra). This proposition clearly envisages a formation of opinion by the Income-tax Officer on the basis of material already on record provided the formation of such opinion is consequent on "information" in the shape of some light thrown on aspects of facts or law which the I.T.O. had not earlier been conscious of. To give a couple of illustrations, suppose an I.T.O., in the original assessment, which is a voluminous one involving several contentions, accepts a plea of the assessee in regard to one of the items that the profits realised on the sale of a house is a capital realisation not chargeable to tax. Subsequently he finds, in the forest of papers filed in connection with the assessment, several instances of earlier sales of house property by the assessee. That would be a case where the I.T.O. derives information from the record on an investigation or enquiry into facts not originally undertaken. Again, suppose in I.T.O. accepts the plea of an assessee that a particular receipt is not income liable to tax. But, on further research into law he finds that there was a direct decision holding that category of receipt to be an income receipt. He would be entitled to reopen the assessment under Section 147(b) by virtue of proposition (4) of Kalyanji Mavji, The fact that the details of sales of house properties were already in the file or that the decision subsequently come across by him was already there would not affect the position because the information that such facts or decision existed comes to him only much later.

What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Mavji(supra). The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the I.T.O. initiates reassessment proceedings in the light of "information" obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the I.T.O., having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been brought to tax. In other words, as pointed out in Indian Eastern Newspaper Society's case, it also ropes in cases of a "bare or mere change of opinion" where the I.T.O. (very often a successor officer) attempts to reopen the assessment because the opinion formed earlier by himself (or, more often, by a predecessor I.T.O.) was, in his opinion, incorrect. Judicial decisions had consistently held that this could not be done and the Indian Eastern Newspaper Society's case (supra) has warned that this line of cases cannot be taken to have been overruled by Kalyanji Mavji (supra). The second paragraph from the judgment in the Indian Eastern Newspaper Society's case earlier extracted has also reference only to this situation and insists upon the necessity of some information which make the ITO realise that he has committed an error in the earlier assessment. This paragraph does not in any way affect the principle enumerated in the two Madras cases cited with approval in Anandji Haridas [1986] 21 S.T.C. 326. Even making allowances for this limitation placed on the observations in Kalyanji Mavji, the position as summarised by the High Court in the following words represents, in our view, the correct position in law:

The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income-tax Officer subsequent to the original assessment. If the Income-tax Officer had considered and formed an opinion on the said material in the original assessment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Income-tax Officer had not considered the material and subsequently come by the material from the record itself, then such a case would fall within the scope of Section 147(b) of the Act." [Emphasis supplied]

36. the aforesaid observations are complete answer to the submission that if a particular subject matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred.

37. We are conscious of the fact that the aforesaid observations have been made in the context of Section 147(b) with reference to the term 'information' and conceptually there is difference in scope and ambit of reopening provisions incorporated w.e.f. 1st April, 1989. However, it was observed by the Supreme Court in Kelvinator of India Ltd. (supra) that amended provisions are wider. What is important and relevant is that the principle of "change of opinion" was equally applicable under the un- amended provisions. The Supreme Court was therefore conscious of the said principle, when the observations mentioned above in A.L.A. Firm(supra) were made.

39. In view of the above observations we must add one caveat. There may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc, because the aspect or question may be too apparent and obvious. To hold that the Assessing Officer in the first round did not examine the question or subject matter and form an opinion, would be contrary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing Officer and answers given by the assessee but in others cases, a deeper scrutiny or examination may be necessary. The stand of the Revenue and the assessee would be relevant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case.

The Hon'ble Delhi Court in the case of Consolidated Photo & Finvest Ltd. (supra) has held as under:
"10. It is common ground that in the present case the Assessing Officer had not received any additional information from any outside source or quarter but the fact that there was no such information did not make any material difference. Action under section 147 was permissible even if the Assessing Officer gathered his reasons to believe from the very same record as had been the subject-matter of the completed assessment proceedings. What Mr. Vohra argued was that the Assessing Officer could not, on the basis of the very same material as was available to him at the time of assessment, initiate action under section 147, for doing so, would constitute action based entirely on a change in his opinion. The contention is that if the material was available to the Assessing Officer and if an assessment order based on that material is passed by him, a reassessment using the very same material or inferences available from that material should tantamount to a mere change of opinion, which cannot, according to the petitioner, constitute a valid ground for reassessment.

11. We may, before going into the merits of the main contention urged before us, deal with the question of limitation feebly argued by Mr. Vohra. As noticed earlier, the proviso to section 147 envisages action in the ordinary course within a period of four years from the end of the relevant assessment year. That limitation does not, however, apply to cases where income chargeable to tax has escaped assessment on account, inter alia, of the failure of the assessee to disclose fully and truly all material facts. The argument that production of the account books and other documentary evidence relevant for assessment must imply a full and true disclosure of all material facts must be rejected out of hand in the light of the provisions of Explanation 1, according to which mere production of the books of account or other evidence from which the Assessing Officer could have, with due diligence, discovered the material evidence does not necessarily amount to a disclosure within the meaning of the proviso. The action initiated by the respondent does not in that view suffer from any error of jurisdiction to warrant interference from this court in exercise of its writ jurisdiction.

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19. In the light of the authoritative pronouncements of the Supreme Court referred to above, which are binding upon us and the observations made by the High Court of Gujarat with which we find ourselves in respectful agreement, the action initiated by the Assessing Officer for reopening the assessment cannot be said to be either incompetent or otherwise improper to call for interference by a writ court. The Assessing Officer has in the reasoned order passed by him indicated the basis on which income exigible to tax had in his opinion escaped assessment. The argument that the proposed reopening of assessment was based only upon a change of opinion has not impressed us. The assessment order did not admittedly address itself to the question which the Assessing Officer proposes to examine in the course of reassessment proceedings. The submission of Mr. Vohra that even when the order of assessment did not record any explicit opinion on the aspects now sought to be examined, it must be presumed that those aspects were present to the mind of the Assessing Officer and had been held in favour of the assessee is too far-fetched a proposition to merit acceptance. There may indeed be a presumption that the assessment proceedings have been regularly conducted, but there can be no presumption that even when the order of assessment is silent, all possible angles and aspects of a controversy had been examined and determined by the Assessing Officer. It is trite that a matter in issue can be validly determined only upon application of mind by the authority determining the same. Application of mind is, in turn, best demonstrated by disclosure of mind, which is best done by giving reasons for the view which the authority is taking. In cases where the order passed by a statutory authority is silent as to the reasons for the conclusion it has drawn, it can well be said that the authority has not applied its mind to the issue before it nor formed any opinion. The principle that a mere change of opinion cannot be a basis for reopening completed assessments would be applicable only to situations where the Assessing Officer has applied his mind and taken a conscious decision on a particular matter in issue. It will have no application where the order of assessment does not address itself to the aspect which is the basis for reopening of the assessment, as is the position in the present case. It is in that view inconsequential whether or not the material necessary for taking a decision was available to the Assessing Officer either generally or in the form of a reply to the questionnaire served upon the assessee. What is important is whether the Assessing Officer had based on the material available to him taken a view. If he had not done so, the proposed reopening cannot be assailed on the ground that the same is based only on a change of opinion.

Further Delhi High Court in the matter of Kuldip Gandotra v. Union of India [2007] 136 DLT 44 has held as under:-…………………….

1. Fraud and justice never dwell together (fraus et jus nunquam cohabitant) and fraud and deceit defend or excuse no man (fraus et dolus nemini patrocinari debent) are two doctrines which are applied by the Courts to recall earlier orders/judgments.

2. Since fraud strikes at the very root of an Order/judgment and effects solemnity, and the Rule of Law, Courts have exercised their inherent power whenever it is brought to their notice that fraud has been practiced. The above principles have been recently reiterated by the Supreme Court in the case of Hamza Haji v. State of Kerala wherein the entire case law on the subject has been extensively examined and considered. In the said case, it has been held that a second review application in law is not maintainable but a Court can exercise its power as a court of record to nullify a decision procured by playing a fraud. A decision procured by fraud must be set at naught and no person who is guilty of having come to Court with unclean hands and practicing fraud should be allowed to take advantage and benefit of an order/judgment obtained and tainted by fraud. Power to recall is somewhat different and distinct from power of review. Power of recall is an inherent power, whereas power of review must be specifically conferred on the authorities/Court (Refer Budhiya Swain v. Gopinath Deb [1994] 4 SCC 396 for the distinction between the two and when power to recall can be exercised).

8. We are conscious of the fact that there is difference between a mere mistake and even negligence which by itself is not fraud but merely evidence of fraud. However, the present case is one in which the petitioner/non-applicant made a false representation deliberately and intentionally concealing facts to mislead the Court. In the present facts, the motive to mislead and the intention to do so is writ large. Fraud is proved when it is shown that false representation was intentionally and recklessly made without caring to know whether it is true or false. In the present matter, vital and relevant material facts were concealed. The Petitioner/non-applicant was fully aware that true facts were not brought to the notice of the Court. Thus actual fraud has been established and it is not a case of mere constructive fraud.

9. Failure to point out the factum of employment cannot be regarded as a mere secondary fact that was immaterial or irrelevant for granting relief. The facts concealed were not collateral or extraneous. In Story's Equity Jurisprudence, 14th Edition, Vol.1, as quoted in Hamza Haji (supra) it has been observed: Fraud indeed, in the sense of a Court of Equity, properly includes all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence, justly reposed, and are injurious to another, or by which an undue and unconscientious advantage is taken of another.

10. Thus omission and concealment which involves breach of legal or equitable duty and confidence justly reposed, is equal to fraud. Similarly, Page 3924 the Supreme Court in Bharau Dadu v. State of Maharashtra has held that suppression of a material document would amount to fraud on a Court. In another case S.P. Chengalvaraya Naidu (decd) thr. LRs v. Jagannath, the Supreme Court was critical and did not agree with the High Court that there is no legal duty cast upon a party to come to the Court with a true case and prove it by true evidence. It was held that fraud is an act of deliberate deception with a design to secure something by taking unfair advantage. Deception to gain by another's loss is fraud. Failure to disclose relevant and material facts and non-mentioning of even a document can tantamount to playing a fraud on the Court, if it is done with the intention to gain advantage with a view to procure an order or an advantage from the Court without disclosing all facts. Obtaining relief by deliberately suppressing facts, which were fundamental to entitlement of relief and foundation of the claim amounts to practicing fraud.

By respectfully following the law laid down in the abovesaid decisions we deem it appropriate to decide the issue of reopening against the assessee in respect of assessment year 2008-09. Accordingly, this ground of appeal is decided against the assessee.

8. Now the other grounds raised by the assessee are with respect to application of Section 115JB of the Act on the assessee. The assessee is engaged in the business of manufacturing of homeopathic medicines including the Mother Tincture, Bio Chemic Medicines, Specialized Tablets etc.. In the return of income, the assessee for the assessment year 2008-09 filed the return of income on 29/09/2010 after claiming the deduction under chapter VIA for a sum of Rs. 14,99,78,187/-. As per written submissions filed by the AR of the assessee before us, it was submitted that the ld CIT(A) for the A.Y. 2011-12 while confirming the action of the ld Assessing Officer has given the following reasons:-

"4.2 Ld. CIT(A) (A.Y. 2011-12) has confirmed the action of the ld. Assessing Officer for the following main reasons (CIT(A)pages 19 to 21):

(a)	That the provisions of section 115JB are of overriding nature.
(b)	That nothing is provided in section 115JB that such tax will not be paid in case of assessees covered u/s 80-IC.
(c)	That CBDT vide letter dated 05/06/2008 addressed to the Principal Secretary, Industrial Development, Uttarakhand, has clarified that companies covered u/s 80-IC are also to pay MAT under the provisions of section 115JB.
(d)	That the promise made by the Hon'ble Prime Minister cannot be a basis of relief as no amendment, according to the promise, was made in the Act and allowability of any deduction or the chargeability of any income is to be decided as per the provisions of the Income-tax Act, 1961.
(e)	That the Hon'ble High Court of Uttarakhand in Appellant's own case has held that the assessee was liable for taxation u/s 115JB.
(f)	That the various case laws relied upon are with reference to different facts and circumstances and not related to the facts of the Appellant's case."

9. Feeling aggrieved by the order passed by the ld CIT(A), the assessee filed the appeal before us and it was contended as under:-

"4.3 Ld. CIT(A) has, in a very summary manner, without appreciating the background and the promise with reference to which section 80-IC was introduced, has rejected the submissions of the Appellant and dismissed this ground of appeal.

4.4 Section 115JB was introduced with effect from 01/04/2001 and subsequent to this section 80-IC was introduced with effect from 01/04/2004. It was submitted before the Ld. CIT(A) that section 80-IC was brought to the statute book subsequent to the existence of section 115JB. Therefore, later of the two, should prevail. It was also submitted that both the sections are special provisions, yet section 115JB is special to all the companies whereas section 80-IC was special to all the corporate and non-corporate assessees having industrial undertakings in Uttarakhand. Thus section 115JB was special to a wider class, within which section 80-IC was 'super' special to a very specific class. Ld. CIT(A) has not appreciated the nuances of principles of interpretations and without dealing with this aspect of submissions, has summarily held that section 115JB has an overriding impact and that nothing was provided in section 115JB that the companies covered u/s 80-IC will be out of the purview of section 115JB.

4.5 Ld. CIT(A) has also not appreciated the resultant absurd and unintended consequences due to the interpretation placed by the ld. AO. He has not dealt with the example given to explain the absurd results of the way interpretation of section 80-IC is given by the ld. AO (example at page 11 of CIT(A) order).

4.6 Ld. CIT(A) has unduly influenced his decision by the CBDT clarification dated 05/06/2008. The clarification of CBDT is not binding on appellate authorities nor is the same binding on assessees. The CBDT has to follow the principle of promissory estoppel. Similarly, CBDT cannot issue a clarification which is contrary to the specific provisions of the Act. On harmonious reading of both the sections, 115JB and 80-IC, it is crystal clear that Parliament provided that provisions of section 115JB would not apply on assessees covered by section 80-IC. Under these circumstances CBDT has no authority to snatch a benefit granted to the assessees by the Parliament.

4.7. Ld. CIT(A) gravely erred in observing that since no amendment was made in the Income-tax Act, 1961, the benefit of non-application of section 115JB cannot be granted to the assessee-Company. Section 80-IC was introduced to give effect to the promise made by the Hon'ble Prime Minister. It is unfortunate that both the lower authorities have misread the sections 115JB and 80-IC. They have ignored the fundamental principles of interpretation. Therefore, they have wrongly come to the conclusion that section 80-IC does not provide for exclusion from application of provision of section 115JB. Section 80-IC is a special provision and was introduced knowing very well the provisions of section 115JB. The Parliament, through this way, was clear in granting benefit. Thus, the legal interpretation placed by the ld. CIT(A) deserves to be quashed.

4.8 Against the order of the Hon'ble High Court of Uttarakhand, the Hon'ble Supreme Court has categorically held that the claim has to be decided uninfluenced by the decision of Uttarakhand High Court. This clearly establishes that the Hon'ble Supreme Court has expressed its disagreement with the decision of Hon'ble Uttarakhand High Court. Still placing reliance on Uttarakhand High Court by the ld. CIT(A) amounts to not following the decision of Hon'ble Supreme Court in this regard.

4.9 Before the ld. CIT(A), plethora of judicial pronouncements were relied upon in support of the arguments put forth. Ld. CIT(A) has not at all dealt with any of the judicial pronouncements. He has not dealt with how those judicial pronouncements do not support the case of the assessee. He has, in a very summary manner, simply mentioned that the facts and circumstances of assessee's case are different. No speaking order in this regard is passed.

4.10 In respect of principle of estoppel, further reliance is placed on a recent judgment of the Hon'ble Supreme Court delivered on September 03,2015 in the case of Lloyd Electric and Engineering Ltd vs. State of Himachal Pradesh (Copy supplied) in Civil Appeal No. 6838 OF 2015 where in the Hon'ble Apex Court held as under:-

"The High Court, with great respect, has gone wrong in not appreciating the background of the case and the decision of the Council of Ministers to extend its own Industrial Policy announced in 2004 and the tax concession beyond 31.03.2009. Once the Council of Ministers takes a policy decision, the implementing Department cannot issue a notification contrary to the policy decision taken by the Government..."

10. On the other hand, the ld DR has submitted that Section 115JB of the Act is required to be applied in view of the law laid. down by the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT [2002] 122 Taxman 562/255 ITR 273 (SC) being the special provision and therefore the interpretation as sought to be given by the ld AR is not correct. He had further relied upon the judgment of the Hon'ble Delhi Tribunal in the case of the assessee itself being Asstt. CIT v. SBL Industries (P.) Ltd. [2013] 35 taxmann.com 233/[2014] 147 ITD 690 (Delhi - Trib.) to the following effect:

"8. A plain reading of the same shows that u/s 143(l)(a)(ii), the AO can compute the total income or loss, after making adjustment of incorrect claim, if such incorrect claim is apparent from any information in the return. Explanation (a) explains what is "an incorrect claim apparent from any information in the return."

9. S.115JB is a special provision. It imposes minimum tax liability' on an assessee-company on its book profits. The mode of computation is specified therein. The Hon'ble Supreme Court in the case of Apollo 255 ITR 273 (2002) held that while computing the book profits of a company u/s 115J under the Act, the AO has only the power of examining whether books of accounts are certified by the authorities under the Companies Act and thereafter as the limited power of making increase or decrease of certain items specifically provided for in the Explanation to S. 115J.

10. Applying the proposition laid down by the Hon'ble Supreme Court to S. 115 JB, we find that a deduction u/s 80-IC, is not an item of adjustment in Explanation I to S. 115 JB. While so, to claim reduction of the amount deductible u/s 80-IC, while computing book profits u/s 115 JB, is not in accordance with the apparent reading of the provisions of S.115 JB. Thus, in our considered opinion, such a claim is an incorrect claim and this is apparent from information in the return as defined in the Explanation (a) to S.143(l)(a)(ii) of the Act. Hence the AO is correct in making adjustment u/s 143(1). Thus, we are unable to persuade ourselves to agree with the finding of the Ld. CIT(A)-I, Dehradun on this issue. The fact that the return is processed by a computer or by the Officer himself, does not make a difference, as in our opinion computerized processing is only an aid to the AO. As computation of book profits u/s 115 JB of the Act is not done in accordance with the provisions of the Act, and when an incorrect claim of reduction from book profits of amount which the assessee is eligible u/s 80 IC is made, it is an incorrect claim apparent from the record, which can be adjusted u/s 143(1) of the Act. In the result the order of Ld. CIT(A) is set aside and the order of the AO is restored."

In rebuttal, the ld AR for the assessee has submitted that the Hon'ble Mumbai Tribunal in the similar facts and circumstances in the case of Shivalik Venture (P.) Ltd. v. Dy. CIT [2015] 70 SOT 92/60 taxmann.com 314 has held as under:-

"26. We shall now examine the scheme of the provisions of sec. 115JB of the Act. It is pertinent to note that the provisions of sec. 10 lists out various types of income, which do not form part of Total income. All those items of receipts shall otherwise fall under the definition of the term "income" as defined in sec. 2(24) of the Act, but they are not included in total income in view of the provisions of sec. 10 of the Act. Since they are considered as "incomes not included in total income" for some policy reasons, the legislature, in its wisdom, has decided not to subject them to tax u/s 115JB of the Act also, except otherwise specifically provided for. Clause (ii) of Explanation 1 to sec.115JB specifically provides that the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) is to be reduced from the Net profit, if they are credited to the Profit and Loss account. The logic of these provisions, in our view, is that an item of receipt which falls under the definition of "income", are excluded for the purpose of computing "Book Profit", since the said receipts are exempted u/s 10 of the Act while computing total income. Thus, it is seen that the legislature seeks to maintain parity between the computation of "total income" and "book profit", in respect of exempted category of income. If the said logic is extended further, an item of receipt which does not fall under the definition of "income" at all and hence falls outside the purview of the computation provisions of Income tax Act, cannot also be included in "book profit" u/s 115JB of the Act. Hence, we find merit in the submissions made by the assessee on this legal point.

27. A careful perusal of the decision rendered by the Special bench in the case of Rain Commodities Ltd(supra) would show that the above said legal contentions were not considered by the Special bench. We notice that the Special bench considered the following decisions:-

(a)	Malayala Manorama Co. Ltd v. CIT [2008] (300 ITR 251)(SC)
(b)	NJ. Jose & Co. (P) Ltd (321 ITR 132)(Ker)
(c)	CIT v. Veekaylal Investment Co. (P) Ltd (249 ITR 597)(Bom)

In all these cases, the Courts were dealing with the issue of inclusion of Capital gains in the computation of "Book Profits", but such capital gains were otherwise chargeable to capital gain tax u/s 45 of the Act under the normal provisions of the Act. However, here is the case that the profits and gains arising on transfer of capital is not falling under the definition of "transfer" and hence under the definition of "Capital gains chargeable u/s 45" and consequently, the same does not fall within the purview of the definition of "income" given u/s 2(24) of the Act. Further, we notice that the Special bench did not have occasion to consider the argument urged before us that the profits and gains arising on transfer of a capital asset by a holding company to its wholly owned Indian Company does not fall under the definition of "income" at all u/s 2(24) of the Act and hence the same does not enter into the computation provisions of the Act at all. We are impressed by the arguments advanced in this regard and we have also extensively dealt with the relevant provisions and also about the scheme of the provisions of sec. 115JB of the Act. We are of the view that the said contentions distinguish the decision rendered by the Special Bench in the case of Rain Commodities(supra). On merits also, we have earlier seen that the assessee herein has attached a note in the notes forming part of accounts and in the case before the Special bench, no such notes has been inserted, which fact was specifically noted by the Special bench. Hence on this factual aspect also, the decision rendered by the Special bench is distinguishable.

28. In view of the foregoing discussions, we find merit in the contentions of the assessee that the profit arising on transfer of capital asset to its wholly owned Indian subsidiary company is liable to be excluded from the Net profit., i.e., the Net profit disclosed in the Profit and Loss account should be reduced by the amount of profit arising on transfer of capital asset and the amount so arrived at shall be taken as "Net profit as shown in the profit and loss account" for the purpose of computation of book profit under Explanation 1 to sec. 115JB of the Act. Alternatively, since the said profit does not fall under the definition of "income" at all and since it does not enter into the computation provisions at all, there is no question of including the same in the Book Profit as per the scheme of the provisions of sec. 115JB of the Act. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to exclude the above said profit from the computation of "Book Profit" for the reasons discussed above."

It was further contended by the ld AR that the principle of promissory estoppels is applicable to the facts and circumstances of the case and therefore, the assessee cannot be asked to pay the MAT u/s 115JB of the Act as the Hon'ble Prime Minister has given assurance to extend the concession of 100% income tax exemption for initial period of 5 years in terms of office memorandum dated 07/1/2003. It was further submitted that the Finance Act, 2003 had inserted the special provision u/s 80-IC of the Act and therefore, on the basis of that the assessee has change its position and had established the industry. The office communication written by the Principal Secretary, Industrial Development, Uttarakhand, Dehradoon whereby he sought the clarification from CBDT. Clarification was sought on the following issue:-

"5. We would request you to clarify and/or give the direction that industries which have been set up in the State after Central Government's Notification dated 7th January, i.e. 100% income tax exemption for initial five years and 30% thereafter for a further period of 5 years would be available to them and they will not be subjected to the minimum tax prescribed in 115JB, as stated above. Section 115JB existed in the statute much before the Notification dated 7th January, 2003 was published and subsequent incorporation of Section 80-IC."

The ld AR has also drawn our attention to the reply given on behalf of the CBDT on 05/6/2008, which is as under:-

"2. Section 115JB is a non-obstante provision and applies to all corporate taxpayers. According to this section, all corporate taxpayers are required to pay a Minimum Alternate Tax (MAT) at the rate of 10% of their book profits if the tax payable by them under the normal provisions of the Act is less than 10% of the book profits. The philosophy behind MAT is that every corporate entity should contribute a minimum amount of tax towards the national exchequer, in any case, the MAT paid by companies can be carried forward for 7 years and can be adjusted .against normal income tax payable in any of the future 7 years, on fulfillment of certain conditions. Thus, it is like payment of an advance tax only.

2.1 Profit-linked tax incentives, like the one under Section 80-IC, are inherently iniquitous as the bigger entitles comer greater tax benefits. MAT acts as a cap on the total exemption claimed by profit-making Corporate entitles.

3. The philosophy of MAT being what it is, it is applicable to all corporate tax payers including those that enjoy tax incentives under any section of the income tax Act. Thus, companies enjoying tax incentives under Section 80-IC are also liable to pay MAT.

4. It is pertinent to point out that in the absence of the tax incentive under section 80-IC, these companies would have been liable to pay a much higher amount of tax.

On the basis of the above, it was submitted that once the assessee changed its position and make huge investment, the revenue and the Government of India are bound by the principle of statutory estoppels and therefore, now the revenue cannot change the assessee u/s 115JB of the Act.

11. We have gone through the rival contentions of both the parties and perused the material available on the record. In our view, the issue of applicability of Section 115JB of the Act is no more res integra in view of the categorical finding by the Coordinate Bench of Delhi ITAT in SBL Industries (P.) Ltd.'s case (supra) wherein the Coordinate Bench has held that Section 115JB is a special provision, it imposes minimum tax liability on an assessee-company on its further profit and the issue has already been examined by the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra), therefore, by respectfully following the judgment of the Coordinate Bench, we also hold that Section 115JB being a special provision shall apply. A bare reading of Section 115JB of the Act make it abundantly clear that the provisions of Section 115JB of the Act are not subjected to other provisions of the Act rather it starts with non-obstante clause. Whereas Section 80-IC of the Act provides the exemption of the profit and gain derived by an undertaking subject to the provisions of the said sub-section. The assessee is required to pay minimum tax as per applicable rate on the book profit under explanation-1 of Section 115JB of the Act. There is no provision of deduction u/s 80-IC which prohibits filling of return under section 115 JB. Section 80-IC was introduced by the Finance Act, 2003 and the notification was issued in that regard. The reading of explanation-1 makes it clear that, by the Finance Act No. 02 of 2004 w.e.f. 01/4/2005 clause (f) to the explanation 1 was substituted and similarly clause (b) of explanation-1 was inserted by the Finance Act, 2002 w.e.f. 01/4/2003. However, no such specific amendment for the exemption of 80-IC was introduced in explanation-1, entitling the assessee like the appellant to have been exempted from filling the return under section 115JB. Therefore, the conjoint reading of the two provisions make it clear that Section 115JB of the Act shall apply even to the companies getting deduction u/s 80-IC of the Act and the said. Companies are liable to pay MAT charges. In our view, if the Legislature intends to give the exemption from the application of Section 115JB to the undertaking benefitting u/s 80-IC, then the Legislature would have amended or made the said legislature by way of insertion in explanation-1 of Section 115JB, as it has done by the Finance Act, 2002, 2004, 2007 and 2008 for other purposes by insertions, substitutions and amendments in the explanation-1 to Section 115JB of the Act . But the parliament has not deemed it appropriate to include the companies getting exemption u/s 80-IC of the Act out of the purview of Section 115JB of the Act. As already stated, Section 115JB is a non-obstante provision and applies to all companies falling in the threshold limit provided under the provisions. Besides the above, the Hon'ble Supreme Court had examined the legality of Section 115J of the Act in the case ofJt. CIT v. Rolta India Ltd. [2011] 9 taxmann.com 36/196 Taxman 594 and held as under:-

7. In our view, section 115J/115JA are special provisions. Section 207 envisages that tax shall be payable in advance during any financial year on current income in accordance with the scheme provided in sections 208 to 219 (both inclusive) in respect of the total income of the assessee that would be chargeable to tax for the assessment year immediately following that financial year. Section 215(5) of the Act defined what is "assessed tax", i. e., tax determined on the basis of regular assessment so far as such tax relates to income subject to advance tax. The evaluation of the current income and the determination of the assessed income had to be made in terms of the statutory scheme comprising section 115J/115JA of the Act. Hence, levying of interest was inescapable. The assessee was bound to pay advance tax under the said scheme of the Act. Section 115J/115JA of the Act were special provisions which provided that where in the case of an assessee, the total income as computed under the Act in respect of any previous year relevant to the assessment year is less than 30 per cent of the book profit, the total income of the assessee shall be deemed to be an amount equal to 30 per cent of such book profit. The object is to tax zero-tax companies.

8. Section 115J was inserted by Finance Act, 1987 with effect from 1-4-1988. This section was in force from 1-4-1988 to 31-3-1991. After 1-4-1991, section 115JA was inserted by Finance Act of 1996 with effect from 1-4- 1997. After insertion of section 115JA, section 115JB was inserted by Finance Act, 2000 with effect from 1-4-2001. It is clear from reading sections 115JA and 115JB that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision(s) is made in the section saying that all other provisions of the Act shall apply to the MAT Company [section 115JA(4) and section 115JB(5) ]. Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under sections 115JA and 115JB. So far as interest leviable under section 234B is concerned, the section is clear that it applies to all companies. The pre-requisite condition for applicability of section 234B is that assessee is liable to pay tax under section 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under section 143(1) or under section 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of section 115J/115JA in the levy of interest under section 234B. The expression "assessed tax" is defined to mean the tax assessed on regular assessment which means the tax determined on the application of section 115J/115JA in the regular assessment.

9. The question which remains to be considered is whether the assessee, which is a MAT Company, was not in a position to estimate its profits of the current year prior to the end of the financial year on 31st March. In this connection the assessee placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. (supra) and, according to the Karnataka High Court, the profit as computed under the Income-tax Act, 1961 had to be prepared and thereafter the book profit as contemplated under section 115J of the Act had to be determined and then, the liability of the assessee to pay tax under section 115J of the Act arose, only if the total income as computed under the provisions of the Act was less than 30 per cent of the book profit. According to the Karnataka High Court, this entire exercise of computing income or the book profits of the company could be done only at the end of the financial year and hence the provisions of sections 207, 208, 209 and 210 (predecessors of sections 234B and 234C) were not applicable until and unless the accounts stood audited and the balance sheet stood prepared, because till then even the assessee may not know whether the provisions of section 115J would be applied or not. The Court, therefore, held that the liability would arise only after the profit is determined in accordance with the provisions of the Companies Act, 1956 and, therefore, interest under sections 234B and 234C is not leviable in cases where section 115J applied. This view of the Karnataka High Court in Kwality Biscuits Ltd. was not shared by the Gauhati High Court in Assam Bengal Carriers Ltd. v. CIT [1999] 239 ITR 862 and Madhya Pradesh High Court in Itarsi Oil & Flours (P.) Ltd. v. CIT[2001] 250 ITR 686 as also by the Bombay High Court in the case of CIT v. Kotak Mahindra Finance Ltd. [2003] 130 Taxman 730 which decided the issue in favour of the Department and against the assessee. It appears that none of the assessees challenged the decisions of the Gauhati High Court, Madhya Pradesh High Court as well as Bombay High Court in the Supreme Court. However, it may be noted that the judgment of the Karnataka High Court in Kwality Biscuits Ltd.'s case (supra) was confined to section 115J of the Act. The Order of the Supreme Court dismissing the Special Leave Petition in limine filed by the Department against CIT v. Kwality Biscuits Ltd.[2006] 284 ITR 434. Thus, the judgment of Karnataka High Court in Kwality Biscuits Ltd.'s case (supra) stood affirmed. However, the Karnataka High Court has thereafter in the case of Jindal Thermal Power Co. Ltd. v. Dy. CIT[2006] 154 Taxman 547 distinguished its own decision in case of Kwality Biscuits Ltd. (supra) and held that section 115JB, with which we are concerned, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under section 115JB, it was liable to pay interest under sections 234B and 234C of the Act. Thus, it can be concluded that interest under sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001, dated 9-11-2001 issued by CBDT 252 ITR (St.) 50 has no application. Moreover, in any event, para 2 of that Circular itself indicates that a large number of companies liable to be taxed under MAT provisions of section 115JB were not making advance tax payments. In the said circular, it has been clarified that section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and consequently provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable."

Therefore, in our view, same principles are applicable to the present set of appeals , therefore respectfully following the law laid down by the various courts referred hereinabove, more particularly, the decision of the Hon'ble Supreme Court, the assessee is liable to be assessed u/s 115JB of the Act.

11.1 The argument of the ld AR invoking the principle of estoppels, in our view is not sustainable in the eyes of law. Under Articles 265 of the Constitution of India, the power to make laws lies with the Parliament. The office memorandum, though had been issued and marked to the Ministry of Finance, had not had legislative backing and is not supported by the Act of the Parliament. The office memorandum issued by the government of India through Ministry of Commerce and Industry was merely an executive instruction and is not a piece of legislation passed by the Parliament while exercising its power u/s 265 of the Constitution of India. There is no sovereign promise made by the Government on the basis of which the estoppels can be made by the assessee. As is clear from the correspondence placed on record by the assessee that a letter dated 20/2/2008 was written by the Principal Secretary of Industrial Development Department, Dehrodoon, Uttrakhand seeking the clarification, however, the competent officer of the revenue (CBDT) vide letter dated 05/6/2008 has clarified that the provisions of Section 115JB of the Act are applicable to the facts and circumstances of the case. The reliance on the Hon'ble Supreme Court judgment by the AR, in our view, is not correct. On the contrary, the Hon'ble Supreme Court in the facts and circumstances of the case as restricted the levy of the building tax for a period 06/9/1990 to 01/3/1993. It is clear from the bare reading of the judgment that w.e.f. 1/3/1993, the provisions was deleted and therefore the building tax exempt, which was statutory confirmed by Section 3A, the government was restricted for a period 06/9/1990 to 01/3/1993. In the present case, no such power was confirmed to the government of India for grant of exemption from Section 115JB of the Act at any point of time by the parliament. Therefore, the judgment of the Hon'ble Supreme Court is on different facts and is not applicable to the case in hand. Moreover, the Secretary, CBDT vide letter dated 05/6/2008 has clarified that the provision of Section 115JB of the Act are applicable, therefore, in our view, no shadow of doubt should remain in the mind of the assessee that the provision of Section 115JB shall not apply to the industry of the assessee company.

In fact, the assessee-company prior to letter dated 20/2/2008 had been writing and requesting for non-applicability of Section 115JB of the Act. This Act clearly shows that the revenue, at any point of time, has not agreed to the demand of the assessee for giving exemption from the applicability of Section 115JB of the Act. In our view, the executive promises will not make the law inapplicable. The Hon'ble Supreme Court in the case ofSethi Auto Service Station v. Delhi Development Authority [Civil Appeal No. 6143 of 2008, dated 17-8-2008] has held as under:-

"12. It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision-making authority. Needless to add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decision-making authority in the department; gets his approval and the final order is communicated to the person concerned.

13. In Bachhittar Singh v. The State of Punjab, a Constitution Bench of this Court had the occasion to consider the effect of an order passed by a Minister on a file, which order was not communicated to the person concerned. Referring to the Article 166(1) of the Constitution, the Court held that order of the Minister could not amount to an order by the State Government unless it was expressed in the name of the Rajpramukh, as required by the said Article and was then communicated to the party concerned. The court observed that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before an action is taken by the authority concerned in the name of the Rajpramukh, which formality is a constitutional necessity, nothing done would amount to an order creating rights or casting liabilities to third parties. It is possible, observed the Court, that after expressing one [1962] Supp 3 SCR 713 opinion about a particular matter at a particular stage a Minister or the Council of Ministers may express quite a different opinion which may be opposed to the earlier opinion. In such cases, which of the two opinions can be regarded as the "order" of the State Government? It was held that opinion becomes a decision of the Government only when it is communicated to the person concerned.

11.2 Further the Hon'ble Supreme Court in the case of Amin Merchant v. Central Board of Excise & Revenue[Civil Appeal No. 4676-4677 of 2013, dated 22-7-2016] has decided the identical issue and held in paragraph No. 31 as under:-

"The whole thrust of the appellant is that the proposals of the Finance Minister were duly approved by the Parliament. No doubt, the appellant has placed before this Court the proposals of the Finance Minister which discloses the intention of the Government but there is no material placed before us to demonstrate that the budget proposals are duly accepted by the Parliament. It is an admitted fact that pursuant to the proposals, the Finance Act was passed by the Parliament wherein for the goods specified under Tariff Sub-Heading 2208.10, particular tariff was specified. We are unable to agree with the argument advanced by the appellant for the reason that he is unable to make note of the difference between a proposal moved before the Parliament and a statutory provision enacted by the Parliament, because the process of Taxation involves various considerations and criteria. Every legislation is done with the object of public good as said by Jeremy Bentham. Taxation is an unilateral decision of the Parliament 21 http://www.itatonline.org Page 22 and it is the exercise of the sovereign power. The financial proposals put forth by the Finance Minister reflects the governmental view for raising revenue to meet the expenditure for the financial year and it is the financial policy of the Central Government. The Finance Minster's speech only highlights the more important proposals of the budget. Those are not the enactments by the Parliament. The law as enacted is what is contained in the Finance Act. After it is legislated upon by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament. Now in the present facts of the case, as per the finance bill, the legislative will of the Parliament is that for the commodities falling under Tariff Head 2208.10, the tariff is Rs.300/- per litre or 400% whichever is higher. Even assuming that the amount of tax is excessive, in the matters of taxation laws, the Court permits greater latitude to the discretion of the legislature and it is not amenable to judicial review. In view of the foregoing discussion, we are unable to concur with the submission of the appellant that the budget proposals are duly passed and approved by the Parliament and moreover, if the 22 http://www.itatonline.org Page 23 appellant is aggrieved by the particular tariff prescribed under the Finance Act and the same is contrary to the approved budget proposals, he ought to have questioned the same if permissible. Hence, this issue is answered against the appellant."

The law laid down by the Hon'ble Supreme Court is clearly applicable to the facts of the present case also. In view thereof, we find that Section 115JB is applicable to the assessee-company and therefore, the ground of the assessee is required to be dismissed and we accordingly dismiss this ground in respect of all the appeals.

12. Ground No. 4 of ITA No. 706/JP/2014, ground No. 1 of 800/JP/2014, 801/JP/2014 and ground No. 2 of ITA No. 771/JP/2014 are against confirming the action of the ld Assessing Officer in reducing the deduction u/s 80-IC of the Act. During the assessment proceedings in respect of A.Y. 2008-09, the ld Assessing Officer has noticed that the assessee-company had purchased traded goods, raw material and packing material from the sister concerns. It was also noticed that the said sister concerns were not entitled to the benefit u/s 80-IC of the Act. It was also recorded by the ld Assessing Officer that the said sister concerns have sold the goods to the assessee-company as its cost price and no profit on the amount was taken by the sister concerns. Therefore, the ld Assessing Officer has held that with a view to obtain benefit of Section 80-IC, the assessee and the sister concerns have showed their affairs in such a manner that the exemption u/s 80-IC can be increased. It was noticed that the sister concerns have disclosed GP rate of 55% on the goods sold to the outside parties whereas no profit was earned on the goods sold by it to the assessee company. Thus the transactions have resulted in the reduction of cost of assessee-company to a substantial extent and as a result thereof the assessee-company has earned extra profit to the assessee. The ld Assessing Officer has noticed that for the assessment year 2008-09, the Assessing Officer for the assessment year 2008-09 has made a total disallowance of Rs. 20848484/- out of the deduction u/s 80-IC of the Act. Similarly, the ld Assessing Officer has made disallowance of Rs. 2695292 out of the deduction u/s 80-IC for the assessment year 2011-12.

13. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A) and it was contended by the AR of the assessee before the ld CIT(A) that out of the total purchases of Rs. 37906334/- the traded goods constitute for a sum of Rs. 20894012 and the remaining goods were for raw material/packing material being used by the appellant company. It was also noticed by the ld CIT(A) that on the traded goods of Rs. 20894012/- the assessee has not claimed 80-IC deduction. Similarly, it is the case of the assessee for the assessment year 2011-12 that out of the total purchase for Rs. 4900531/- the traded goods constituted Rs. 1720028/- and on such traded goods, the assessee has not claimed deduction u/s 80-IC of the Act. On the basis of the submissions made by the assessee, the ld CIT(A) has granted relief on the traded goods in respect of both the assessment years. However, CIT has made the confirmation in respect of the remaining goods purchased by the assessee from the sister concerns namely the raw material and packing material and to that extent, the ld CIT(A) has confirmed the order passed by the ld Assessing Officer.
14. Now the revenue as well as the assessee are in appeals before us. The ld AR of the assessee has supported the order of the ld CIT(A) whereby the benefit has been given on the traded goods. It is the contention of the ld AR for the assessee that the raw materials and packing materials were purchased by the assessee from the sister concerns on account of emergency and even if the said goods were purchased from the third party by the assessee, it would have costed the assessee-company at the same rate. Therefore, there was no inflation of profit as indicated by the ld Assessing Officer.

15. On the other hand, the ld DR has relied upon the order passed by the ld lower authorities with respect of raw material and packing materials and has submitted that the assessee has inflated the profit. The ld DR, in respect of traded goods , has submitted that the ld CIT(A) has wrongly given the benefit to the assessee as it was not the case of the assessee before the ld Assessing Officer that the goods purchased include the traded goods on which no 80-IC has been claimed by the assessee. It was further submitted that whether the assessee has claimed 80-IC in respect of traded goods is required to be verified by the ld Assessing Officer. It was contended that the ld CIT(A) has passed the order without verifying this fact from the ld Assessing Officer.

16. We have gone through rival contentions of both the parties and perused the material available on the record. In our view, the assessee has filed written submissions before the ld CIT(A) and in written submissions in paragraph No. 2.4 to 2.7 for the assessment year 2008-09, it is submitted as under:-

"2.4 During the course of reassessment proceedings it was adequately explained vide letter dated 28/2/2014 that there is no question of inflation of profits for claiming enhanced deduction under section 80-IC. It was also explained that the assessee-company has not claimed any 80-IC deduction on profit from trading of goods. The ld. AO without assigning any reason rejected the explanation and proceeded to reduce the 80-IC deduction.

2.5 & 2.6..............

.............

.............

2.7 Further, the sister concern has also transferred raw material and packing material at cost to the assessee company. The sister concern is not dealing in the raw materials and packing material. It does not sell the raw material and packing material to any third party. The said sales were to take care of the emergency needs of the appellant company. Since these are not finished goods produced and dealt with by the sister concern, there does not arise any question of earning any profit thereon by the sister concern. Thus, the allegation that these purchases from the sister concern have resulted into inflated deduction under section 80-IC is baseless."

Similarly in assessment year 2011-12, the assessee in paragraph No. 2.2.4 and 2.2.7 has submitted as under:

"2.2.4 During the course of assessment proceedings it was adequately explained vide letter dated 5.03.2014 & 18.03.2014 that there is no question of inflation of profits for claiming enhanced deduction under section 80-IC. It was also explained that the assessee-company has not claimed any 80-IC deduction on profit from trading of goods. The ld. AO without assigning any reason rejected the explanation and proceeded to, reduce the 80-IC deduction.

2.2.5 & 2.2.6..............

..............

................

2.2.7 Further, the sister concern has also transferred raw material and packing material at cost to the assessee company. The sister concern is not dealing in the raw materials and packing material. It does not sell the raw material and packing material to any third party. The said sales were to take care of the emergency needs of the appellant company. Since these are not finished goods produced and dealt with by the sister concern, there does not arise any question of earning any profit thereon by the sister concern. Thus, the allegation that these purchases from the sister concern have resulted into inflated deduction under section 80-IC is baseless.

From perusal of the submissions made by the assessee before the ld CIT(A), it is abundantly clear that the assessee before the ld Assessing Officer has categorically submitted that the assessee has not claimed 80-IC benefit on the traded goods after purchasing it from the sister concerns. Similarly, it was also the case of the assessee that in respect of raw material and the packing material purchased by it from the sister concerns, the said sister concerns have not sold the raw material and packing material to any third party thereby the earning GP profit @ 55%. In fact, it was also the contention of the assessee that the sister concerns are not manufacturing the raw material and packing material.

Therefore, the goods purchased by the assessee whether comes under traded items or the assessee has done anything which may attract the definition of manufacturing is also required to be examined in the light of law laid down by Hon'ble Supreme court. In the case of CIT v. Oracle Software India Ltd.[2010] 187 Taxman 275/320 ITR 546 (SC), the Hon'ble Supreme Court has observed in paragraph 10 as under:

"10. In our view, if one examines the above process in the light of the details given hereinabove, commercial duplication cannot be compared to home duplication Complex technical nuances are required to be kept in mind while deciding issues of the present nature. The term "manufacture" implies a change, but every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. However, this test of manufacture needs to be seen in the context of the above process. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word "manufacture". Applying the above test to the facts of the present case, we are of the view that, in the present case, the assessee has undertaken an operation which renders a blank CD fit for use for which it was otherwise not fit. The blank CD is an input. By the duplicating process undertaken by the assessee, the recordable media which is unfit for any specific use gets converted into the programs which is embedded in the master media and, thus, the blank CD gets converted into recorded CD by the afore stated intricate process. The duplicating process changes the basic character of a blank CD, dedicating it to a specific use. Without such processing, blank CDs would be unfit for their intended purpose. Therefore, processing of blank CDs would be unfit for their intended purposes. Therefore, processing of blank CDs dedicating them to a specific use, constitutes a manufacture in terms of section 80-IA(12) read with section 33B of the Income-tax Act."

Similarly, in the case of CIT v. Emptee Poly-Yarn (P.) Ltd. [2010] 188 Taxman 188/320 ITR 605 (SC), the Hon'ble Supreme Court has followed the decision in the case of Oracle Software India Ltd. (supra), and held in paragraph 8 as under :

"Applying the above test to the facts of this case, it is clear that POY simpliciter is not fit for being used in the manufacture of a fabric. It becomes usable only after it undergoes the operation/process which is called thermo mechanical process which converts POY into texturised yarn, which, in turn, is used for the manufacture of fabric. One more point needs to be mentioned. Under the Income-tax Act, as amended in 2009, the text given by this court in Oracle Software's case (2010) (1) Scale 425 has been recognized when the definition of the word "manufacture" is made explicit by the Finance (No. 2) Act, 2009, which states that "manufacture" shall, inter alia, mean a change in bringing into existence of a new and distinct object or articles or thing with a different chemical composition or integral structure. Applying this definition to the facts of the present case, it may be mentioned that the above thermo mechanical process also beings about a structural change in the yarn itself, which is one of the important tests to be seen while judging whether the process is manufacture or not. The structure, the character, the use and the name of the product are indicia to be taken into account while deciding the question whether the process is a manufacture or not."

In the light of the above, we deem it appropriate to remand the matter to the file of the Assessing Officer with the following directions:

(i)	To examine the record of the assessee as well as the sister concerns to find out whether the assessee has purchased the goods from the sister concerns on account of emergency.
(ii)	Whether the said goods purchased from the sister concerns were used by the assessee-company for the purposes of manufacturing, in the light of stated herein above
(iii)	Whether out of the goods purchased from the sister concerns any goods were traded by the assessee-company , with amount if any, without taking benefit of Section 80-IC of the Act or not.
(iv)	Whether the sister concerns had earned GP profit of 55% on such goods by selling the same to other parties.
(v)	Whether the sister concerns are into the manufacturing activities of the raw material/packing materials purchased by the assessee from them.
(vi)	Whether the sister concerns of the assessee are purchasing raw material/packing material from a third party, if yes, at what rate and from whom.
(vii)	What was the prevailing market rate of the raw material/packing material at the time of selling by the sister concerns to the assessee. Thereafter compare the market rate of raw material/packing material with the purchased price of the assessee from the sister concerns.

In the light of the above, the matter is remanded back to the file of the ld Assessing Officer. If it is concluded by the ld Assessing Officer that the goods purchased by the assessee were traded without trading any benefit u/s 80-IC then the Assessing Officer shall not reduce deductions u/s 80-IC to that extent. Further if the Assessing Officer found that the raw material/packing material are not manufactured by the sister concerns and is available at the same rate, then the ld Assessing Officer shall also not reduce the profit calculated by it by adding GP profit @ 55% to the cost price of the purchased material.

If however the Assessing Officer comes to the conclusion after scrutinizing the record of the sister concerns more particularly the sale invoices, excise record, sale tax/vat record etc. that the goods sold (traded, raw material and packing material) were manufactured by the sister concerns then the Assessing Officer shall calculate the GP profit @ 55% and apply the provisions of section 80-IC(7) read with Section 80IA(10) of the Act.

In the light of the above, these issues are remanded back to the file of Assessing Officer and the appeal of the revenue as well as the assessee is allowed for statistical purposes only.

17. Sale of scrap:- The ld Assessing Officer has noticed that the scrap sale declared by the assessee of the packing material is out of the manufacturing activity of the assessee and therefore, the same was business receipt and accordingly, the ld Assessing Officer disallowed amount of Rs. 5,14,372 for the assessment year 2008-09, Rs. 5,28,014/- for the assessment year 2009-10, Rs. 4,39,076/- for the assessment year 2011-12. The ld CIT(A) while hearing the appeal against the order passed by the ld Assessing Officer has held that the revenue received from the sale of the scrap material will reduce the sale consideration/cost of raw material and therefore it will reduce the profit of the undertaking. It was held that there is a direct nexus between the sale activities and the profit from the eligible business and therefore has allowed the ground.

18. Now the revenue is in appeal before us. The ld DR has submitted that the first degree nexus is not with respect to amount received for the sale of scrap and therefore, it is not the part of the manufacturing activities of the assessee as laid down by the Hon'ble Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218/183 Taxman 349 (SC). The ld DR also relied upon the judgment of the Hon'ble High Court of Madras in the case of CIT v. Shiva Distilleries Ltd. [2007] 293 ITR 108 (Mad.) and more particularly in paragraph No. 7.3, the Hon'ble High Court has held as under:-

"7.3 Applying the ratio laid down by this court in CIT v. Madras Motors Ltd./M. M. Forgings Ltd. [2002] 257 ITR 60, we held that the scrap and waste materials, which would not be relatable to export business of the assessee, have to be excluded from business profit for the purpose of calculation of deduction under section 80HHC of the Act."

19. On the other hand, the ld AR of the assessee has submitted that the ld CIT(A) has held that the scrap is generated out of the manufacturing activities of the undertaking and the sale receipt on account of scrap will ultimately reduce the purchase price of the raw material. It was submitted that the said sale scrap cannot be utilized by the assessee and therefore, the ld CIT(A) was right in allowing the benefit.

20. We have heard the rival contentions of both the parties and perused the material available on the record. The present issue is squarely covered by the decision of the Coordinate Bench in the case of Yodeva Plastics (P.) Ltd.v. Dy. CIT [2016] 65 taxmann.com 47 (Hyd. - Trib.) where the Coordinate Bench has held as under:-

36. Hence we are of the opinion that sale of scrap has the effect of reducing the cost of production. Further, sale of scrap is eligible for deduction under section 80-IC. The following cases support the view that 80-IC deduction would be available with respect to sale of scrap.

1.	CIT v. Sundaram Clayton Ltd. [1982] 133 ITR 34 (Mad.);
2.	CIT v. Wheels India Ltd. [1983] 141 ITR 745 (Mad.);
3.	CIT v. Sadhu Forging Ltd. [2011] 336 ITR 444/11 taxmann.com 322/200 Taxman 1 (Mag.) (Delhi); and
4.	Fenner (India) Ltd. v. CIT (No. 2) [2000] 241 ITR 803/[2002] 125 Taxman 386 (Mad.).

37. In the case of Sadhu Forgings Ltd. (supra) it has been held as follows :

"The assessee's industrial undertaking was set-up for the purpose of manufacture of steel, forging, transmission gears and parts, and accessories of motor vehicles. During the relevant assessment year, it claimed deduction under section 80-IB on its gross receipts which, apart from goods sales, also included scrap sales, labour charges and job work charges. The Assessing Officer held that the deduction under section 80-IB could not be allowed on sale of scrap, job work and labour charges as the same were attributable to the business carried on by the assessee, but not derived from the profits of industrial undertaking. On appeal, the Commissioner (Appeals) allowed deduction under section 80-IB on the scrap sales holding that the scrap generation at various stages of manufacturing process was part of the manufacturing activity of an industrial unit and, thus, profits and gains derived on that account were from the industrial undertaking.

However, with regard to the claim of deduction on job work and labour charges, the Commissioner (Appeals) disallowed the appeal of the assessee and held that the job charges and labour charges not derived from the exports, were to be categorised as independent income and had to be deducted from gross profits to calculate profits derived from the exports. On the second appeal, the Tribunal allowed deduction under section 80-IB on job work charges and labour charges also holding that job works/labour charges income received by the assessee, by utilising its plant and machinery installed in the undertaking, gave rise to income which had a direct nexus with the assessee's industrial undertaking, and, thus, was entitled to claim of deduction under section 80-IB.

From a plain reading of section 80-IB, it would be seen that the only essential requisite is that the eligible industrial undertakings should be carrying out manufacture or production of articles or things. The industrial undertaking set-up by the assessee was for the purpose of manufacture of steel, forging, transmission gears and part, and accessories of motor vehicles and the scrap of those items was stated to be a bye-product of manufacturing process. The assessee explained in detail the process involved in forging and in that regard drew attention to the finding of the Tribunal based on the records that the assessee was involved in manufacturing of forging which involved purchase of steel, cutting the same, making of forging parts, giving heat treatment and machining. Dye making was stated to be the primary process and was a separate industry by itself. It was noted, and rightly so, that each of the above processes could be done in separate industrial undertaking, whereas the assessee had undertaken all those processes in its units. The issue was also that the assessee was doing those works on job basis for other undertakings, by getting the raw material from them. When the assessee was entitled to claim exemption in respect of income derived from such processes doing for itself, there was no reason as to why it would not be entitled to so merely because the raw material component was being supplied by other customers for whom the assessee was doing the job. In fact, deduction under section 80-IB is given on the profits derived from the manufacturing process, being undertaken by the assessee which qualifies for deduction. (para 9)

The heat treatment is one of the processes through which the forgings are given the desired temperature and then cooled in different manner which results in changing the mechanical properties desired by the customers. The heat treatment toughens the forged part for being used as automobile parts. The process of heat treatment is absolutely essential for rendering them marketable. Without the heat treatment, the material is not fit for automobile industry. (para 10)

Thus, in view of several decisions of the High Courts and the Supreme Court, the activity of forging is 'manufacturing' within the ambit of section 80-IB. It was immaterial that the assessee was doing the job of forging also for customers and was charging them on job-work basis or on the basis of labour charges. It would still be qualified as carrying eligible business under section 80-IB. (para 12)

Keeping in view the activities of the assessee in giving heat treatment for which it had earned labour charges and job-work charges, it could, thus, be said that the assessee had done a process on the raw material which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. Those receipts could not be said to be independent income of the manufacturing activities of the undertakings of the assessee and, thus, could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB. Those were gains derived from industrial undertakings and, so, entitled for the purpose of computing deduction under section 80-IB. There cannot be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from industrial undertaking for the purpose of computing deduction under section 80-IB." (para 13)

38. Since there is parity in the provisions of sections 80-IB and 80-IC, the above case shall apply in the case of 80-IC deduction with respect to sale of scrap. Respectfully following the decision in Sadhu Forgings Ltd.(supra) we allow ground Nos. 2 and 3 raised by the assessee.

The judgment relied by the revenue is not applicable to the facts and circumstances of the case as the issue involved in the said judgment was pertaining to Section 80HHC of the Act and the issue of 80HHC was examined by the Hon'ble Supreme Court in the case of CIT v. Punjab Stainless Steel Industries [2014] 46 taxmann.com 68/[2005] 229 Taxman 423/[2014] 364 ITR 144 (SC) wherein the Hon'ble Supreme Court has given the reasons for not treating the sale of scrap as part of the turnover for the following reasons:

"25. So as to be more accurate about the word "turnover", one can either refer to dictionaries or to materials which are published by bodies of accountants. The Institute of Chartered Accountants of India (hereinafter referred to as the "ICAI") has published some material under the head "Guidance Note on Tax Audit under section 44AB of the Income-tax Act". The said material has been published so as to guide the members of the ICAI. In our opinion, when a recognized body of accountants, after due deliberation and consideration publishes certain material for its members, one can rely upon the same. Paragraph 5 of the said Note deals with "sales", "turnover" and "gross receipts". Paragraph 5.2 and 5.3 of the said Note are reproduced hereinbelow, which pertain to the term "turnover".

"5.2 In the 'Guidance Note on Terms Used in Financial Statements' published by the ICAI, the expression 'Sales Turnover' (Item 15.01) has been defined as under :-

"The aggregate amount for which sales are effected or services rendered by an enterprise. The term "gross turnover" and "net turn over" (or "gross sales" and "net sales") are sometimes used to distinguish the sales aggregate before and after deduction of returns and trade discounts.'

5.3 The Guide to Company Audit issued by the ICAI in the year 1980, while discussing 'sales', stated as follows :

"Total turnover, that is, the aggregate amount for which sales are effected by the company, giving the amount of sales in respect of each class of goods dealt with by the company and indicating the quantities of such sales for each class separately. Note (i) The term "turnover" would mean the total sales after deducting therefrom goods returned, price adjustments, trade discount and cancellation of bills for the period of audit, if any. Adjustments which do not relate to turnover should not be made, e.g., writing off bad debts, royalty, etc. Where excise duty is included in turnover, the corresponding amount should be distinctly shown as a debit item in the profit and loss account.' (Emphasis supplied)
The aforestated meaning given by the ICAI clearly denotes that in normal accounting parlance the word "turnover" would mean "total sales" as explained hereinabove. The said sales would definitely not include the scrap material which is either to be deducted from the cost of raw material or is to be shown separately under a different head. We do not see any reason for not accepting the meaning of the term "turnover" given by a body of accountants, which is having a statutory recognition.

26. If all accountants, auditors, businessmen, manufacturers, etc., are normally interpreting the term "turnover" as sale proceeds of the commodity in which the business unit is dealing, we see no reason to take a different view than the view normally taken by the persons who are concerned with the said term.

27. In addition to the above factors, which we have considered for understanding the meaning of the term "turnover", we should not miss the purpose with which the said term has been incorporated in section 80HHC of the Act.

28. The intention behind the enactment of section 80HHC of the Act was to encourage export so as to earn more foreign exchange. For the said purpose, the Government wanted to encourage businessmen, traders and manufacturers to increase the export so as to bring more foreign exchange in our country. If the purpose is to bring more foreign exchange and to encourage export, we are of the view that the Legislature would surely like to give more benefit to persons who are making an effort to help our nation in the process of bringing more foreign exchange. If a trader or a manufacturer is trying his best to increase his exports, even at the cost of his business in a local market, we are sure that the Government would like to encourage such a person. In our opinion, once the Government decides to give some benefit to someone who is helping the nation in bringing foreign exchange, the Revenue should also make all possible efforts to encourage such traders or manufacturers by giving such business units more benefits as contemplated under the provisions of law.

29. For the aforesaid reasons, we are of the view that the view expressed by the High Court is in conformity with the normal accounting practice followed by the traders, including the respondent-assessee and it was justified in coming to a conclusion that the proceeds generated from the sale of scrap would not be included in the "total turnover".

However, in the present case, the issue is of Section 80-IC and not of 80HHC. Both the provisions apply and operates in different fields. Whereas in Section 80HHC revolves around , the issue of export benefit on the turnover whereas in the case of 80-IC the benefit is to be calculated on the profit and loss of an undertaking qualifying as per Section 80-IC(2) of the Act. The treatment of the scrap for the purposes of manufacturing activity is required to be appreciated in the context that the sale of scrap which will goes to reduce the input cost of the undertaking and thereby decline the profit margin of the undertaking whereas in the case of 80HHC if the sale scrap is made a part of the turnover the export benefit of the undertaking will increase and therefore to different effects are therefore for treating the sale being part of the turnover and also treating the receipt of sale scrap being part and parcel of the activity being proximate to the activities of the industrial undertaking while computing the deduction u/s 80-IC of the Act. For the reasons stated above, we uphold the order passed by the ld CIT(A) and dismiss the appeals of the revenue on this ground. We hold that the sale of scrap being part and parcel of the activities of the undertaking and the gains derived from the said activity is arising out of core activity of the assessee and therefore, is required to be taken into consideration for the purposes of computation the deduction under the provisions.

21. Interest on sale invoices:- The assessee has claimed that the interest charged on account of delayed payment from the purchaser in respect of the manufactured goods sold to them, is required to be allowed as deduction u/s 80-IC of the Act. However, the assessee itself is engaged in manufacturing activities and trading of goods, therefore, the assessee has itself offered amount for taxation. The assessee has not filed bifurcation of the interest received under the manufacturing and trading activities, considering the complicity, the ld Assessing Officer has allowed 50% of interest received are in respect of trading item and 50% of the interest received/in respect of manufacturing item. Thus, the ld Assessing Officer has allowed the deduction of 50% of Rs. 67,114/- in respect of assessment year 2008-09.

22. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal and has only restricted to the disallowance for 5% with the following reasons:-

"As regards reduction of Rs. 134228/- on account of interest against sales invoices, it may be noted that the assessee was engaged in trading of goods as well as manufacturing activities and as bifurcation of such interest income from trading viz a viz manufacturing was not given therefore the A.O. reduced 50% of such interest income from claim u/s 80-IC. The appellant case is that 95.00% (Rs. 443979181/-) of the turnover is of manufactured goods and the turnover of trading goods was only for 5% (Rs. 25326452). As per the appellant, the apportion of interest should have been in the ratio of turnover. The contention of the appellant deserves merit inasmuch as the profit can be reduced only to the extent attributed to profit claimed u/s 80-IC and accordingly the A.O. is directed to disallow the interest only to the extent of 5%. Accordingly, the disallowance from the claim u/s 80-IC is to be made for Rs. 6711/- as against Rs. 134228/- made by the A.O."

23. We have heard the rival contentions of both the parties and perused the material available on the record. The conclusion of the ld CIT(A) that the turnover of the trading goods was only 5% i.e. for Rs. 25326452, on the face of it is appears to be incorrect. As per CIT(A), the total purchase of traded goods from the sister concerns was Rs. 20894012/-, therefore the basis for attributing at the figure of Rs. 25326452/-, in our view, was incorrect and is required to be verified by the ld Assessing Officer. The ld CIT(A) has merely accepted the figure of Rs. 25326452/- on the basis of the submissions made by the assessee. However, the said submissions have not been verified by the ld Assessing Officer.

In the light of the facts and circumstances of the case, we deem it appropriate to remand the matter to the file of the ld Assessing Officer to verify as to what was the turnover of trading goods (not manufactured by the assessee) and what was the turnover of the goods manufactured by the assessee and thereafter disallowed interest on sale invoices only in respect to the manufactured goods . In view thereof, this issue is also remanded back to the file of the Assessing Officer. Accordingly, this ground of appeal is allowed for statistical purposes only.

24. Ground No. 2 of the assessee's appeal for A.Y. 2010-11 and Ground No. 3 of the assessee's appeal for A.Y. 2011-12 are against confirming the action of the ld Assessing Officer in reducing the deduction u/s 80-IC. The ld Assessing Officer observed that the assessee has shown an amount of Rs. 48,875/- for the A.Y. 2010-11 and Rs. 70,670/- for A.Y. 2011-12 as sundry creditors balances written off and included it in the miscellaneous income. These amounts have not been reduced while calculating deduction u/s 80-IC of the Act. As the amounts do not represent income from manufacturing activities, these are liable to be reduced from the deduction claimed u/s 80-IC of the Act.

25. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the order passed by the ld Assessing Officer by observing as under:-

"As regards the creditors balance of Rs. 48875/- reduced from deduction u/s 80-IC, the appellant case is that due to written back of such amount the cost of material consumed was reduced and it would enhance the profit of the undertaking. In this connection, it may be noted that there is nothing on record which may indicate that such creditors balances were on account of trade creditors and therefore the nexus of such activity with the manufacturing activity is not manifested. Accordingly, the A.O. has rightly reduced such amount from the claim of deduction u/s 80-IC."

Similar finding is also given by the ld CIT(A) for the decision in A.Y. 2011-12.

26. Now the assessee is in appeals before us. The ld AR of the assessee has reiterated the submissions made before the ld CIT(A) and further submitted that the said write back reduces the cost of material consumed and would enhance the profit of the undertaking, excluding the same from section 80-IC deduction calculation is unjustified.

27. At the outset, the ld DR has vehemently supported the order of the lower authorities.

28. We have heard the rival contentions of both the parties and perused the material available on the record. The contention of the ld AR of the assessee that the credit balance of Rs. 48,875/- is required to be reduced from deduction u/s 80-IC of the Act, in our view, is required to be set aside to the file of the Assessing Officer, as the assessee has failed to prove the nexus between the amount of the credit balance of Rs. 48,875/- for the A.Y. 2010-11 and Rs. 70,670/- for A.Y. 2011-12 with that of the manufacturing activities. The assessee is directed to produce all the evidences before the Assessing Officer. In this regard, the Assessing Officer is directed to examine the same and after examination, the Assessing Officer, if found that the creditors were associated with the manufacturing activities of the assessee, then he shall reduce the credit balance from the deduction u/s 80-IC of the Act. Hence, this ground of appeals is allowed for statistical purposes only.

29. In the result, all the appeals of the assessee are allowed partly.