O/TAXAP/59/2015 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 59 of 2015 ================================================================ COMMISISONER OF INCOME TAX, AHMEDABAD IV....Appellant(s) Versus AKZO NOBLE NON STICK COATINGS LTD....Opponent(s) ================================================================ Appearance: MR.VARUN K.PATEL, ADVOCATE for Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE S.H.VORA Date : 28/01/2015 ORAL ORDER (PER : HONOURABLE MR.JUSTICE JAYANT PATEL) [1] Revenue has preferred present appeal on two substantial questions of law as mentioned in Paragraph 2 of memo of appeal. However, learned counsel submits that essential question is question [2][i], which would arise for consideration, same reads as under: [2](i) Whether in facts and circumstances of case, learned ITAT has erred in law in allowing appeal of assessee against order of CIT(A) confirming dis allowance of deduction u/S. 10B and 80IB of Income Tax Act, 1961 ? [2] We have heard Mr. V.K. Patel, learned counsel appearing for appellant. Page 1 of 4 HC-NIC Page 1 of 4 Created On Wed Sep 30 15:44:50 IST 2015 O/TAXAP/59/2015 ORDER [3] relevant facts are that AO discarded books of accounts of assessee while considering benefit of exemption under Section 10B and 80IB of Income Tax Act on ground that production shown by assessee is exceeding sanction limit and production data are inflated and consequently disallowed claim of Rs.98,13,965/ + Rs.10,08,545/ , total Rs.1,08,22,510/ . In appeal, CIT(A) confirmed view taken by AO. However, Tribunal in further Appeal observed at Paragraph 8, as under: Paragraph 8: We have heard rival submissions and perused material on record. It is undisputed fact that Assessee has claimed u/S.80IB and u/S.10B of Act. It is also fact that deductions have been claimed by Assessee in past and has also been allowed in scrutiny assessments. We find that AO has also not disputed that Assessee is engaged in manufacturing of goods and is also entitled to deduction u/Ss. 80IB and 10B of Act. AO after rejecting books of accounts has not estimated book results but only has re worked deduction u/S.80IB and 10B of Act. It is also fact that books of accounts of Assessee are audited under Companies Act and production of Assessee has not been doubted by any other regulatory authority. We further find that AO has also not brought on record findings of any other government or regulatory authority who was doubted production of Assessee. We also find that though there has been fall in G.P in year under consideration and Assessee's Page 2 of 4 HC-NIC Page 2 of 4 Created On Wed Sep 30 15:44:50 IST 2015 O/TAXAP/59/2015 ORDER books of accounts have been rejected by AO but no addition on account of fall in G.P has been made by AO. We further find that even after rejection of books of accounts, total income before deduction has not been disturbed by AO. Before us, Revenue has not brought any material on record to support contention of AO that Assessee has produced more than installed capacity and AO has proceeded on basis of presumption. Considering totality of aforesaid facts, we are of view that AO was not justified in working revised claim of deduction u/S.10B and 80IB of Act. We thus set aside addition made by AO and allow ground of Assessee. Under circumstances, present appeal by Revenue. [4] aforesaid shows that Tribunal found that books of accounts of assessee were audited books of accounts and production data are not doubted by any of regulatory authority. Tribunal also recorded as under: Before us, Revenue has not brought any material on record to support contention of AO that Assessee has produced more than installed capacity and AO has proceeded on basis of presumption. [5] As such whether to discard books of accounts and to reach conclusion on basis of past assessment would depend upon facts of each case. In any case, before discarding of books Page 3 of 4 HC-NIC Page 3 of 4 Created On Wed Sep 30 15:44:50 IST 2015 O/TAXAP/59/2015 ORDER of accounts, genuineness of entry or entries in books of accounts would be required to be tested. Tribunal found that production data are not found doubtful by any other regulatory authority. Tribunal has relied upon fact that books of accounts which were duly audited. In our view, if Tribunal has recorded ultimate finding of fact that discarding of books of accounts was not justified, and consequently working out of revise claim for deduction by AO, we find that such finding of fact would be outside scope of judicial scrutiny, more particularly, when nothing is satisfactorily demonstrated before Court that such finding of fact by Tribunal can be said as perverse to record. [6] Under circumstances, we do not find any substantial questions of law as sought to be canvased. [7] Hence present appeal is merit less hence same is dismissed. (JAYANT PATEL, J.) (S.H.VORA, J.) VATSAL Page 4 of 4 HC-NIC Page 4 of 4 Created On Wed Sep 30 15:44:50 IST 2015 Commissioner of Income-tax, Ahmedabad-IV v. Akzo Nobel Non Stick Coatings Ltd