IN HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 3 of 2019 Principal Commissioner of Income Tax ....Appellant. Vs. M/s Laxmi Electronic ...Respondent. Mr. Hari Mohan Bhatia, learned Advocate for appellant. Dated: 21st February, 2019 Coram: Hon ble Ramesh Ranganathan, C.J. Hon ble R.C. Khulbe, J. Ramesh Ranganathan, C.J. (Oral) This appeal is preferred against order passed by Income Tax Appellate Tribunal, New Delhi in ITA No.1994/Del./2015 dated 10.09.2018. Aggrieved by said order, Revenue has invoked jurisdiction of this Court under Section 260A of Income Tax Act. 2. respondent-assessee claims to have purchased goods worth `73,91,587/- in Faridabad for his business activities at Haridwar. Holding that these purchases had not been made, claim of respondent-assessee for deduction of `73,91,587 was disallowed, and respondent-assessee was subjected to tax under Income Tax Act on resultant enhanced profit from business. 3. assessee carried mater in appeal to Commissioner of Income Tax (Appeals) who deleted additions made by Assessing Officer, allowing them benefit, under Section 80IC of Income Tax Act, on entire eligible income. Aggrieved thereby, Revenue carried matter in appeal to Tribunal. 4. In order under appeal, Tribunal observed that assessee-unit was eligible for deduction u/s 80IC; it was not in dispute that 2 assessee was entitled to benefit of Section 80IC on entire eligible income; it was also not in dispute that Assessing Officer had granted relief to assessee, under Section 80IC, qua sum of `73,91,587/- claimed in return of income; when profits, for purposes of Section 80IC, were to be calculated as per Sections 28 to 44BB of Income Tax Act, purchases were also covered thereunder; while calculating profits of any business, purchases were also deductible expenditure; disallowance of purchases resulted in reduction in purchases amount and, consequently, increase in profit which would be again be eligible for exemption u/s 80IC of Income Tax Act; it would not increase income tax liability of assessee, which would remain same even if purchases were disallowed; contention of Revenue, that assessee had not made any claim in return of income for amount claimed as deduction and, therefore, deduction should not be allowed in view of Section 80A(5) of Income Tax Act, was not sustainable; assessee had made claim in his return as Assessing Officer had, himself, shown income from business as `3,36,83,304/-; in these circumstances, deduction u/s 80IC was allowed on profit; contention of Revenue, that assessee had not made this claim in return, was wrong and incorrect; entire profit of assessee was exempt u/s 80IC; and learned Commissioner of Income Tax (Appeals) had rightly deleted deduction u/s 80IC wrongly made by Assessing Officer on account of inflated purchases. 5. Deduction u/s 80IC of Income Tax Act is, admittedly, available to undertaking of assessee. deduction therein is 100% of profits. As has been held both by Commissioner of Income Tax (Appeals), and Tribunal, even if part of purchases made by assessee is held ineligible for deduction it would only result in increase in profits of undertaking; and, since entire profits of undertaking is eligible for deduction under Section 80IC of Income Tax Act, it mattered little whether or not portion of purchases, effected by assessee, was disallowed. 6. While we are satisfied that deduction allowed by Commissioner of Income Tax (Appeals), as confirmed by Tribunal, 3 does not necessitate interfere in appeal under Section 260A of Income Tax Act, Mr. Hari Mohan Bhatia, learned Senior Standing Counsel for Income Tax, would draw our attention to Section 80A(5) of Income Tax Act to contend that, since assessee did not claim this expenditure, Commissioner of Income Tax (Appeals) and Tribunal could not have extended to them benefit under Section 80IC of Act. Section 80A(5) stipulates that, where assessee fails to make claim in his return of income for any deduction under Section 10A or Section 10AA or Section 10B or Section 10BA or under any provision of this Chapter under heading C. Deductions in respect of certain incomes , no deduction shall be allowed to him thereunder. said provision only obligates Assessing Authority not to allow any deductions which assessee has not claimed. 7. As noted by Tribunal, in order under appeal, assessee, in present case, had claimed deduction towards purchases made by him. These deductions were disallowed by Assessing Authority. Since assessee had made such claim for deduction, Tribunal has rightly held that Section 80A(5) of Act is not applicable. 8. Interference, under Section 260A of Act, is justified only if appeal gives rise to substantial question of law. It is only if findings recorded by Tribunal, on facts, is based on no evidence, or findings are perverse, would it give rise to substantial question of law warranting interference in proceedings under Section 260A of Income Tax Act. We find no such infirmity in order under appeal. 9. When we asked Mr. Hari Mohan Bhatia, learned Senior Standing Counsel, as to whether Assessing Officer had ascertained genuineness of purchases made by assessee, learned Senior Standing Counsel would submit that, during pendency of appeal before Commissioner of Income Tax (Appeals), Assessing Officer was directed to verify genuineness of purchases made by assessee; and, on such verification, Assessing Officer found that assessee had, in fact, made such purchases. 4 10. In light of this submission, it is clear that Assessing Officer should, in first instance, not have made any deduction on ground of inflated purchases, since purchases were in fact, even according to learned Senior Standing Counsel for Income Tax, made by assessee. 11. Viewed from any angle, we are satisfied that no interference is called for, under Section 260A of Income Tax Act, against order of Tribunal. appeal fails and is, accordingly, dismissed. No costs. (R.C. Khulbe, J.) (Ramesh Ranganathan, C.J.) 21.02.2019 21.02.2019 Sanjay Principal Commissioner of Income-tax v. Laxmi Electronic