M.K. Auto Clutch Industries, Kala Amb V. Addl. CIT, Solan

ITA 1018/CHANDI/2009

• Counselvise Citation: 101821514 RSA 2009
• Duration Of Justice: 6 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Business income; Additional evidence; Agreed addition; Right to appeal; Onus to prove
• Section: 143(3); 80HHC; 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NOS. 1018/CHD/2009 ASSESSMENT YEAR: 2006-07 M/S M.K. AUTO CLUTCH INDUSTRIES, VS. THE ADDL. CIT , KALA AMB, DISTT. SIRMOUR SOLAN RANGE, SOLAN (HP) H.P. PAN NO. AAMFM0902H (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUBHASH AGGARWAL RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 05.10.2015 DATE OF PRONOUNCEMENT : 21.12.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), SHIMLA DATED 4.9.2009 RELATING TO ASSESSMENT YEAR 2 006-07. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA [BRIEF LY 'THE CIT(A)'] HAS ERRED IN UPHOLDING ADDITION OF RS. 35, 00.000/-. APPELLANT DENIES ITS LIABILITY TO BE ASSESSED AT RS .35,00,000/- 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT ADDITION OF RS.35,00,000/- MADE ON AGREED BASIS WAS NOT APPEAL- ABLE. 2 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN NOT APPRECIATING THE CIRCUM STANCES THAT COMPELLED THE APPELLANT TO AGREE TO ADDITION O F RS.35,00,000/-. CIRCUMSTANCES THAT LED TO THE ADDIT ION WOULD SHOW THAT APPELLANT'S AGREEMENT WAS NOT VOLUNTARY. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN NOT ADMITTING ADDITIONAL EV IDENCE WITHOUT EVEN EXAMINING THE SAME. 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT IT CA NNOT BE LAID DOWN AS A PROPOSITION THAT ADDITION AGREED UPO N CANNOT BE DISPUTED. JUDGMENTS RELIED UPON DO NOT LAY DOWN SUCH PROPOSITION AND NEED TO BE READ IN THE CONTEXT IN W HICH THEY WERE RENDERED. 6. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE AUTHORITIES BELOW DID NOT APPRECIATE THAT SECTI ON 80IA(10) OF THE ACT WAS NOT APPLICABLE. THE ABOVE GROUNDS ARE INTERRELATED AND THEY ARE BEI NG DISPOSED OFF TOGETHER IN SUCCEEDING PARAGRAPHS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FIRM DERIVES INCOME FROM MANUFACTURING OF AUTO PARTS. THE ASSESS EE HAD STARTED PRODUCTION W.E.F. 14.9.2005 AND THUS IT WAS THE FIRST YEAR OF PRODUCTION. HOWEVER, THE DATE OF COMMENCEMENT OF PRODUCTION ACTIVITIES AS PER FOR M 10CCB WAS 13.9.2005. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED TOTAL SALES AT RS. 5,78,72,888/- AGAINST WHICH GROSS PROFIT OF RS. 1,7 5,29,650/- WAS SHOWN WHICH GIVES GP RATE OF 30.25%. THE NET PROFIT SHOWN WAS A T RS. 1,13,99,583/-, PERCENTAGE OF WHICH COMES TO 19.56%. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO JUSTIFY THE PROFIT SHOWN BY IT. IN RESP ONSE TO THE SAID QUERY, THE ASSESSEE SUBMITTED ITS REPLY VIDE LETTER DATED 28.1 1.2008, WHICH READS AS UNDER:- 3 A) THE ASSESSEE FIRM IS GENUINELY OPERATING AND ACT UALLY ENGAGED IN MANUFACTURING ACTIVITIES AT KALA AMB, HAVING INVEST ED RS. 2.21 CRORES TOWARDS LAND, BUILDING, PLANT & MACHINERY UP TO THE FINANCIAL YEAR ENDING 31.3.2006 AND HAVING EMPLOYED ALMOST 75 WORKERS FROM THE STATE OF HIMACHAL PRADESH. B) DURING THE YEAR UNDER REFERENCE, THE ASSESSEE FI RM HAVING MADE TOTAL PURCHASE OF 5.21 CRORE; OUT OF WHICH PURCHASE S TO THE EXTENT OF 68% I.E. 3.54 CRORES WERE FROM THE SISTER CONCERN AND REMAINING 32% PURCHASES WERE FROM OPEN MARKET. THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE REPL Y STATING THAT AS PER PARTNERSHIP DEED, IT WAS AUTHORIZED AS UNDER:- I) THE FIRM WAS TO PAY 5% OF ITS TURN OVER TO SH. VIJA Y KUMAR BHANDARI, PARTNER AS TRADE MARK CHARGES II) INTEREST ON THE CAPITAL OF THE PARTNERS WAS TO BE P AID @ 6% PER ANNUM III) THE THIRD AND FOURTHPARTNER I.E. SHRI NITIN BHANDAR I AND SH. GAURAV BHANDAR WERE PAID REMUNERATION / SALARY AS P ER THE PROVISION OF INCOME TAX ACT. 4. THE ASSESSING OFFICER NOTED THAT IN THE PROFIT A ND LOSS ACCOUNT, NO SUCH EXPENSES ON ACCOUNT OF TRADEMARK CHARGES, INTEREST ON CAPITAL AND REMUNERATION HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT. T HE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE ABOVE EXPENSE S HAVE NOT BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT. IN RESPONSE TO THE ABO VE SAID QUERY, THE ASSESSEE SUBMITTED ITS REPLY ON 29.12.2008. THE ASSESSING OF FICER DID NOT ACCEPT THE REPLY OF THE ASSESSEE STATING THAT THE ASSESSEE HAD USED THE TRADE MARK OF THE PARTNERS SHRI VIJAY KUMAR BHANDARI FOR ITS TECHNICA L KNOW-HOW / GOODWILL, CUSTOMER BASE SERVICES FOR WHICH NO COMPENSATION / REMUNERATION AS AUTHORIZED IN THE PARTNERSHIP DEED HAS BEEN PAID. IN REPLY DA TED 29.12.2008, THE ASSESSEE CLAIMED TO HAVE EXECUTED SUPPLEMENTARY AGREEMENT DA TED 31.3.2005 WHEREIN IT 4 WAS INCORPORATED THAT NOTHING SHALL BE CHARGED FROM THE FIRM FOR THE TIME BEING FOR USE OF TRADE MARK WORD M.K.. IN THE ABOVE REP LY THE ASSESSEE ALSO CLAIMED THAT THE CLAUSE FOR PAYMENT OF REMUNERATION TO THE WORKING PARTNERS WAS CHANGED AS PER MEMORANDUM OF UNDERSTANDING (MOU) EX ECUTED ON 30.4.2005 IN WHICH IT WAS MUTUALLY AGREED BETWEEN THE PARTIES TH AT NO REMUNERATION IN THE INITIAL PERIOD OF 5 YEARS SHALL BE PAID TO THE WORK ING PARTNERS. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE FAILED TO FURNISH T HE ORIGINAL DOCUMENTS. HOWEVER, THE ASSESSING OFFICER HAS ADMITTED THAT TH E ASSESSEE HAS FURNISHED PHOTOCOPIES OF THE AFORESAID SUPPLEMENTARY PARTNERS HIP DEED. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM BY PRODUCING AUTHE NTIC DOCUMENTS. THE ASSESSING OFFICER FURTHER NOTED THAT NO EXPENSES WERE FOUND T O HAVE BEEN DEBITED TO PROFIT AND LOSS ACCOUNT ON ACCOUNT OF INTEREST ON PARTNERS CAPITAL AND REMUNERATION TO THE PARTNERS. THE ASSESSING OFFICER HELD THAT INTE REST ON CAPITAL AND REMUNERATION IS REQUIRED TO BE PAID TO THE PARTNERS AS PER THE PROVISIONS OF INCOME-TAX ACT, BECAUSE THE PARTNERS ARE DIFFERENT PERSONS FROM THE FIRM. THE ASSESSING OFFICER TOOK THE VIEW THAT BY NOT PAYING SALARY TO THE PARTNERS, THE ASSESSEE HAS USED THEIR KNOWLEDGE FOR TECHNICAL KNO W-HOW FREE OF COST WHICH IS NOT PERMISSIBLE IN VIEW OF THE PROVISIONS OF SECTIO N 80IA(10) OF THE ACT. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE HAS USED THE TECHNICAL KNOW- HOW AND GOODWILL / MARKETING SERVICES OF ITS RELATE D CONCERNS M/S VNG AUTO MOTIVES PVT LT & VNG BAKES PVT LTD AND BHANDARI FOR GE & ALLOYS CAST PVT LTD. THE PARTNERS OF THE ASSESSEE FIRM NAMELY SHRI VIJAY KUMAR BHANDARI, GAJURAV BHANDARI AND NITIN BHANDARI ARE DIRECTORS I N THE ABOVE CONCERNS. AS DIRECTORS, THEY HAVE RECEIVED SALARY / REMUNERATION FROM THE ABOVE CONCERN BUT NO PARTNERS REMUNERATION WAS PAID BY THE ASSESSEE F IRM. ACCORDING TO ASSESSING OFFICER THEY HAVE USED TECHNICAL KNOW-HOW / GOODWIL L / MARKETING SERVICES OF THE RELATED CONCERNS BUT NO SALARY / REMUNERATION H AS BEEN PAID FOR THIS. SIMILARLY, THE INTEREST ON CAPITAL HAS NOT BEEN PAI D TO THE PARTNERS. THE 5 ASSESSING OFFICER FURTHER OBSERVED THAT THE KNOWLED GE OF TECHNICAL KNOW-HOW FOR MANUFACTURING OF AUTO PARTS WAS AN INTANGIBLE A SSETS OF M/S VNG AUTO MOTIVES PVT LTD AND VNG BRAKES PVT LTD AND BHADARI FORGE & ALLOYS CAST PVT LTD, WHO MADE ITS TECHNICAL KNOW HOW AVAILABLE TO T HE ASSESSEE FOR WHICH THE ASSESSEE FIRM HAD NOT INCURRED ANY EXPENDITURE AS B EING THE SISTER CONCERN OF THE ASSESSEE BUT NO COMPENSATION WAS PAID TO THEM. SIMI LARLY, THE ASSESSEE HAD NOT PAID ANY COMPENSATION ON ACCOUNT OF GOODWILL TO THE ABOVE CONCERNS WHICH WAS BEING USED BY THE ASSESSEE. ACCORDING TO ASSESSING OFFICER THE TECHNICAL KNOWHOW AND GOODWILL IS THE MOST VALUABLE INTANGIBL E ASSET OF THE BUSINESS ESTABLISHMENT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DECLARED THE TOTAL SALES AT RS. 5,78,72,888/- AND IT HAD CLAIMED 100% DEDUCTION ON ITS PROFITS UNDER SECTION 80IC OF THE ACT. THE ASSESSING OFFICE R HAS STATED THAT IT IS BECAUSE OF SUCH TECHNICAL KNOW-HOW THAT THE ASSESSEE COULD MANUFACTURE THE GOODS WHICH INVOLVED COMPLICATED TECHNIQUES AND HENCE THE ASSESSEE SOLD ITS GOODS WORTH RS. 5,78,72,888/-. THE ASSESSING OFFICER FUR THER NOTED THAT PROVIDING OF TECHNICAL KNOW HOW TRADEMARK, GOODWILL AND CUSTOMER BASE SERVICE CLEARLY AMOUNTED TO BUSINESS TRANSACTIONS BETWEEN THE ASSES SEE AND CLOSELY CONNECTED PERSONS WITHIN THE MEANING OF SECTION 80IA(10) OF T HE ACT. THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT PROVIDING OF TECHNICAL KNOW-HOW AND SERVICES FREE OF COST TO THE ASSESSEE HAS RESULTED IN THE ASSESSEES DECLARING PROFITS WHICH IS HIGHER THAN NORMAL PROFITS. THE AS SESSING OFFICER TOOK THE VIEW THAT THE PROFITS DECLARED BY THE ASSESSEE HAVE TO B E ADJUSTED EITHER BY PROVIDING FOR PAYMENT OF ROYALTY OR FEES FOR TECHNICAL SERVIC ES, USE OF TRADE MARK AND PAYMENT OF INTEREST ON CAPITAL AND REMUNERATION FOR THE SERVICES OF PARTNERS. THE ASSESSING OFFICER HAS ALSO NOTED THAT OUT OF TOTAL PURCHASES, PURCHASES FROM ITS SISTER CONCERN WAS 68% AND BALANCE 32% FROM OPEN MA RKET. THE ASSESSING OFFICER CONCLUDED THAT THERE WAS AGREEMENT / ARRANG EMENT BETWEEN THE SISTER CONCERNS TO ARRANGE THEIR BUSINESS IN SUCH A WAY TH AT ASSESSEE FIRM COULD GET MAXIMUM PROFIT AND CLAIM THE SAME AS DEDUCTION U/S 80IC OF THE ACT. THE 6 ASSESSING OFFICER OBSERVED THAT WHEN CONFRONTED ON THE ABOVE ISSUE, THE ASSESSEE COULD NOT GIVE ANY SATISFACTORILY REPLY. H OWEVER, IN VIEW OF THE DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER, THE ASSESSEE FIRM OFFERED TO REDUCE THE ELIGIBLE PROFIT BY RS. 35 LAKHS TO COVER UP THE DISCREPANCIES AND OTHER LEAKAGE AND TO PAY TAX ON IT. THE ASSESSEE ALSO OFF ERED NOT TO CLAIM DEDUCTION U/S 80IC OF THE ACT ON THE PROFITS SO REDUCED. ACCO RDINGLY, THE ASSESSING OFFICER; MADE THE ADDITION OF RS. 35 LAKHS. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION, OB SERVING AS UNDER:- 4. T HE UNDERSIGNED HAS CONSIDERED THE FACTS AND R IVAL PLEAS. THE APPELLANT SUO-MOTO AGREED TO REDUCE THE ELIGIBLE PROFIT BY RS.35 LACS IN VIEW OF THE DISCREPANCIES POINTED OUT VIDE ITS LETTER DATED 29.12.2008. DURING APPEAL THE APPELLANT WANTS TO RE TRACT THE SURRENDER MADE SUO-MOTO THE SAME IS NOT ALLOWED KEEPING IN VI EW THE RATIO OF HON'BLE PUNJAB & HARYANA HIGH COURT IN BANTA SINGH KARTER SINGH IN 125 ITR 181(ALL) AND STERLING MACHINE TOOLS 132 ITR 122 (ORISSA)W HEREIN IT WAS LAID DOWN THAT ADDITION ON AGREED BAS IS IS NOT APPEALABLE. 4.2 THE APPELLANT HAS SOUGHT PERMISSION TO ADMIT FRESH EVIDENCE. THE SAME IS NOT ADMISSIBLE IN VIEW OF THE NON ELIGI BILITY UNDER RULE 46A OF THE IT RULES. THE APPELLANT FAILS TO FALL UNDER ANY OF THE CIRCUMSTANCES LAID DOWN UNDER RULE - 46A AS UNDER: - A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED. B) WHERE THE APPELLANT WAS PREVENTED BY S UFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER]. C) WHERE THE APPELLANT WAS PREVENTED BY S UFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER} ANY EVIDEN CE WHICH IS RELEVANT TO ANY GROUND OF APPEAL. 7 D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. 6. AGAINST THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD SHRI SUBHASH AGGRWAL, LD. COUNSEL FOR THE ASSESSEE AND SHRI S.K. MITTAL, LD. DR AT LENGTH AND HAVE ALSO P ERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR T HE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT IN CASE OF AGREED ASSESSMENT, THE ASSESSEES RIGHT TO APPEAL IS THERE, PROVIDED THE ASSESSEE IS ABLE TO SHOW AS TO WHY THE AGREEMENT IS NOT BINDING. HE FURTHER POINTED OUT THAT IT IS ALWAYS OPEN TO THE PERSON WH O HAS MADE ADMISSION TO SHOW THAT THE STATEMENT TO OFFER INCOME IS INCORRECT. SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KRISHAN LAL SHIV CHAND RA I VS CIT (1973) 88 ITR 293 (P&H) WHEREIN IT HAS BEEN STATED THAT IT IS WELL SE TTLED PRINCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW AND PROVE THAT AN ADMISSI ON MADE BY HIM PREVIOUSLY WAS IN FACT NOT CORRECT AND TRUE. FURTHER, HE ALSO RELIED ON THE FOLLOWING DECISIONS:- 1. CHHAT MULL AGGARWAL VS. CIT (1979) 116 ITR 694(P&H) 2. PULLANGODE RUBBER PRODUCE CO. LTD V STATE OF KERELA AND ANR (1973) 91 ITR 18 (SC) 3. SHAMNUR MURUGAPPA & SONS V ACIT (2002) 77 TTJ (BANG LORE 195) 4. WORK OF ART (P.) LTD VS. ACIT (1998) 50 ITD 513 (MA D.) 5. R.T. BALASUBRAMANIAM VS. ITO (1997) 50 ITD 513 (MAD ) 6. ESTER INDUSTRIES LTD VS. CIT (2009) 316 ITR 260 (DE LHI) 8 7. SMT. RANJNABEN MANSUKHLAL SHAH V ACIT (2004) 83 TTJ (RAJKOT) 369 8. ITO V SIDHIVINYAK DYEING & PRINTING MILLS (P) LTD ( 2009) 23 DTR (AHD)(TRIB) 370 119 ITD 169 9. BALDEV KRISHAN KAPOOR VS. ACIT (19990 65 TTJ (CHD)( TM) 254 : 68 ITD 37 10. M.NARAYANAN & BORS. VS. ACIT (2011) 339 ITR 192 (MAD.) 11. ITO V JGANNATH CHIRNJILAL ITAT JAIPUR (1985) 21 TTJ JP 45 SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE FURTHER EMPHASIZED THAT NO ADDITION ON SIMILAR GROUNDS HAS BEEN MADE BY THE AS SESSING OFFICER IN RESPECT OF ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 AND T HE ASSESSMENTS WERE FRAMED UNDER U/S 143(3) OF THE ACT. 8. ON THE OTHER HAND, SHRI S.K. MITTAL, LD. DR SUBM ITTED THAT IN THE CASE OF AGREED ASSESSMENT, THE ASSESSEES RIGHT TO APPEAL I S THERE PROVIDED IF THE ASSESSEE IS ABLE TO SHOW AS TO WHY THE AGREEMENT IS NOT BINDING. ACCORDING TO LD. DR, IN THE INSTANT CASE, THE ASSESSEE FAILED T O PROVE THIS ASPECT OF THE MATTER AND, THEREFORE, THE CIT(A) WAS JUSTIFIED IN REJECTING THE APPEAL ON THE GROUND THAT IT WAS AN AGREED ASSESSMENT. THE LD. DR ALSO RELIED ON THE FOLLOWING DECISIONS:- A) RAM LAL V CIT (1997) 108 ITR 73 (MAD.) B) RAMESH CHANDRA V CIT (1987) 168 ITR 375 (BOM) C) BANTA SINGH KARTAR SINGH V CIT (1980) 125 ITR 239 P &H) THE ASSESSEE VIDE ITS LETTER DATED 29.12.2008 AGREE D TO OFFER A SUM OF RS. 35 LAKHS AS ADDITIONAL INCOME OF THE ASSESSEE FIRM IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LETTER DATED 29.12.2008 READS AS UNDER:- TO 9 THE ADDL. COMMISSIONER OF INCOME TAX, SOLAN RANGE, SOLAN. SIR, SUB:- SURRENDER OF RS. 35.00 LACS AS ADDITIONAL INCOME IN THE CASE OF M/S. M.K. AUTO CLUTCH INDUSTRIES, TRILOKPUR ROAD, KALA AMB. IN RESPECT OF ABOVE MENTIONED CASE, YOUR GOODSELF H AS POINTED OUT THAT ASSESSEE FIRM HAS SHOWN HIGHER & I N GENUINE PROFIT, WHICH COULD NOT BE CORRECTLY DERIVED AS PER ITS BOOKS OF ACCOUNTS. FURTHER, YOUR GOODSELF HAS ALSO POINTE D OUT THAT NO EXPENDITURE OF TECHNICAL KNOW-HOW/GOODWILL, CUST OMER BASE SERVICE HAS BEEN BOOKED BY THE ASSESSEE AND IN TEREST ON CAPITAL CONTRIBUTION OF THE PARTNER AS WELL AS REMU NERATION TO THE PARTNERS AS PROVIDED IN THE ORIGINAL PARTNERSHI P DEED EXECUTED BY AND BETWEEN THE PARTNER OF THE ASSESSEE FIRM. IN THIS CONNECTION IT IS SUBMITTED AS UNDER:- A) THAT THE PROVISION OF CHARGING OF TECHNICAL KN OW- HOW//GOODWILL, CUSTOMER BASE SERVICE AND INTEREST O N CAPITAL CONTRIBUTION OF THE PARTNER AS WELL AS REMUNERATION TO THE PARTNERS HAVE BEEN DULLY MODIFI ED AND AMENDED BY WAY OF SUPPLEMENTARY HOWEVER, IN THE ABSENCE OF ORIGINAL DOCUMENTS AVAILABLE IN ORDER TO ESTABLISHMENT THE GENUINENESS AND AUTHENTICITY OF THE AFORESAID SUPPLEMENTARY AGREEME NT REMAINED UN-ESTABLISHED DUE TO SHORTAGE OF TIME BEI NG A TIME BARRING CASE. IN VIEW OF THE ABOVE AND IN ORDER TO BUY PEACE OF M IND AND TO AVOID PROTRACTED LITIGATION, WE AGREE TO OFFER A SU M OF RS.35.00 LACS AS ADDITIONAL INCOME OF THE FIRM FOR THE A.Y. 2006-07 SUBJECT TO NO PENAL ACTION U/S 271 {1)( C) AND PROSECUTION. THE DEDUCTION U/S 80IC WILL NOT BE CLA IMED ON THE ADDITIONAL INCOME OF RS. 35.00 LACS SURRENDERED . 10 THANKING YOU, YOURS FAITHFULLY, SD/- (VIJAY KUMAR BHANDARI) PARTNER M/S. M.K. AUTO CLUTCH INDUSTRIES DATED: 29.12.2008 9. FROM THE ABOVE LETTER IT IS CRYSTAL CLEAR THAT T HE ASSESSEE HAS ACCEPTED THE DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IT IS OBSERVED THAT AS PER THE PARTNERSHIP DEED, THE ASSE SSEE FIRM WAS TO PAY 5% OF ITS TURN OVER TO SHRI VIJAY KUMAR BHANDARI, PARNTER AS TRADE MARK CHARGES. FURTHER, AS PER THE PARTNERSHIP DEED, INTEREST ON CAPITAL OF THE PARTNERS WAS TO BE PAID @ 6% PER ANNUM. SHRI NITIN BHANDARI AND SH. GAURAV BH ANDARI PARTNERS WERE TO BE PAID REMUNERATION / SALARY AS PER THE PROVISIONS OF INCOME TAX ACT. IN THE PROFIT AND LOSS ACCOUNT, NO SUCH EXPENSES ON ACCOUNT OF TR ADE MARK CHARGES, INTEREST ON CAPITAL OF THE PARTNERS AND REMUNERATION TO PARTNER S HAVE BEEN DEBITED. HOWEVER, THE ASSESSEE CLAIMED THAT IT HAD EXECUTED SUPPLEMENTARY AGREEMENT DATED 31.3.2005 IN WHICH IT AS INCORPORATED THAT NO THING SHALL BE CHARGED FROM THE FIRM FOR THE TIME BEING FOR USE OF TRADE MARK W ORD M.K. FURTHER, IT WAS CLAIMED THAT AS PER MOU EXECUTED ON 30.4.2005, IN W HICH IT WAS MUTUALLY AGREED BETWEEN THE PARTNERS THAT NO REMUNERATION FO R THE INITIAL PERIOD OF FIVE YEARS SHALL BE PAID TO THE WORKING PARTNERS. THE AS SESSEE FAILED TO PRODUCE THE ORIGINAL DOCUMENTS TO SUBSTANTIATE THE ABOVE CONTEN TION. SECTION 184(4) PROVIDES THAT WHERE ANY SUCH CHANGE HAD TAKEN PLA CE IN THE PREVIOUS YEAR, THE FIRM SHALL FURNISH A CERTIFIED COPY OF THE REVISED INSTRUMENT OF PARTNERSHIP ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR R ELEVANT TO SUCH PREVIOUS YEAR AND ALL THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. IN OUR VIEW, THE AUTHORITIES BELOW HAVE TAKEN A CORRECT VIEW THAT IN THE ABSENCE OF AUTHENTIC DOCUMENTS, THE PLEA OF THE ASSESSEE CANNOT BE ACCEP TED. IT IS ALSO OBSERVED THAT 11 IN THE PROFIT AND LOSS ACCOUNT, NO EXPENSES HAVE BE EN DEBITED ON ACCOUNT OF INTEREST TO PARTNERS CAPITAL AND REMUNERATION TO TH E PARTNERS. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS USED TECHNICAL KNOWHOW / GOODWILL AND MARKETING SERVICES OF ITS RELATED CONCERNS VIZ M/S VNG AUTOMOTIVES PVT LTD AND M/S AND VNG BRAKES AND BHANDARI FORGE & ALLOY C AST PVT LTD. THE PARTNERS OF THE ASSESSEE FIRM NAMELY SHRI VIJAY KUM AR BHANDARI, SH. GAURAV BHANDARI AND SH. NITIN BHANDARI ARE DIRECTORS IN TH E ABOVE CONCERN. IT IS ALSO AN ADMITTED FACT THAT AS DIRECTORS THEY HAVE RECEIVED REMUNERATION FROM THE ABOVE CONCERN BUT NO REMUNERATION WAS PAID BY THE ASSESSE E FIRM TO ITS PARTNERS. FURTHERMORE, THE TECHNOLOGY OF TECHNICAL KNOWHOW AV AILABLE WITH THE CONCERN WAS USED BY THE ASSESSEE. IT IS TRUE THAT THE TECHN ICAL KNOWHOW AND GOODWILL IS MOST IMPORTANT INTANGIBLE AND VALUABLE ASSET OF BUS INESS ESTABLISHMENT. IT IS ALSO AN ADMITTED FACT THAT FOR USING THE TECHNICAL KNOWHOW, THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE. IT IS ALSO RELEVANT TO O BSERVE HERE THAT THE PROVISIONS OF SECTION 80IA(10) OF THE ACT ARE CLEARLY APPLICAB LE TO THE FACTS OF THE PRESENT CASE. WE FULLY AGREE WITH THIS OBSERVATION OF THE A SSESSING OFFICER THAT PROVIDING OF TECHNICAL KNOWHOW / TRADE MARK / GOODW ILL AND CUSTOMER BASE SERVICES, CLEARLY AMOUNTS TO BUSINESS TRANSACTED BE TWEEN THE ASSESSEE AND CLOSELY CONNECTED PERSONS WITH THE MEANING OF SECTI ON 80IA(10) OF THE ACT. FURTHERMORE, THE PURCHASES MADE BY THE ASSESSEE FRO M ITS SISTER CONCERNS WERE 68% AND BALANCE 32% WAS FROM OPEN MARKET. IN OUR V IEW, THE ASSESSING OFFICER HAS CORRECTLY OBSERVED THAT THERE WAS AGREEMENT / A RRANGEMENT BETWEEN THE SISTER CONCERNS TO ARRANGE THEIR BUSINESS IN SUCH A WAY THAT THE ASSESSEE FIRM COULD GET MAXIMUM PROFIT AND CLAIM THE SAME AS DED UCTION U/S 80IC OF THE ACT. WE ALSO OBSERVE HERE THAT SUPPLEMENTARY DEED / MOU WAS NOT AUTHENTICATED, THEREFORE, THE LOWER AUTHORITIES WERE CORRECT IN NO T CONSIDERING THE SAME AS GENUINE DOCUMENT. SHRI SUBHASH AGGARWAL, LD. COUNSE L FOR THE ASSESSEE POINTED OUT THAT APPLICATION FOR ADMISSION OF ADDITIONAL EV IDENCE WAS FILED BEFORE THE CIT(A). HOWEVER, THE LD. CIT(A) HAS REFUSED TO ADMI T THE SAME ON THE GROUND 12 THAT THE SAME IS NOT ADMISSIBLE IN VIEW OF THE NOT ELIGIBILITY UNDER RULE 46A OF THE I.T. RULES. THE ADDITIONAL EVIDENCE WHICH WAS SOUGHT TO BE PRODUCED BEFORE THE CIT(A) WAS THE PHOTOCOPY OF REGISTER OF SALE OF STAMP PAPER ON THE PARTICULAR DATE I.E. 31.3.2005 ISSUED BY THE OFFICE OF SUB DIVISIONAL MAGISTRATE, SHAHDARA, GOVERNMENT OF NCT OF DELHI DATED 15.1.20 09 PROVIDED TO THE ASSESSEE IN RESPONSE OF ITS APPLICATION DATED 27.12 .2008. THUS, SAID EVIDENCE WAS IN THE SHAPE OF PHOTOCOPY OF THE REGISTERED SAL E DEED ON STAMP PAPER. IN THE ABSENCE OF ORIGINAL SUPPLEMENTARY DEED / MOU., THE SAID PHOTOCOPY OF REGISTER OF SALE OF STAMP PAPER HAS NO EVIDENTIARY VALUE PAR TICULARLY WHEN THE ASSESSEE FAILED TO PRODUCE THE ORIGINAL SUPPLEMENTARY AGREEM ENT DATED 31.3.2005 AND THE MOU DATED 30.4.2005 ALONG WITH THE RETURN OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO AGREED TO THE ADDIT ION. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS COMPELLE D / FORCED THE ASSESSEE TO AGREE TO HE ADDITION OF RS. 35 LAKHS. FURTHER, IT I S ALSO CLAIMED BY THE ASSESSEE THAT ITS AGREEMENT TO ADDITION WAS NOT VOLUNTARILY. ON A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE OBSERVE THAT ASSESSEE SUO MOTTO AGREED TO REDUCE THE ELIGIBLE PROFITS BY RS. 35 LAKHS IN VIEW OF THE DIS CREPANCIES POINTED OUT TO IT BY THE ASSESSING OFFICER VIDE HIS LETTER DATED 29.12.2 008. THE LD. COMMISSIONER HAS POINTED OUT THAT DURING THE APPELLATE PROCEEDIN GS, THE ASSESSEE RETRACTED FROM THE AGREED ADDITION. IT IS TRUE THAT IN CASE O F AGREED ASSESSMENT, THE ASSESSEES RIGHT TO APPEAL IS THERE PROVIDED THE AS SESSEE IS ABLE TO SHOW THAT WHY THE AGREEMENT IS NOT BINDING. IN OUR VIEW, IN THE I NSTANT CASE, THE ASSESSEE HAS MISERABLY FAILED TO PROVE AS TO WHY THE AGREEMENT I S NOT BINDING UPON IT AND ACCORDINGLY THE ASSESSEE CANNOT BE HELD TO BE AGG RIEVED. THE ONUS WAS ON THE ASSESSEE TO GIVE EXPLANATION IN RESPECT OF THE DISC REPANCIES POINTED OUT BY THE ASSESSING OFFICER. THE EXPLANATION, IF ANY, WAS OFF ERED BY THE ASSESSEE THE SAME WAS NOT CORROBORATED BY COGENT EVIDENCE. WE MAY ALS O OBSERVE HERE THAT IT IS NOT A CASE WHERE THE ASSESSEE WAIVED ANY OF ITS RIG HTS AT THE ASSESSMENT STAGE GRANTED UNDER THE STATUTE, ON THE CONTRARY, IT ESCH EWED PERFORMING ITS DUTIES. 13 THERE IS NO ALLEGATION ON BEHALF OF THE ASSESSEE TH AT THE PARTNER WAS COMPELLED / FORCEDTO AGREE TO THE ADDITION. ON THE CONTRARY, TH E ASSESSEE HAS SUO MOTTO ACCEPTED THE DISCREPANCIES POINTED OUT BY THE ASSES SING OFFICER WHICH ARE MENTIONED IN THE LETTER OF THE ASSESSEE DATED 29.1 2.2008. IN OUR OPINION, WHILE ACCEPTING THE ASSESSEES OFFER OR CONCESSION, THE A SSESSING OFFICER HAD NOT DONE ANYTHING WRONG AGAINST THE LAW. IN THE CASE OF RA MESHCHANDRA AND COMPANY VS. CIT 168 ITR 375 (BOM.), THE HON'BLE BOMBAY HI GH COURT NAGPUR BENCH HELD AS UNDER;- WHERE AN ASSESSEE HAS MADE A STATEMENT OF FACTS, H E CAN HAVE NO GRIEVANCE IF THE TAXING AUTHORITY TAXES HIM IN ACCORDANCE WITH THAT STATEMENT. IF HE CAN HAVE NO GRIEVANCE, HE CAN FILE NO APPEAL. THEREFORE, IT IS IMPERATIVE, IF THE ASSESSEE'S CASE IS THAT HIS STAT EMENT HAS BEEN WRONGLY RECORDED OR THAT HE MADE IT UNDER A MI STAKEN BELIEF OF FACT OR LAW, THAT HE SHOULD MAKE AN APPLI CATION FOR RECTIFICATION TO THE AUTHORITY WHICH PASSED THE ORD ER BASED UPON THE STATEMENT. UNTIL RECTIFICATION IS MADE, AN APPEAL IS NOT COMPETENT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS RIGHT IN THE CONCLUSION TO WHICH IT CAME AND WE ANSWER THE QUESTION IN THE NEGATIVE AND IN FAVOUR OF THE R EVENUE. IN THE ABOVE CASE, THE ITO ASKED THE ASSESSEE TO EX PLAIN THE DISCREPANCY OF 360 BAGS OF SARKI IN A PARTICULAR ACCOUNT IN ITS BOOK S OF ACCOUNT. IN RESPONSE, ONE OF THE PARTNERS OF THE AFORESAID FIRM APPEARED BEF ORE THE ITO AND EXPRESSED IN WRITING HIS INABILITY TO RECONCILE THE DISCREPANCIE S AND HE ASKED THAT THE AMOUNT BE ADDED TO INCOME. THE NOTE OF ITO IN THE ORDER SHEET, TO THAT EFFECT WAS SIGNED BY THE PARTNER. THE ITO HELD THAT 360 BA GS OF SARKI WEIGHING 198 QUINTALS HAVE BEEN SOLD BY THE ASSESSEE WITHOUT REC ORDING THE SALE PROCEEDINGS IN ITS BOOKS OF ACCOUNT AND THAT THE SALE PROCEEDS THEREOF WOULD BE AN AMOUNT OF RS. 18,052/-. HE ADDED THIS AMOUNT AS ASSESSEE SUPP RESSED BUSINESS INCOME. ON APPEAL, THE APPELLATE ASSISTANT COMMISSIONER (AAC) DELETED THE ADDITION. THE 14 REVENUE FILED AN APPEAL BEFORE THE ITAT CHALLENGING THE ORDER OF THE AAC AND THE TRIBUNAL HELD THAT THE AAC WAS JUSTIFIED IN ENT ERTAINING THE ADDITIONAL GROUND IN RESPECT O THE ADDITION TO THE AMOUNT OF R S. 18,052/- AND FURTHER IN DELEING THE SAID ADDITION. ON A REFERENCE, THE HON' BLE HIGH COURT HELD THAT WHEREIN THE ASSESSEE HAS MADE A STATEMENT OF FACTS, HE CAN HAVE NO GRIEVANCE IF THE TAXING AUTHORITY TAXES HIM IN ACCORDANCE WITH T HAT STATEMENT. IN THE INSTANT CASE ALSO, THE ASSESSING OFFICER POINTED OUT THE DI SCREPANCIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED ITS LETTER DATED 29.12.2008 AND AGREED TO OFFER A SUM OF RS. 35 LAKH S AS ADDITIONAL INCOME OF THE FIRM FOR THE ASSESSMENT YEAR 2006-07. IN VIEW OF TH E ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ABOVE GROUND AND ACCORDIN GLY, WE DISMISS THE SAME. 10. AS AN ALTERNATIVE SUBMISSION, SHRI SUBHASH AGGA RWAL LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DEDUCTION U/S 80IC MAY BE A LLOWED ON THE ADDITIONAL INCOME OF RS. 35 LAKHS. ON THE OTHER HAND, SHRI S.K MITTAL LD. DR SUBMITTED THAT IN ITS LETTER DATED 29.12.2008, THE ASSESSEE HAS STATED THAT DEDUCTION U/S 80IC WILL NOT BE CLAIMED ON THE ADDITIONAL INCOME O F RS. 35 LAKHS SURRENDERED. HE FURTHER SUBMITTED THAT ASSESSEE HAD FAILED TO SH OW THAT THE AMOUNT WHICH WAS SURRENDERED DURING THE COURSE OF ASSESSMENT PROCEED INGS WAS DERIVED FROM INDUSTRIAL UNDERTAKING. THE ASSESSING OFFICER HAS NOT TAKEN THE SURRENDERED INCOME UNDER THE HEAD BUSINESS OR PROFESSION. THE ASSESSEE HAD ALSO FAILED TO PRODUCE ANY EVIDENCE TO SHOW THAT THE SURRENDERED I NCOME WAS DERIVED FROM INDUSTRIAL UNDERTAKING. ACCORDING TO LD. DR THE ON US WAS UPON THE ASSESSEE TO SHOW THAT THE INCOME ON WHICH DEDUCTION HAS BEEN CL AIMED U/S 80IC OF THE ACT WAS IN FACT DERIVED FROM INDUSTRIAL UNDERTAKING. HE THEREFORE, SUBMITTED THAT ASSESSEE WAS NOT ENTITLED TO ANY DEDUCTION U/S 80IC OF THE ACT. IN OUR CONSIDERED VIEW, THE ISSUE IS SQUARELY COVERED AGAINST THE ASS ESSEE AND IN FAVOUR OF THE REVENUE BY THE FOLLOWING DECISIONS OF THE HON'BLE J URISDICTIONAL HIGH COURT :- 15 A) NATIONAL LEGGUARD WORKS VS CIT(A) & ANOTHER (2007) 288 ITR 18 (P&H) B) TUDOR KNITTING WORKS PVT LTD V CIT (2014) 360 ITR 4 53 (P&H) IN THE CASE OF TUDOR KNITTING WORKS PVT LTD V CIT ( SUPRA) THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) HAS HELD AS UND ER:- 8. FROM THE PERUSAL OF THE FINDINGS AS NOTICED ABO VE, THE TRIBUNAL HAD COME TO THE CONCLUSION THAT THE ONUS UPON THE A SSESSEE WAS NOT DISCHARGED. IN SUCH A SITUATION, IT COULD NOT BE SA ID THAT THE TRIBUNAL HAD ERRED IN HOLDING THAT THE DEDUCTION UN DER SECTION 80- IB OF THE ACT WAS NOT ADMISSIBLE TO THE ASSESSEE. T HIS COURT IN HOME TEX V. CIT [2011] 59 DTR 165 (P&H), CONSIDERING SIMILAR ISSUE HAD NOTICED AS UNDER : '12. IT IS QUITE EVIDENT FROM THE ABOVE LETTER SUBM ITTED BY ASSESSEE THAT RS. 40 LAKHS INCOME WAS SURRENDERED O NLY ON ACCOUNT OF EXCESS STOCK FOUND AS PER PHYSICAL VERIF ICATION. IT WAS ALSO STATED IN THE LETTER THAT NO ADJUSTMENT WILL BE MADE AGAINST THE SURRENDERED INCOME AND SUCH SURREN DERED INCOME IS OVER AND ABOVE THE REGULAR INCOME AS PER THE BOOKS OF ACCOUNT. ADVANCE TAX ON THE ADDITIONAL INC OME WAS ALSO PROPOSED TO BE DEPOSITED, VIDE POST-DATED CHEQUES. SINCE IN THE LETTER ITSELF THE ASSESSEE HA S ACCEPTED THAT THIS ADDITIONAL INCOME WAS OVER AND ABOVE THE REGULAR INCOME AS PER THE BOOKS OF ACCOUNT, THE REGULAR INC OME WHICH IS ARISING OUT OF THE INDUSTRIAL UNDERTAKING CAN ONLY BE SUBJECT TO DEDUCTION UNDER SECTION 80-IB AND NO OTHER INCOME SUR RENDERED ON ACCOUNT OF ADDITIONAL STOCK FOUND DURING THE COURSE OF SURVEY CAN BE CONSIDERED FOR DEDUCTION UNDER SECTION 80-IB. MORE PARTICULARLY, I N VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA) WHEREIN EVEN THE INCOME FROM THE DEPB AND DUTY DRAWBACK WHICH ARE RECEIVED BY THE INDUSTRIAL UNDER TAKING AS AN INCENTIVE IN THE COUR SE OF THEIR BUSINESS WERE HELD TO BE NOT ELIGIBLE FOR CLA IM OF DEDUCTION UNDER SECTION 80-IB, NOTHING IS LEFT FOR GRANTING DEDUCTION IN RESPECT OF SUCH INCOME SURRENDERED DUR ING THE COURSE OF SURVEY WHICH IS ATTRIBUTABLE TO THE EXCES S STOCK FOUND DURING THE SURVEY. NOTHING WAS BROUGHT ON REC ORD BY THE LEARNED AUTHORISED REPRESENTATIVE TO SHOW THAT THE AMOUNTS SO INVESTED IN THE EXCESS STOCK WAS DERIVED FROM THE INDUSTRIAL UNDERTAKING. IT IS NOT ONLY THE INCO ME OF THE BUSINESS WHICH CAN BE CLAIMED FOR DEDUCTION UNDER S ECTION 80-IB BUT IT IS ONLY THAT INCOME WHICH IS DERIVED F ROM 16 INDUSTRIAL UNDERTAKING AND COMES WITHIN THE FIRST D EGREE OF NEXUS BETWEEN THE PROFIT AND THE INDUSTRIAL UNDERTA KING AS FOUND BY THE HON'BLE SUPREME COURT IN THE CASE OF L IBERTY INDIA (SUPRA), THAT CAN BE MADE AVAILABLE FOR ALLOW ING THE DEDUCTION UNDER SECTION 80-IB OF THE INCOME-TAX ACT . WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDERS OF LOWER AUTHORITIES FOR DECLINING CLAIM OF DEDUCTION UNDER SEC TION 80-IB IN RESPECT OF EXTRA INCOME SURRENDERED DURING SURVEY ON ACCOUNT OF EXCESS STOCK PHYSICALLY FOUND AS COMP ARED TO THE STOCKS INDICATED IN THE REGULAR BOOKS OF ACCOUN T. THE TRIBUNAL HAD SPECIFICALLY RECORDED THAT THE ASS ESSEE HAD FAILED TO SHOW THAT THE AMOUNT WHICH WAS INVEST ED IN THE EXCESS STOCK AND WAS SURRENDERED AT THE TIME OF SURVEY WAS DERIVED FROM INDUSTRIAL UNDERTAKING. IN THE ABS ENCE OF ANY SUCH FINDING OR NEXUS ESTABLISHED BY THE ASSESS EE, THE TRIBUNAL HAD RIGHTLY DECLINED THE CLAIM OF DEDUC TI ON UNDER SECTION 80-IB OF THE ACT IN RESPECT OF EXCESS INCOM E SUR RENDERED DURING SURVEY ON ACCOUNT OF EXCESS STOCK W HICH WAS NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT. LEARNED COUNSEL FOR THE ASSESSEE WAS UNABLE TO SHOW ANY PER VERSITY OR ILLEGALITY IN THE FIND INGS WHICH MAY WARRANT INTERFERENCE BY THIS COURT.' SIMILAR VIEW WAS RECORDED IN NATIONAL LEGGUARD WORK S'S CASE (SUPRA) (PAGE 21 OF 288 ITR) : 'WE ARE UNABLE TO ACCEPT THIS SUBMISSION. DEDUCTION UNDER SECTION 80HHC OF THE ACT IS AVAILABLE ONLY ON SHOWI NG FULFILMENT OF CONDI TIONS SPECIFIED THEREIN AND THE RE COULD BE NO PRESUMPTION THAT SUR RENDER MADE ON ACCOUNT O F UNEXPLAINED STOCKS REPRESENTED EXPORT INCOME. THE ASSESSEE WAS UNABLE TO GIVE ANY EXPLANATION. THERE COULD BE NO PRESUMPTION THAT ADDITIONAL AMOUNT SURRENDERE D REPRESENTED INCOME FROM EXPORTS. DEDUCTION UNDER SE CTION 80HHC OF THE ACT CAN BE CLAIMED ONLY ON SHOWING FAC TS WHICH MADE THE ASSESSEE ELIGIBLE FOR THE DEDUCTION. THE BURDEN TO PROVE THESE FACTS WAS ON THE ASSESSEE AND NOT ON THE REVENUE. THE JUDGMENT RELIED UPON IS ON ITS OWN FACTS AND NO T IN RESPECT OF CLAIM FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. IN ANY CASE, FROM THE FACTS OF THE PRESENT CAS E, THE ASSESSEE CANNOT BE HELD TO BE ENTITLED TO CLAIM INC OME SURRENDERED AS A RESULT OF UNEXPLAINED STOCKS AS IN COME FROM EXPORTS.' 9. ADVERTING TO THE JUDGMENTS RELIED UPON BY THE CO UNSEL FOR THE ASSESSEE, IT MAY BE NOTICED THAT IN THOSE CASES, EI THER THE TRIBUNAL HAD RECORDED THE FINDING THAT THE SURRENDERED INCOM E WAS DERIVED FROM THE INDUSTRIAL UNDERTAKING OR THEY WERE BASED ON INDIVIDUAL 17 FACT SITUATION INVOLVED THEREIN. THUS, THE ASSESSEE CANNOT DERIVE ANY BENEFIT FROM THOSE JUDGMENTS. 10. THE FINDINGS RECORDED BY THE TRIBUNAL HAVE NOT BEEN SHOWN TO BE ILLEGAL OR PERVERSE IN ANY MANNER. CONSEQUENTLY, THE SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. THE APPEAL IS DISMISSED. 11. IN THE INSTANT CASE, THE ASSESSEE SURRENDERED A N AMOUNT OF RS. 35 LAKHS DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON ACCO UNT OF DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN ITS BOOKS OF ACCOUN T. THE SURRENDERED AMOUNT HAS NOT BEEN ASSESSED UNDER THE HEAD INCOME FROM BUSIN ESS OR PROFESSION. IN OUR OPINION, IN ORDER TO HOLD THAT SUCH INCOME IS ELIGI BLE FOR DEDUCTION U/S 80IC, THE NEXUS WITH THE INDUSTRIAL UNDERTAKING IS REQUIRED T O BE ESTABLISHED. IN OUR OPINION, THERE IS NOT PRESUMPTION THAT SURRENDER MA DE ON ACCOUNT OF DISCREPANCIES FOUND IN THE BOOKS OF ACCOUNT REPRESE NTED THE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. SECTION 80IC OF THE AC T PROVIDES THAT (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROF ITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFE RRED TO IN SUB-SECTION (2), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). 12. IN OUR VIEW THE DECISION OF THE HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF TUDOR KNITTING WORKS PVT LTD V CIT (SUPRA) IS FULLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE PROVISIONS OF SECTIO N 80IB ARE SIMILAR TO THE PROVISIONS OF SECTION 80IC OF THE ACT. IN THE CASE OF TUDOR KNITTING WORKS PVT LTD V CIT (SUPRA) THE ISSUE FOR CLAIMING DEDUCTION U/S 80IB O F THE ACT WAS INVOLVED. RESPECTFULLY FOLLOWING THE JUDGEMENT OF T HE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TUDOR KNITTING WORKS PVT LTD V CIT (SUPRA), WE 18 REJECT THE ALTERATIVE CONTENTION RAISED BY SHRI SU BHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE. 13. NO OTHER POINT WAS RAISED OR ARGUED BEFORE US. 14. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2015 SD/-` SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 21 ST DECEMBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR F IT FOR PUBLICATION SD/-` SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT 19