COMMISSIONER OF INCOME TAX Vs. ALLIED INDUSTRIES

JUDGEMENT

(1.) THIS appeal was admitted on the following questions of law : "1. Whether on the facts and in the circumstances of the case the Hon'ble Tribunal was right in law in holding that income of Rs. 2,50,000 surrendered by the assessee during the assessment proceedings was income derived from the business of the industrial undertaking and thus eligible for deduction under s. 80 -IB as the AO had not specifically proved that the income was not from the business and profession?

(2.) WHETHER on the facts and in the circumstances of the case the Hon'ble Tribunal was right in law holding that 100 per cent deduction under s. 80 -IB was allowable to the assessee on the surrendered income whereas the assessee surrendered the income of Rs. 2,50,000 on account of unaccounted expenses and also undertook to pay the tax on the surrendered income. This income could be taxed only under s. 69C of the Act under the head 'Income from other sources' and there was no question of it being taxed as 'income from business' and much less as derived from the business of industrial undertaking - 2. Briefly stated the facts of the case are that for the asst. yr. 2001 -02 the assessee filed a return declaring income of Rs. 24,340. The case was taken up for scrutiny and statutory notices along with detailed questionnaire were issued to the assessee.

(3.) THE assessee is carrying on the business of manufacture of tractor and automobile components. Production profit was claimed under s. 80 -IB of the IT Act, 1961. It is not disputed that the assessee firm is entitled to this benefit. The AO found that one of the partners of the assessee firm Smt. Neena Mahajan is also running a firm under the name and style of M/s Ankur Industries, Chandigarh, where the gross profit and net profit rate is much lower than that in the assessee firm. The assessee was asked to explain this discrepancy.