Bifurcated Details Of Income From Specified & Non-Specified Business Is Not Available: Indore ITAT Asks To Reconsider Deduction U/s 35AD

While setting aside the order of deduction passed u/s 35AD of the Income Tax Act in relation to investment on warehouse, the Indore ITAT has remitted back the issue to the AO for proper verification and consideration of the bifurcated details of income from specified and non-specified business after finding that such bifurcation of income was not presented earlier before the AO. The Bench of the ITAT comprising of Vijay Pal Rao (Judicial Member) and B.M. Biyani (Accountant Member) observed that “Since the assessee has not disputed the fact that warehouse facilities were provided for agricultural produce as well as non-agricultural produce therefore, the only dispute is regarding the bifurcated details of income earned from the specified business activities being the warehouse facility provided for storage of agricultural produce as well as non-agricultural produce. Now the Ld. AR has produced bifurcated income and expenditure details. Accordingly in the facts and circumstances of the case this issue of deduction u/s 35AD is set aside to the record of the AO for proper verification and consideration of the bifurcated details of income from specified and non-specified business of the assessee and then adjudicate the issue as per law.” (Para 5) As per the brief facts of the case, the assessee is statutory Corporation established under the Warehousing Corporations Act 1962 and engaged in the business of construction and maintenance of warehouses for storage for goods mainly agricultural produce. The assessee claimed deduction u/s 35AD in respect of the investment made for construction of warehouses. The AO denied the claim of deduction u/s 35AD on the ground that the assessee is leasing out the warehouse for storage of goods other than agricultural produce. The AO then proceeded to estimate the income for specified business eligible for deduction u/s 35AD and arrived to the total income at loss from the specified business and thereby denied the claim of the assessee. The CIT(A) allowed the claim of the assessee by considering the details of income as well as investments made by the assessee. The Bench noted that in the assessment order the AO has not given any calculation or basis for estimation of the income from specified business carrying out the activities of warehousing and storage of agricultural produce and sugar. The Bench further noted that the CIT(A) has allowed the claim of the assessee by accepting contention of the assessee that 97.47% of the total storage/warehousing was in respect of agricultural produce and only 2.53% storage facility was used for non-agricultural produce. The Bench observed that the details have not been produced before the AO as the AO has specifically mentioned that the assessee had not provided the profit and gain derived by the undertaking from the operating warehouses on which the deduction u/s 35AD has been claimed. Therefore, on finding that the bifurcated income and expenditure details has been provided later to the AO, ITAT allowed the revenue's appeal. Counsel for Appellant/Department: Ashish Porwal Counsel for Respondent/Taxpayer: S.S. Deshpande Case Title: ACIT verses MP Warehousing and Logistics Corporation Case Number: ITA No.167/Ind/2023 Click here to read/ download the Order

Bifurcated Details Of Income From Specified & Non-Specified Business Is Not Available: Indore ITAT Asks To Reconsider Deduction U/s 35AD

Pankaj Bajpai

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