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2016 (9) TMI 1314 - AT - Income TaxDeduction claimed u/s 80-IA in respect of interest, management fees and corporate guarantee commission - Held that:- Merely because there was a nexus between the business and the receipt of income, we cannot say that the income was directly derived from the business undertaking. This Tribunal is of the considered opinion that for claiming deduction under Section 80-IA(4) of the Act, the income shall have to be derived from business of developing or operating and maintaining or developing or operating and maintaining of infrastructure facility. Therefore, interest income received from deposits, management fees and corporate guarantee commission are not eligible for deduction under Section 80-IA of the Act. In the absence of specific provision like Explanation (baa) to Section 80HHC of the Act, this Tribunal is of the considered opinion that the entire miscellaneous income has to be excluded since they are not derived from industrial undertaking. Therefore, the question of netting would not arise for consideration. Disallowance of deduction u/s 80-IA in the computation of book profit under Section 115JA - Held that:- This Section 80-IB merely says that the assessee is eligible to claim deduction at 100% of he profits and gains for the first five assessment years. For the first five assessment years, the assessee is eligible for 100% of the profits and gains and in the next year, in the case of company, the assessee is eligible for 30% of the profits. Therefore, the 30% of the profits and gains allowed under Section 80-IA of the Act has to be reduced from the book profit computed for the purpose of Section 115JA of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to reduce 30% of the profits and gains, which was computed under Section 80-IB(4) of the Act, from the book profit for the purpose of computing taxable income under Section 115JA of the Act. Estimation of profit for the purpose of computing profit under Section 155JA - addition made to the extent of ₹ 61 Crores in the normal computation - Held that:- The very same issue was considered by this Tribunal for the assessment years 1998-99 and 1999-2000 and this Tribunal deleted the similar addition made by the Assessing Officer. Both, the Ld. Sr. Standing Counsel for the Revenue and the Ld.counsel for the assessee very fairly brought to the notice of the Tribunal that the issue is covered in favour of the assessee. Depreciation claimed by the assessee on the purchase of steel - Held that:- CIT(Appeals) is expected to examine the genuineness of purchase of steel independently on the basis of the material available on record and thereafter record his own finding with regard to acquisition and existence of the capital asset. Unfortunately, the CIT(Appeals) has not taken any pain to ascertain the genuineness of purchase of steel and the acquisition/existence of the capital asset. Therefore, as rightly submitted by the Ld. Sr. Standing Counsel for the Revenue, the matter needs to be re-examined. Accordingly, the orders of the lower authorities are set aside and the issue with regard to depreciation is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh on the basis of bills and vouchers that may be produced by the assessee for purchasing the steel and thereafter decide the issue afresh, in accordance with law, after giving a reasonable opportunity to the assessee. Disallowance under Section 14A - Held that:- The assessee being a company, has to entrust the matter to some of the executives for making investment. Therefore, the salary paid to the executives, who were entrusted the work of investment, is definitely a cost incurred by the assessee for taking administrative decision to invest in the shares which yielded exempted income. The managerial function performed by the executives need to be taken into consideration for the purpose of estimation of disallowance. Since Rule 8D is not applicable, this Tribunal is of the considered opinion that a reasonable estimation has to be made. This Tribunal, wherever Rule 8D of Income-tax Rules, 1962 is not applicable, is uniformly making 2% disallowance of investment. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to estimate the disallowance at 2% of investment made by the assessee. Deduction claimed by the assessee under Section 80HHC - assessee has not filed Form 10CCAC - Held that:- Denial of claim on the ground that the assessee has not filed Form 10CCAC, which was a pre-condition for allowing deduction under Section 80HHC of the Act. Therefore, the CIT(Appeals) directed the Assessing Officer to verify Form 10CCAC. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Set off of losses by the assessee while computing book profit - Held that:- It is not known what kind of claim was made by the assessee to set off while computing the book profit. In the absence of details of claim for set off for deduction under Section 80HHC of the Act, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, the orders of the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer.
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