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2013 (6) TMI 478 - AT - Income TaxDeduction u/s 80IA - interest income received against late payment from customers - Held that:- This issue came up for consideration before various High Courts and it was pointed out that when the interest is received from delayed payment from customers then it would have direct nexus with such sale and would be eligible for deduction u/ s Chapter VI. As relying on Nirma Industries Ltd. Vs. CIT [2006 (2) TMI 92 - GUJARAT High Court] & PHATELA COTGIN INDUSTRIES P. LTD. VERSUS CIT [2007 (5) TMI 226 - PUNJAB AND HARYANA HIGH COURT] it becomes clear that when interest is received on account of delayed payments from customers then it would definitely constitute income from eligible business because such interest has direct nexus with the receipt from eligible business. Provision of leave encashment - whether an ascertained liability and therefore, need not to be added back to the book profits u/s 115 JB - Held that:- As relying on Bharat Earth Movers v CIT [2000 (8) TMI 4 - SUPREME Court] wherein the Court considering the issue where provision for leave encashment was allowable as admissible deduction referred to the another decision of Metal Box Company of India Ltd. V Their Workmen (1968 (8) TMI 53 - SUPREME Court). Thus the principles laid down in these cases show that the provision for leave encashment would constitute a liability and if the same has been determined on the basis of actuarial valuation then same cannot be considered as unascertained liability. Provision for staff incentive - whether unascertained liability or not? - Held that:- As no evidence has been filed before AO in respect of particular policy followed by the assessee- company in respect of staff incentive. The copy of scheme has also not been filed before us. However, at the same time the AO also rejected the issue summarily without asking for the scheme for incentive claimed from the assessee and the ld. CIT(A) has allowed the relief without examining the scheme. Therefore remand the matter back to the file of AO with a direction to re-examine the issue after obtaining the scheme of staff incentive from the assessee. Adjustments for working the book profit u/s 115 JB by adding Advance Against Depreciation to the book profits - Held that:- As the issue was decided in favour of the assessee by following the decision of case of National Hydro Electric Power Corporation V CIT [2010 (1) TMI 281 - SUPREME COURT] wherein held that AAD is income received in advance & since the amount of AAD is reduced from sales, there is no debit to the profit and loss account and the amount did not enter the stream of income for the purposes of determination of net profit at all. Hence clause (b) of the Explanation 1 is not applicable to AAD. The decision is directly on the issue of advance against depreciation and whether the same is required to be added u/ s 115 JB to the book profits & as decision of Hon'ble Supreme Court is the Law of land therefore bound to be followed. Sale of scrap from profits for the purpose of deduction u/s 80IA - Held that:- No force in the submissions of assessee because the CIT(A) has clearly observed that admittedly scrap was generated out of stores and from repair of plant and therefore, same cannot be said to have been generated during the process of manufacture. Further the decision of CIT V. Bicycle Wheels (2010 (10) TMI 496 - Punjab and Haryana High Court) as relied by assessee involves all together different issue i .e. whether sale of scrap should be included in the total turnover or not? But in the present case CIT(A) has observed that the scrap was not out of manufacture but only from stores and repairs of plants - against the assessee.
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