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2014 (9) TMI 99 - AT - Income TaxDeduction u/s 80IA - eligible profit - Interest received from employees - Claim of equipment hire charges, crane hire charges, and ammonia tank wagon hire charges disallowed - Held that:- Following the decision in KRISHAK BHARATI CO-OPERATIVE LTD. Versus JOINT COMMISSIONER OF INCOME-TAX [2006 (11) TMI 129 - DELHI HIGH COURT] - the interest on loans to employees, would not be entitled to special deduction u/s 80I of the Act – with regard to equipment charges, following the decision in KRISHAK BHARATI CO-OPERATIVE LTD. Versus JOINT COMMISSIONER OF INCOME-TAX [2006 (11) TMI 129 - DELHI HIGH COURT] – the equipment hire charges would not be entitled to special deduction u/s 80I of the Act - Decided against Assessee. Service charges received from Heavy Water Board of the Department of Atomic Energy, Govt. of India – Held that:- With regard to service charges, following the decision in Krishak Bharti Cooperative Limited Versus Deputy Commissioner of Income Tax [2013 (7) TMI 632 - DELHI HIGH COURT] - the issue of ownership is irrelevant, the service charges received by Kribhco from the Heavy Water Board, would have to be regard as profits or gains derived from an industrial undertaking so as to qualify for deduction u/s 80I of the Act – Decided in favour of Assessee. Interest from IDBI under Investment Deposit u/s 32AB – Held that:- Held that:- Following the decision in CIT Vs. Pandian Chemicals Ltd 2003 (4) TMI 3 - SUPREME Court] - The word “derived from” income in section 80HH of the Act, must be understood as something which has direct or immediate nexus with the assessee industrial undertaking – the contention of the assessee is accepted that the interest derived from IDBI under investment deposit u/s 32AB could not be said to be income derived from the industrial undertaking and we do not see any direct or immediate nexus of the income from the assessee’s undertaking, consequently we hold that the interest derived from IDBI under investment u/s 32AB cannot qualify as profit and gain derived from the undertaking for the purpose of the said deduction u/s 80I of the Act – Decided against Assessee. Claim of legal and professional charges incurred on various consultants for feasibility studies – Held that:- The assessee who is in the business of production of fertilizer intended to produce more fertilizers of different variant, for ultimate purpose of promotion of agricultural production and though the attempt was not successful and the fact that it was abandoned is of no consequence and the expenditure has to be treated as business expenditure - the assessee made attempt to conveniently carry on some more business activities to produce more profit which it could not and ultimately abandoned - All the payments were made to obtain consultant’s report, feasibility study for carrying on same, connected business activity but ultimately had to be abandoned for various reasons as detailed against each case - substantially the amounts were paid for getting technical reports, details and feasibility studies, and the amounts have been debited to the existing head "legal and professional charges" and qualify as revenue expenditure because the said expenditure incurred had direct nexus with the existing business carried on by the assessee it is allowable expenditure u/s 37 of the Act - CIT(A) has not looked into the issue properly and passed a cryptic order without analyzing properly the business of the assessee – relying upon CIT Vs. Priya Village Roadshows Ltd. [2009 (8) TMI 765 - Delhi High Court] - the claim of the assessee was correct and need to have been allowed u/s 37 of the Act – Decided in favour of Assessee.
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