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2014 (11) TMI 597 - ITAT BANGALOREComputation of deduction u/s 80HHC – Exclusion of 90% of net job charges – Held that:- In assessee’s own case it has been held that u/s 80HHC 90% of the labour charges have to be deducted and the deductions should be on the net and not the gross - The assessee is entitled to deduction of 90% towards the labour charges on the net income and not on the gross income – Decided against revenue. Allowability of provision for warranty as a deduction – Held that:- In assessee’s own case it has been held that provisioning to be an admissible expenses, since a sensible analysis of historical trends enables a robust and reliable estimation of a present obligation which arises out of an obligating event - If such a provision is based on the past experience, containing demonstrable data of the expenses incurred by the assessee for providing warranty, then it would be an ascertained liability - FAA has rightly allowed the claim of the assessee – Decided against revenue. Computation of book profits u/s 115JB – Computation of Book profit for the purpose of MAT - reduction of book profit by deduction allowable u/s 80HHC (Export Benefit) - Held that:- Following the decision in Ajanta Pharma Ltd. Versus Commissioner of Income Tax-9, Mumbai [2010 (9) TMI 8 - SUPREME COURT] - the total amount of deduction computed u/s 80HHC is to be deducted from the book profit u/s 115JB - ultimate deduction granted to the assessee u/s 80HHC is not the amount which is to be reduced from the book profit, but the amount originally computed for deduction u/s 80HHC has to be reduced, but after the Finance Act, 2000, the rate of deduction has been reduced in phased manner - the AO is directed to reexamine this aspect and compute the deduction admissible to the assessee while preparing the book profit for the purpose of section 115JB – Decided partly in favour of assessee.
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