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2017 (3) TMI 1237 - ITAT AHMEDABADDisallowance of deduction under section 80IB(11A) - Discount - Held that:- Discount is an item by which the assessee has reduced its cost of purchase, i.e. cost of material has been saved which has resulted a little higher profit. Thus, this discount has a direct nexus with activities of the assessee and it is treated as business profit. It deserves to be considered for grant of deduction under section 80IB Interest received from PGVCL - Held that:- The ld.counsel for the assessee conceded that in view of the judgment of the Hon’ble Gujarat High Court in the case of CIT Vs. Nirma Ltd (2014 (10) TMI 388 - GUJARAT HIGH COURT ) only net interest income is to be excluded for grant of deduction under section 80IB. We remit this aspect to the AO. He shall exclude net interest income from PGVCL for admissibility of deduction under section 80IB. Interest subsidy received from Govt. of Gujarat. - Held that:- AO himself has not treated the interest income as income from other sources. He treated it as a business income, but did not grant deduction under section 80IB(11) of the Act. Since this interest income has direct nexus with the activities of the assessee, it only goes to reduce the expenditure incurred on the loans availed from the bank. The assessee could reduce the net interest expenditure. In other words, if bank has charged 12% and it got subsidy of 5%, then it had charged the rate of 7% on the profit & loss account, then it would have enhanced its profit to this extent, and therefore, this interest subsidy is to be considered as eligible for grant of deduction under section 80IB(11) of the Act. See ACG Associated Capsules P.Ltd. vs. CIT [ 2012 (2) TMI 101 - SUPREME COURT OF INDIA ] Notional interest payment on the capital contribution and remuneration paid to the partners - Held that:- Direct the AO not to reduce interest payable to the partners on their capital contribution and remuneration from the eligible profits for grant of deduction under section 80IB because, it is the discretion of the assessee to pay interest and remuneration to partners or not. See Sagar Foods case [2017 (3) TMI 1297 - ITAT AHMEDABAD ]
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