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2017 (12) TMI 567 - ITAT AHMEDABADDisallowance in respect of employees’ contribution of ESI u/s. 36(1)(va) - Held that:- This issue is no more res integra as the same has been decided against the assessee and in favour of the revenue by the Hon’ble Jurisdictional High Court in the case of GSRTC Ltd. [2014 (1) TMI 502 - GUJARAT HIGH COURT] Denial of deduction u/s. 80IB - Held that:- It is not coming out from the records that when these items were written off they reduced the eligible profit of the assessee. Therefore in the interest of justice, we restore the entire issue to the files of the A.O. The A.O. is directed to verify when the bad debts were written off, the eligible profits of the assessee were reduced. Further, when the provisions were made in earlier years, the same were charged to the eligible profit. The A.O. is also directed to verify whether the foreign exchange fluctuation gain is on revenue account or capital account and if found on revenue account for the eligible business, the same should be treated as eligible for deduction u/s. 80IB of the Act. Similarly, the A.O. is also directed to verify when the claim of loss was made whether the same was debited to the eligible profit of the assessee and if found so, then the Insurance claim should be allowed as eligible for deduction u/s. 80IB of the Act. The assessee is directed to furnish necessary details for verification. With these directions, ground no. 3 is treated as allowed for statistical purpose. Disallowance of deduction u/s. 80IB on Vatva unit - Held that:- It is true that some of the work was carried out at Vatva unit. It is equally true that the job work charges have been debited to the Profit and Loss account. We further find that the total job work done at Vatva unit constitutes hardly 2 to 5% of the total revenue of the assessee. Added with the fact that the job work charged have been charged to the Profit and Loss account. Therefore, we do not find any merit in the disallowance of the claim of deduction u/s. 80IB. We, therefore, set aside the findings of the ld. CIT(A) and direct the A.O. to allow the deduction u/s. 80IB of the Act. Disallowance of deduction u/s. 80IB - Membership & Subscription Expenses - Held that:- Since the Membership & Subscription Expenses pertain to the magazines which are supplied to the Vatva unit, the expenditure can be wholly charged to Vatva unit only. ROC filing fees being for corporate office of the assessee has been rightly allocated on turnover basis. Since the Insurance Premium of vehicles are in respect of the vehicles relating to the capital assets of the Vatva unit, the same has been rightly debited to the Vatva unit. Tol tax and Parking charges have been rightly allocated on turnover basis by the A.O. The only item remains is that of Directors’ remuneration and all other incidental expenses. As mention elsewhere, only two of the directors are looking after Kathwada Unit and the assessee has charged on 50% of the expenditure related to them to the Kathwada Unit. We do not find any reason for allocating the balance of the expenditure on turnover basis. We find that the A.O. has allocated the expenditure only on surmise and suspicion and the method of allocation by the assessee has been accepted in the past by the Department and the same cannot be changed accept for just cause. We accordingly direct the A.O.to re-allocate only ROC filing fee and Tol tax and Parking fees on the basis of turnover and the other expenditures have to be excluded from the re-allocation. Disallowance of deduction u/s.80IA in respect of Profit from business of operating and maintaining an infrastructure facility for supply of drinking water - Held that:- The initial assessment year is A.Y. 2005-06 and after thorough examination, the claim of deduction was allowed by the Department. In our understanding of the law without disturbing the claim of the initial assessment year, a similar claim cannot be denied in the subsequent assessment years. Thus we direct the A.O. to allow the claim of deduction u/s. 80IA of the Act. See Katira Construction Ltd. case [2013 (3) TMI 416 - GUJARAT HIGH COURT ]
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