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2011 (12) TMI 534 - AT - Income TaxEligible for deduction u/s 80IB - Sales tax incentive - Held that:- Sales tax incentive which has been retained by the assessee from the Sales Tax collected has to be held as derived from the industrial undertaking and consequently is eligible for deduction u/s 80IB of the Act. In this view of the matter, the order of the ld. CIT(A) is set aside and the A.O. is directed not to exclude the sales tax incentive of 12,94,109/- and ₹ 84,687/- from the profit of Unit-1 and Unit –II respectively while calculating deduction u/s 80IB of the Act. The ground raised by the assessee is accordingly allowed. Addition u/s 40A(2) - related party - Held that:- Comparison cannot be made with all India operation and restricted area of operation. We do not find much force in the above submission of the ld. counsel for the assessee. The ld. CIT(A) has already given a finding that the quantum of sales effected through M/s Shanti Udyog was ₹ 852 lacs and they were paid commission @ 1.5%. The related party through whom the sales effected was ₹ 869 lacs has been paid commission @ 3.75% commission. From the analysis made by the A.O. in the body of the assessment order, we find the commission paid to unrelated parties ranges from 1.5% to 3% whereas commission in the case of related party is 3.75%. Even assuming that the related party has rendered some extra services such as giving market information feed back regarding changing trends as well as commercial information etc. and giving services on all India basis still such huge increase in the rate of commission appears to be in higher side. Considering the totality of the facts of the case and considering the fact that the commission to un-related parties varies from 1.5 to 3%, therefore, payment of commission @ 3% to the related party as against 2.5% allowed by the A.O., in our opinion, is reasonable and will meet the ends of justice. We hold and direct accordingly. The ground raised by the assessee is accordingly party allowed.
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