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2012 (7) TMI 119 - HC - Income TaxDeduction under Section 80-IA - Manufacturing activity - preparing of designs and drawings - number of workers employed - Section 80-IA(2)(V) of the Act - Held that:- Activities of the assessee involves various activities as per the requirement of their clients - Activities fall in the category of preparing engineering drawings, designs and other technical know how - what is transferred to the client is not the intellectual property, the consideration of which is for supply of drawings and design. Instructions given for preparing the equipment according to the drawings and also its installation when it is installed - Activity of the assessee falls within the meaning of the word 'manufacture' or produce used in Section 80-IA - assessee has employed nearly about 400 persons as work force to carry out its activities - Tribunal was justified in extending the benefit of Section 80-IA to the assessee - In favour of the assessee Whether assessee would be entitled to claim 80-O deduction - Services rendered or agreed to be rendered was utilized by the foreign company in India Held that:- Assessee was rendering service from India, which service was being made use of by the foreign enterprise outside the country. Therefore, it is not a case of service being rendered inside India - Assessee has not rendered any service in India in connection with the entire project - Service is rendered from India to a foreign enterprise and therefore, Section 80-O is attracted and the Tribunal rightly extended the said benefit - In favour of the assessee Whether the Tribunal was correct in proceeding to hold that Section 80-IA and 80-O deduction operate under two different spears and the assessee would be entitled to claim both the deduction on the same income of project Held that:- Section 80-IA and Section 80-O both fall under the heading deductions in respect of certain incomes both are independent of each other - assessee is entitled to claim deduction under both the Sections - overall claim under both Sections has to be restricted to the total profits and gains of eligible accounts from the total profits and gains - provision 9A to Section 80-IA was inserted by Finance Act No.2, 1988, which came into effect from 1.4.1998 that limitation was not there for the earlier assessment years - In favour of the assesses Whether the Appellate Tribunal was right in not apportioning the financial cost and operating expenses which had to be allocated to the export income before working out the deduction under Section 80-HHB of the Act Held that:- no allocation of overheads in computing, the deduction is necessary - there is no error committed by the Tribunal on this issue of deduction under Section 80-HHB Whether the Tribunal was justified in the facts of the case in holding that Section 80-O deduction shall not be allowable on gross amount of foreign exchange brought into India and further, it should also not be allowed on net foreign exchange brought into India i.e., foreign exchange received minus foreign exchange expended Held that:- Expenses in India currency cannot be taken into consideration - assessee is entitled to benefit only on the net income - claim of the assessee for deduction on the gross receipts rejected Against assessee
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