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2012 (12) TMI 412 - ITAT HYDERABADDeduction u/s 80IB - deduction to small scale industrial units engaged in manufacture or producing articles or things. - reduction in investment limit from Rs. 3 crore to Rs. 1 crore in case of small scale industrial undertaking. - Ministry of Commerce and Industry, Government of India, in press note No.3 has clarified that units which have obtained permanent registration based on the order dated 10.12.1997 would continue to remain as SSI unit in spite of order dated 24.12.1999 reducing the investment limit to Rs. 1 crore. - held that:- it appears that the assessee satisfies all the conditions to be regarded as a small scale undertaking under S.11B of the Industries (Development and Regulation) Act,1951. The letter dated 19.10.2000 of the Additional Development Commissioner, SSI relied upon by the Learned Departmental Representative only supports the claim of the assessee. In view of the aforesaid facts and circumstances, the direction of the CIT(A) to the assessing officer to verify the original documents and allow deduction under S.80IB, if registration has been obtained prior to 24.12.1999 is most appropriate and does not call for any interference. - Decided in favor of assessee. Deduction of TDS withheld by the the authorities of Sikkim as expenditure - the assessee explained that the amount debited is income tax deducted by State Government of Sikkim while making payment to the assessee for material supplied during the relevant previous year. The assessing officer disallowed the claim of the assessee by observing that the TDS is not an allowable expenditure. - held that:- any rate or tax levied on the profit or gain of any business or profession shall not be allowed as deduction. The tax levied on the profits or gain of any business would mean that profit has been ascertained in a manner comparable with the outline in the provisions of the Income-tax Act. In the aforesaid context, it has to be seen whether the income-tax deducted at 3% on the bills of the assessee, partakes the character of a tax levied on the profits of the assessee. It has also to be seen whether the tax levied at the rate of 3% under the Sikkim Income Tax Manual, is after determination of profit in accordance with a machinery provision comparable with the provisions of the Indian Income Tax Act, or whether it is on the basis of a rough estimate. - matter remanded back to AO.
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