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2013 (11) TMI 170 - AT - Income TaxEntitlement of Deduction u/s 80IB - Weather the Commissioner of Income Tax (Appeals) erred in holding that the assessee is entitled for deduction under sec.80IB of the Act – Held that:- Held that:- The assessee was entitled to deduction under sec.80IB of the Act since the assessee unit was located in an industrially back-ward State specified in VIII Schedule and was governed by the provisions of sub sec.(iv) of Sec.80IB of the I.T. Act - by analyzing the provisions of the Act, the assessees, whose industrial undertakings were recognized as “Small Scale Industries” or located in an industrially back-ward state were eligible for deduction under sec.80IB of the Act even if they manufacture articles or things specified in the list in XI Schedule - The Revenue could not rebut any of the findings of Commissioner of Income Tax (Appeals) with any supporting material - The deduction u/s.80-IB was available for the assesses who being to manufacture or produce things or article specified in the section and subject to the conditions laid down. The assessee’s manufacturing unit was located in the State of Pondicherry, which was an “industrially backward State” - the assessee’s case was covered by the second limb of proviso to clause (iii) of sub-section (2) of sec.80-IB of the Act - Hence, the words “not being any article or thing specified in the list in the Eleventh Schedule” stands omitted from the language of clause (iii) of the Act - Manufacturing of any article or thing (including those specified in 11th Schedule) was sufficient for claiming deduction u/s.80-IB of the Act in such a case - On this account alone the instant assessee, being located in an “industrially backward State” of Pondicherry, was eligible for deduction u/s.80-IB of the Act - the assessee was located in the State of Pondicherry which was in an industrially backward State - There was no dispute regarding this - Hence, the assessee was eligible for deduction under the sub-section (4) of sec.8O-lB of the Act. The deduction u/s. 80-IB in the case of an industrial undertaking an industrially backward State specified in the Eighth Schedule is governed by the provisions of sub-sec.(4). The only requirement in such cases is that the industrial undertaking should be located in an industrially backward State. It makes no difference whether such undertaking is a small scale industry or not. In other words, once the industrial undertaking is located in an industrially backward State, all units (whether SSI or non-SSI) are equally eligible for deduction u/s.80-lB of the Act. Disallowance u/s 40(a)(1a) - The order of the CIT(A) was confirmed in respect of the deduction u/s.80IB and reversed in respect of disallowance u/s.40(a)(ia) - The Assessing Officer to consider the said payments made to various parties as allowable expenses in the subsequent years since the assessee has deducted TDS on the said amount and remitted the same to the Govt. account, subject to verification - the Assessing Officer made disallowance under sec.40(a)(1a) on the ground that the assessee has not deducted TDS on certain payments made to various parties.
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