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2014 (1) TMI 234 - AT - Income TaxDeduction u/s 80IA - Held that:- As per Section 80IA(5) - The quantum of deduction under section 80IA, for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year to be computed as if the eligible business is the only source of income - The eligible business is the only source of income and the deduction would be allowed from the initial assessment year or any subsequent assessment year - In view of the amendemnt to section 80IA w.e.f. 01.04.2004 - The assessee exercises the option of choosing the initial assessment year from which it chooses its 10 years of deduction out of 15 years, then only the losses of the years starting from the initial assessment year alone are to be brought forward as stipulated in section 80IA(5) - It is only when the loss have been incurred from the initial assessment year, then the assessee has to adjust loss in the subsequent assessment years and it has to be computed as if eligible business is the only source of income and then only deduction under section 80IA can be determined. Following CIT v/s Emerald Jewel Industry (P) Ltd. [2010 (8) TMI 648 - Madras High Court] - Sub-section (5) of section 8oIA will come into operation only from the initial assessment year or any subsequent assessment year. The option of choosing the initial assessment year is wholly upon the assessee in the post amendment period i.e., after 1st April 2000 by virtue of section 80IA(2) - The initial Assessment Year in the case of Jivraj Tea & Industries Ltd. is the Assessment Year 2004-05 and in the case of Jivraj Tea Ltd. is Assessment Year 2007-08 - The assessee has not suffered any loss in the said year, no brought forward loss or depreciation could be reduced for determining the amount in which the deduction is to be allowed u/s. 80IA of the Act - Decided in favour of assessee. Whether deduction u/s. 80IA will be allowable on the sale proceeds of sales tax entitlement received - Held that:- Following CIT Vs. Birla VXL Ltd [2013 (7) TMI 655 - GUJARAT HIGH COURT] - The scheme was framed as a part of Government's initiative to encourage modernization of existing industries in underdeveloped areas - The main purpose of the scheme was to accelerate the industrial development and to disperse industries to under-developed areas as well as to provide additional employment - The scheme was primarily concerned with the modernization of the existing industries - It was not a scheme either for development of new industries in specified areas, or for mere expansion of the existing production capacities of the industries - The main purpose of the resolution was to modernize industries, which ordinarily would come at a considerable cost, particularly when such industries were located in under-developed areas - The industries will find it difficult without Government's incentive to undertake large-scale modernization with the use of modern technology.the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-to-day functioning of the business, or for making the industry more profitable - The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry - The issue was restored for fresh adjudication. Disallowance u/s 40A(2)(b) - Held that:- Following assessee's own case for A.Y. 2006-07 - The yard stick adopted by the Assessing Officer was average purchase price of Tea without ascertaining the price prevailing in the market on the date when purchase was made from sister concerns with that from outside party and without comparing the exact quality and the transactions of purchases from the sister concerns were not the sham transactions - Decided in favour of assessee. Disproportionate increase in sales promotion expenses - Held that:- Following assessee's own case for A.Y. 2006-07 - the payments were made through account payee cheques and bank draft and none of the parties were related to the assessee company or its director and details and vouchers were maintained verifiably and genuineness of the expenditure was not in doubt - Decided in favour of assessee.
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