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2015 (7) TMI 436 - AT - Income TaxClaim of deduction u/s 80IC of the Act - Applicability of section 115JB of the Act – Partial disallowance of 10% of turnover as profit on account of the market value of the brand – Held that:- In so far as the question of reduction of the eligible profits on account of ‘brand’ value is concerned, it is noticed that the AO attributed 20% of profits to the ‘brand’, which the ld. CIT(A) restricted to 10%. The Tribunal, on similar facts and circumstances, has held that there can be no question of restricting the amount of eligible profit on account of ‘brand.’ In the absence of any distinguishing feature having been brought to our notice in the facts for the instant year, vis-à-vis the preceding year, respectfully following the precedent [2014 (4) TMI 618 - ITAT DELHI], we direct that no deduction can be made from the eligible profits on account of ‘Brand.’ AO held that profits to the extent of 5% of the turnover of the company were attributed to the past experience, expertise and knowledge, etc., of related and connected persons and not to the eligible unit. That is how, he allowed deduction for a sum of ₹ 32.40 lac on account of salary paid to directors and, apart from that, he also allowed a further deduction of ₹ 23,27,164/-, being the amount in excess of salary paid to directors up to 5% of total turnover. This resulted into reduction in the amount of eligible profit to the extent of ₹ 23.27 lac. The Tribunal, for the immediately preceding assessment year, has approved the view taken by the ld. CIT(A) in not increasing the deduction for expenses up to 5% of the sale value. It can be seen from the assessment order that the assessee categorically stated before the AO that all the sales were made from manufacturing unit at Haridwar and the branch offices etc. were only engaged in sale promotion and rendering after-sales services for the warranty provided on the products. Even copy of VAT return in support of the claim that all the sales were made from Haridwar, was also placed before him. This fact is brone out from page 5 of the assessment order. Similar contention was made before the ld. CIT(A) as well to the effect that the entire sales were made from Haridwar unit and no income producing activity was carried out from any place other than the eligible unit. - In the absence of any material to controvert the above submissions, respectfully following the precedent, we uphold the impugned order in not limiting the amount of eligible deduction to 12% of the total profits. - However, appeal regarding applicability of Section 115JB is dismissed - Decided partly in favour of assessee.
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