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2018 (3) TMI 1738 - AT - Income TaxDeduction u/s 80IC - difference in billing and payments made and as such the income derived is from industrial undertaking - diverting more profits towards non exempt units, the assessee had diverted profits towards exempt units and had not examined the issue while coming to conclusion - A.O. calculated the income of exempted unit by calculating total turnover of all the units of assessee-firm and total profit declared by all the units and reduced the deduction under section 80IC HELD THAT:- As decided in DEPUTY COMMISSIONER OF INCOME TAX, ROHTAK CIRCLE, ROHTAK, HARYANA VERSUS M/S MICRO TURNERS HISAR ROAD, ROHTAK [2016 (9) TMI 752 - ITAT DELHI] the assessee has produced all the books of accounts and vouchers before the AO during the assessment proceedings. No show cause query was issued by the AO on this account during the assessment proceedings. AO has not considered the fact that the units in exempted zones are mainly engaged in manufacturing on job work basis where there is either negligible or no input cost of raw material involved. It was noted that if the sales were made using their own raw material, there would be substantial difference in the GP rate insofar as, if the cost of raw material was excluded, the GP rate in all the units would remain the same. The fact that the exempted unit at Haridwar has shown a loss has not been referred to by the AO. Therefore, it is clear that no profit has been diverted to this unit. As further noted that there has been no investigation or specific exercise to show that the amount claimed as deduction u/s 80-IC was wrong. We find considerable cogency in the finding of the CIT(A) that there is no ground for disallowing claim for job work expenses for the eligibility u/s 80IC - Decided against revenue.
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