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2017 (8) TMI 1569 - AT - Income TaxDeduction u/s. 80IB(4) - Whether the activity carried out by the assessee at Silvasa unit amounts to manufacture or production? - HELD THAT:- As decided in own case [2015 (2) TMI 1317 - ITAT PUNE] activity involving assembling of various components and achieving a final product of a generator amounts to manufacture or production of an article or thing with the meaning of section 80-IB of the Act. Moreover, in the case of Tata Locomotive and Engineering Company Limited [1967 (2) TMI 22 - BOMBAY HIGH COURT] has also held that assembling of various components which results into a different product which is distinct then the individual components, such an activity amounts to manufacture or production. As a consequence, we therefore do not agree with the first objection of the AO to deny assessee’s claim for deduction u/s. 80-IB (4) of the Act. Thus, on this aspect assessee succeeds Disallowance u/s.14A - HELD THAT:- Since no exempt income has been earned during the period relevant to the assessment year under appeal and since it is no ones case that any interest expenditure was incurred for making investments by the assessee, therefore, no disallowance u/s 14A is warranted. Accordingly, ground No. 2 raised in the appeal by the assessee is allowed. Amended provisions of section 40(a)(ia) - TDS u/s 194A - disallowance u/s. 40(a) (ia) - payment of interest for delayed payments to creditors - HELD THAT:- Without going into the merits whether the interest paid by the assessee is in the nature of trade payment or payment of interest falling within the ambit of section 194A, we deem it appropriate to consider the alternate submission of the assessee. The provisions of section 40(a)(ia) have been amended by the Finance Act, 2012 w.e.f 01.04.13. The second proviso to section 40(a)(ia) have been inserted according to which no disallowance u/s 40(a)(ia) of the Act would be made if the assessee is not deemed to be an assessee in default under first proviso to section 201(1) of the Act. In the light of amended provisions of section 40(a)(ia) and case of M/S. SHREE SAI TRADERS VERSUS ITO, WARD-2, BEED [2016 (11) TMI 1512 - ITAT PUNE] we deem it appropriate to restore the issue back to the file of Assessing Officer with direction to give opportunity to the assessee to substantiate with evidence that payee has already included interest income in its return and has paid tax thereon. Accordingly, ground No. 3 raised in the appeal by the assessee is partly allowed for statistical purposes.
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