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2017 (1) TMI 1249 - AT - Income TaxQuantum of deduction allowable u/s. 80IB and 80IC - Held that:- The adjustment of brought forward losses for the purpose of arriving “Income from Business”, in our view, cannot be come in the category of determining the “Net income of the eligible undertaking” for the year under consideration, since the brought forward losses cannot be considered to be expenses incurred to earn the profits and gains of eligible undertakings. The adjustment of brought forward losses is the process prescribed by the statute to determine the “Gross total income”. Hence we are of the view that, for the purpose of determining the quantum of deduction, the Profits and gains of eligible business of eligible undertaking should be considered before setting off of brought forward losses, but the deduction should restricted to the amount of “Gross Total income” as per the provisions of sec. 80A(2) of the Act. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the aggregate amount of deduction u/s 80IB and 80IC of the Act to the aggregate amount or the Gross Total income, whichever is less. Disallowance made u/s 14A - Held that:- On a careful perusal of the submissions made by the assessee and the Ld D.R, we find merit in the submissions made by Ld A.R. We have noticed the nature of investments and the volume of transactions. Considering these factual details, we are of the view that the disallowance of ₹ 1,65,000/- is reasonable. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance of administrative expenses u/s 14A to ₹ 1,65,000/-. We direct the AO to add the amount disallowed u/s 14A of the Act under the normal provisions of the Act to book profit computed u/s 115JB of the Act. ESOP expenses allowability - Held that:- We notice that an identical issue was considered by the Special bench of Bangalore in the case of M/s Biocon Limited Vs. DCIT [2013 (8) TMI 629 - ITAT BANGALORE] held that the discount on ESOP is allowable as deduction. The Special bench has also prescribed the manner of computation of discount and the adjustments to be made in the succeeding years. There should not be any dispute that the decision rendered by the larger bench of Tribunal is required to be preferred over the division bench. Accordingly we are of the view that this issue requires fresh examination in accordance with the decision rendered by the Special bench in the case of Biocon Ltd (supra).
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