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2017 (3) TMI 1297 - AT - Income TaxEligible for deduction u/s 80IB(11A) - income of kasar (discount) treated as not not derived from the eligible industrial undertaking - Held that:- There is no quarrel about the fact that the assessee received the impugned purchase discount from raw materials/consumables suppliers to the tune of ₹ 2,99,1537- as utilized in its eligible business of manufacturing of specialty chemicals whose profits are already eligible for section 80IB deduction. Both the Id. lower authorities do not rebut assessee's books specifically stating the crucial live nexus between the discounted raw materials and its manufactured specialty chemicals. Net effect thereof is that assessee's eligible profits derived from its manufacturing activities have seen increased since raw material costs have come down due to the impugned discount forming integral part of the manufacturing process. We conclude in these peculiar facts that the authorities below have wrongly equated these facts with those involved in hon'ble apex court decision in Liberty India vs. CIT (2009 (8) TMI 63 - SUPREME COURT ) involving DEPB sales figures. We accept assessee's contentions on merits and reject those raised at Revenue's behest supporting the impugned disallowance. Thus assessee is eligible to claim deduction u/s 80IB on the income from discount (kasar) - Decided against revenue Non treating, interest of received from PGVCL, interest subsidy received from Government of Gujarat through district industrial center and interest from FDR eligible for deduction u/s 80IB(llA) - Held that:- As regards interest received from Government of Gujarat issue is squarely covered in favour of assessee in the case of Commissioner of Income Tax vs. Meghalaya Steels [2016 (3) TMI 375 - SUPREME COURT ] as held the subsidies were only in order to reimburse, wholly or partially, costs actually incurred by the assessee in the manufacturing and selling of its products. Examining the facts of the case in the light of above judgment we are of the considered view that assessee has also received interest subsidy from Govt. of Gujarat for the project undertaken by the assessee eligible for deduction u/s 80IB(11A) of the Act and, therefore, since subsidy received is also a part of profit and loss account of the industrial undertaking it is eligible for deduction u/s 80IB(11A) of the Act. We, therefore, allow assessee's claim of deduction u/s 80IB As regards interest received from PGVCL and interest on FDRs certainly this income does not have direct nexus with the profit and loss of the undertaking but it is also a fact that the deposits with PGVCL and deposit with the bank FDRs have been indirectly carried out in the process of business only with regard to statutory deposits to be made or surplus funds deposited with Bank. Ld..As AR requested for netting of the interest income against interest paid we find substance in the argument of ld. Authorised Representative and are of the view that benefitting of netting of interest should be allowed to the assessee against the interest expenditure claimed by the assessee and resultantly there will be nil effect to the eligible profit for the purpose of claiming deduction u/s 80IB (11A) of the Act and accordingly, this ground of the assessee is allowed. See ACG Associated Capsules Pvt. Ltd. [ 2012 (2) TMI 101 - SUPREME COURT OF INDIA ] Notionally reducing amount on account of remuneration and interest payable to the partners as per the partnership deed from the eligible profit to claim deduction u/s 80IB(11A) - Held that:- As the assessee was having discretion of providing interest and remuneration to partners, and in the year under appeal it decided to not to book any such expenditure ld. Assessing Officer's was not justified in notionally calculating the interest and remuneration at ₹ 10,92,653/- and ₹ 251634/- and reducing deduction u/s 80IB(11A) of the Act by ₹ 13,44,287/-. Accordingly, we set aside the order of ld. Commissioner of Income Tax(A) and allow this ground of assessee. Disallowance on account of late payment of PF u/s 36(l)(va) - Held that:- During the course of assessment proceedings ld. Assessing Officer disallowed a sum of ₹ 31,421/- being employees contribution to PF Asst. Year 2010-11 deposited after the due date as statutorily provided under the Act. Ld. Commissioner of Income Tax(A) confirmed the disallowance. We observe that Hon. Jurisdictional High Court in the case of Commissioner of Income Tax vs. Gujarat State Road Transport Corporation (2014 (1) TMI 502 - GUJARAT HIGH COURT ) held that if the employees contribution to PF is deposited beyond the due date as provided in the statute then such expenses cannot be claimed as deduction against the gross revenue. Respectfully following the judgment of Hon. Jurisdictional High Court in the above case, we find no reason to interfere with the order of ld. Commissioner of Income Tax(A) confirming the disallowance with respect to late payment of employees PF. - Decided against assessee.
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