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2019 (3) TMI 224 - HC - Income TaxEligibility to deduction u/s 80IA - income derived from the Chennai and Pondicherry manufacturing unit - inclusion of income from service centres in the claim under Section 80IA - allocation of expenditure - HELD THAT:- The inclusion of income from service centres in the claim u/s 80IA was rightly found by the assessing officer to be incorrect. As regards the financial overheads, the methodology followed by the CIT(A) was that 50% of the expenditure be apportioned directly on the basis of turnover of three (3) units and the balance of 50% be apportioned in the ratio of 1:3 between the two manufacturing units and the trading unit. As against the service centre expenses, AO had observed that the service centres provided free service under warranty for the new systems sold for two years and thereafter earns income from the Annual Maintenance Contract entered into with the customers. The centres also undertake installation of the new UPS systems and provide technical support during the period of warranty when necessary. The expenditure incurred was, according to the Assessing Officer, to be directly allocated to the manufacturing units, as warranty was a part of their sale transaction. In the absence of any material before us to indicate that the methodology for allocation of expenditure followed by the CIT (A) and confirmed by the Tribunal was incorrect or perverse, we find no reason to interfere with the factual findings of the Tribunal and the first substantial question of law is answered in the affirmative, against the revenue and in favour of the assessee. Quantum of deduction granted stands enhanced consequent upon the re-working of the claim by the CIT(A), to an amount in excess of that claimed by the assessee - HELD THAT:- Mr.Ranganathan does not raise any factual dispute regarding the details set out above. Certain limitations are placed by statute on the quantum of relief allowable in relation to deductions under Chapter VI A of the Act, in terms of Sections 80A(2) and (4), 80AB, 80AC and 80B. These include a mandate that the relief granted shall not exceed the gross total income as defined u/s 80B(5). The relief granted, as seen above, has been restricted to the gross total income computed only. In these circumstances, we do not find any reason to interfere with the order of the Tribunal. - Decided in favour of the assessee and against the revenue.
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