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2019 (10) TMI 119 - AT - Income TaxDeduction u/s 80IA - eligible profit computation - set-off of unabsorbed depreciation or loss of the years prior to initial assessment year - HELD THAT:- Board has recognized rights of the assessee for selecting the initial assessment year for claiming deduction under section 80IA. The Board has appraised its authorities and contemplated that sub-section (2) of section 80IA provide that the assessee who is eligible to claim deduction under section 80IA has option to choose the initial /first year from which it may desire the claim of deduction for ten consecutive years out of slab of 15 years as prescribed under that sub-section. It has also been propounded by the Board that once such initial assessment year has been opted by the assessee, he shall be entitled to claim deduction under section 80IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to fulfillment of conditions prescribed in the section. As far as conditions of section are concerned, the AO has himself allowed the deduction under section 80IA. Thus, he has himself has not disputed above fulfillment of necessary conditions for claiming the deduction under section 80IA. It is also pertinent to note that in the assessment years 2012-13 and 2013-14, the stand of the assessee that loss of earlier years i.e. prior to selection of initial assessment year are required to be ignored for the purpose of section 80IA. CIT(A) correctly has accepted the claim of the assessee and held that unabsorbed depreciation or loss of the years prior to initial assessment year are not required to be set off against the eligible profits and thus the assessee is entitled for deduction under section 80IA on the enhanced amount. Addition u/s 40(a)(i) of the Act on account of non-deduction of TDS on the foreign commission payment - HELD THAT:- We are of the view that the ld.CIT(A) has examined issue with all possible angle in order to find out whether commission paid by the assessee is genuine or alleged commission has element of income taxable in India. After satisfying himself on both the counts, the ld.CIT(A) has allowed deduction of the above expenditure to the assessee in both these assessment years. On due consideration of the detailed finding, we do not find any merit in the grounds of appeal raised by the Revenue. Disallowances u/s 80IC - Whether alleged income sub-divided by the AO has nexus with the manufacturing activity or not? - HELD THAT:- There is no dispute with regard to the proposition that deduction under section 80IC is admissible where the gross total income of an assessee includes any profit and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2) of section 80IC of the Act; sub-section (2) further contemplates that this section applies to an undertaking or enterprise which has begun or begins to manufacture or produce any article or things. There is no dispute that the assessee has begun to manufacture any article or thing. The question whether the alleged income sub-divided by the AO has nexus with the manufacturing activity or not. As far as interest income on fixed deposits made with electricity department is concerned, it has direct nexus with the manufacturing activity. Unless an electricity connection is there, no manufacturing activity would commence and for taking electricity connection, it is mandatory to give deposits. Similarly, the assessee had made recoveries from transporters on account of loss of material on transit. Therefore, it has a direct nexus with the manufacturing process. The goods manufactured or raw-materials purchased by it were lost in transit, which were compensated by the transporter. It has a direct nexus. Similarly, if the assessee get certain discount from the supplier, then it would reduce the purchase price of the material, which will enhance the profit, and therefore, deduction on such higher profit will be admissible. The ld.CIT(A) has rightly appreciated this aspect and granted the deduction to the assessee. We do not find any error in the order of the ld.CIT(A), and therefore, this ground of appeal is rejected in both the years. Disallowance u/s 36(1)(va) - delay in deposit PF dues in the PF account - HELD THAT:- Assessee did not pay salary to its employees, then would it get an enhanced period of limitation for depositing the PF dues in the PF account ? If that be accepted, then there will be no relevancy of “due date” provided under the respective Acts. For this proposition we find support from the subsequent decision of Hon’ble jurisdictional High Court in the case of M/s.Checkmate Facility And Electronics Solutions P.Ltd. Vs.DCIT, [2018 (10) TMI 994 - GUJARAT HIGH COURT] on this similar issue. Therefore, we do not find any merit in this ground of CO. It is dismissed.
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