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2019 (12) TMI 141 - AT - Income TaxEligible for deduction u/s 80IA - income is attributable to the manufacturing activities - HELD THAT:- Case made out by the assessee, the documents in support of such claim on record before us and respectfully relying on the ratio laid down on this issue of allowability of supervision charges by the Jurisdiction High Court, we find no alternative but to allow the claim of the assessee for deduction u/s. 80IA since we find the income is attributable to the manufacturing activities. Consequently the addition is deleted. Hence, the assessee appeal is allowed. Applicability of the provision of Sec. 194C or Sec. 194J - payment to the contractors - non-deduction of tax at source or non payment of tax though was deducted on payments made to residents - HELD THAT:- It is a fact that the assessee has made such payment to the contractors but TDS has not been deducted u/s 194C and hence the disallowance was made under section 40(a)(ia) by the authorities below. It is also a fact that the assessee was with the bona fide wrong impression regarding the applicability of the provision of Sec. 194C or Sec. 194J to such nature of payments. It is also a fact that Sec. 40(a)(ia) after its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residents as specified in Sec. 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the expenditure so claimed by the assessee. If that be so, the disallowance of entire expenditure of ₹ 7,65,700/- for drawing charges and ₹ 2,84,050/- towards PLC Programming Charges ought not to have been made by the authorities below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee’s appeal are partly allowed.
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