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2020 (11) TMI 871 - AT - Income TaxDeduction u/s 80IA - second round of proceedings - AO once again denied the claim of deduction in respect of profits from production of lean gas/processed natural gas at various customer terminals - Whether lean gas was manufactured/produced at the two LPG plants at Vijaipur and Vaghodia and not at customer terminals as claimed by the assessee? - activities undertaken by the appellant at its customer terminals did not constitute “manufacture or production of any article or thing”, so as to be eligible for deduction under sections 801, 80IA and 80HH or not? - HELD THAT:- As decided in own case [2020 (10) TMI 1125 - ITAT DELHI] we are of the considered view the appellant is eligible to the deductions/tax holding u/s 80HH/80I and 80IA of the Act on lean gas at the stage of customer terminals. Claim of deduction in respect of interest on fixed deposits, bonds etc. Interest on employees, loans and advances, interest on customer outstanding and miscellaneous income - HELD THAT:- As decided in own case [2020 (10) TMI 1125 - ITAT DELHI] Assessee has produced all the relevant evidence as regards to how the scrap sale is derived from the industrial undertaking. As regards to interest on fixed deposits, various decisions of the Hon’ble High Court categorically held that the deduction in respect of interest on fixed deposits under Section 80IA is allowable. The revenue has not pointed out as to why the same should be denied to the assessee. The case laws given by the Revenue in fact reiterate the stand of the assessee. Hence, it is pertinent to remand back the matter to the file of the AO and we direct the Assessing Officer to allow deduction in respect of interest on fixed deposits under Section 80IA - interest on employees’ loans and advances is concerned, the interest on loan provided to employees in our opinion is inextricably linked to the business of the assessee and constitutes business income eligible for deduction - interest on customer outstanding is profit derived from eligible undertakings and entitled for deduction under Section 80IA/80I, in department’s appeal, the issue is covered in favour of the assessee by various decisions of High Court. As regards to miscellaneous income, the said income is inextricably linked to and have first degree nexus with the profits and gains of the eligible undertaking and the same were eligible for deduction. Asset Transfer Agreement - Payment received towards the reimbursement of expenses - first appellate authority set aside the matter to the file of the AO for deciding afresh - HELD THAT:- The Asset Transfer Agreement the total value of assets to be transferred is mentioned which is ₹ 18,13,13,311/-. We further find that on this total value appellant was issued shares of ₹ 10/- each at 18131331. We have carefully considered the computation of additional reimbursement computed by the AO at ₹ 3,01,17,428/-. We find that the AO has simply proceeded by erroneous figures without applying his mind. The actual reimbursement of cost of ₹ 2,68,16,119/- has already been offered therefore in our considered opinion nothing further remained to be added more particularly on erroneous figures and computation. We accordingly direct the AO to delete the impugned addition. Ground No. 5 is accordingly allowed. Provision for guarantee fee payable - Central Government has given guarantee on behalf of the assessee in lieu thereof instructed for levy of guarantee fee @ 1.2% per annum on the outstanding amount of loan - HELD THAT:- C&AG made adverse remark and pursuance to which the assessee created the liability. In our considered opinion the assessee has rightly created the liability as such liability was properly ascertainable. We are of the considered view that merely because the assessee was pursuing the matter with the Ministry of Petroleum and Natural Gas the same can not make the liability a contingent liability. Moreover this is not an estimated liability but the same is in line with the office Memorandum F-12 (1)-B/SB/92 dated 4.6.1993 by which the Central Government has instructed for levy of guarantee fee @ 1.2% per annum on the outstanding amount of loan. As per the said OM the guarantee fee was to be levied on the date of guarantee and thereafter on first day of April every year. Considering the facts of the case in totality we are of the considered view that such liability has to be allowed in the year under consideration - direct the AO to delete the impugned addition on account of guarantee fee. Investment allowance u/s 32A - assessee had awarded a contract for laying of HBJ pipeline to consortium led by M/s. Spice Capag. The plant and machinery was put to use before 31.3.1990 and was capitalized during the assessment year 1989-90 - HELD THAT:- The fact is that in the first order of litigation the Tribunal has categorically allowed the claim of deduction u/s 32A of the Act. Though certain verifications were to be done by the AO. However without following the directions of the Tribunal the AO simply repeated the addition. However the first appellate authority after considering the findings of the Tribunal in the first order of litigation allowed the claim of deduction. AO is directed to verify only the aggregate amounts of investment allowance and investment allowance reserve, respectively, claimed by the reliant during this period. If the aggregate amount of reserves created are more than 75% of the aggregate amount of investment allowance claimed by the appellant, the claim of deduction u/s 32A is to be allowed. Accordingly, this ground is allowed in favour of the appellant -No error or infirmity in the directions of the CIT(A) and hence we do not find any reason to interfere with the same
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