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2021 (10) TMI 1105 - AT - Income TaxDeduction u/s 80IB(11A) - AO disallowing the deduction claimed as the predominant activity of the assessee is milling/de-husking of paddy, which does not constitutes a ‘manufacturing activity’, and is beyond the scope of Section 80IB(11A) and that the activity of storage and transportation undertaken by the assessee are only incidental to the main manufacturing activity off the assessee - HELD THAT:- The aforesaid issue is squarely covered in favour of the assessee by the order of the Co-ordinate Bench of Tribunal in assesse’s own case for the A.Y. 2009-10 [2021 (6) TMI 258 - ITAT DELHI] Following the order of the co-ordinate Bench in the case of a group company, LT Foods Ltd. [2020 (10) TMI 88 - ITAT DELHI] allowed deduction claimed u/s 80 IB(11 A) - activities involving cleaning, steaming, soaking, drying, polishing, grinding etc. clearly fall within the expression “ handling” as contemplated under section 80 IB(11 A) - de- husking of the paddy to convert it into rice is an integral part of reducing the post- harvest food grain loss as it enhances life of food grain and reduces the loss of food grain and contributes to the preservation of food grains - CIT(A) has righty allowed the claim of deduction under section 80IB(11A) of the Act and we decline to interfere with the order of the ld. CIT(A). Disallowance u/s 14A - HELD THAT:- The assessee is not liable for any disallowance on interest as no interest bearing funds have been utilized for the purpose of making investment. Since, the share of profit from the partnership is mere distribution of income which is already been taxed, hence the provisions u/s 14A are not attracted in such case. Further, we also affirm the principle of no disallowance is called for where there is no exempt income earned. The AO is directed to re- compute the disallowance, keeping in view the guidelines mentioned above. Prior period Expenses - amount comprised of excess input tax receivable and bank processing charges - AO disallowed prior period expenses on the grounds that they do not relate to the relevant previous year - HELD THAT:- The relevant facts are that the aforesaid expenditure was duly claimed as deduction in the computation of income as the same were business expenditure incurred in the ordinary course of running the business and allowable revenue deduction u/s 37(1) of the Act. Further, in so far as bank processing chargesis concerned, the processing charges was accounted and charged by the bank during the relevant assessment year only, but the assessee inadvertently debited the same into prior period expenses. In view of the above, the disallowance of prior period expenses is being deleted in toto.
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