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M/s Bora Agro Foods Versus Addl. Commissioner of Income Tax, Range-2, Pune

Disallowance u/s 40(a)(ia) - invoking section 80A(4) - Held that:- There is no claim under any of the provisions covered in section 80A(4) of the Act. Therefore, invoking section 80A(4) of the Act in the present case to deny assessee's claim is anyway not justified. So however, even if for a moment, we accept the invoking section 80A(4) of the Act by the Revenue yet it would cover a situation if multiple deductions are claimed for same profits in the same assessment year. Ostensibly, that is not .....

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assessee would derive double benefit if the claim was allowed because in the earlier year such income has not suffered tax on account of the deduction u/s 10B ? - Held that: - We are unable to find any statutory support to the plea of the Revenue. It is a well-settled rule of law that where language is clear and not capable of any other construction then the same has to be applied.

In this context, the assessee had placed reliance on the parity of reasoning laid down in the case of .....

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e subject against the taxing department. Therefore, in conclusion, we uphold the plea of the assessee for deduction u/s 40(a)(ia) of the Act of a sum of ₹ 70,35,997/-. - Decided in favour of assessee. - ITA No. 1882/PN/2013 - Dated:- 10-4-2015 - G S Pannu, AM And Sushma Chowla, JM,JJ. For the Appellant : Mr Nikhil Pathak For the Respondent : Mr A K Modi ORDER Per G S Pannu, AM. The captioned appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-II .....

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the Companies Act, 1956 and is, interalia, engaged in the business of manufacture and export of Hulled sesame seeds and dealing in spices. The Assessing Officer noticed that in the return of income, assessee had claimed deduction of a sum of ₹ 70,35,997/- representing freight charges incurred in the preceding assessment year 2009-10. The assessee explained that the tax deduction at source (TDS) corresponding to the impugned sum was deducted in the previous year relevant to the earlier asse .....

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t of the Central Government in the subsequent year, such sum shall be allowed as a deduction in computing the income of the subsequent year in which such tax has been paid; assessee contended that in the previous year relevant to the assessment year under consideration such tax has been paid and therefore it claimed deduction for the corresponding expenditure of ₹ 70,35,997/- while computing the income for the year under consideration. Pertinently, in the preceding assessment year of 2009- .....

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year 2009-10 but the entire income of the assessee (inclusive of such add back) was allowed a deduction in terms of section 10B of the Act. In so far as the current assessment year is concerned, there is no claim for deduction u/s 10B of the Act. According to the Assessing Officer, the deduction of such amount cannot be allowed in this year on the basis of the proviso to section 40(a)(ia) of the Act because in the preceding assessment year the tax burden on the assessee qua the said amount was .....

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owance of impugned expenditure was made in assessment year 2009-10. Furthermore, in the current assessment year following the provisions of section 40(a)(ia) of the Act, such expenditure was liable to be allowed since the requisite TDS has been paid to the Government in the current year. The Ld. Representative for the assessee vehemently pointed out that there is no double benefit inasmuch as the claim of the assessee is within the purview of section 40(a)(ia) of the Act. The Ld. Representative .....

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preceding assessment year, the assessee cannot be allowed to reduce its tax burden by claiming deduction of the said amount against taxable income of the current year by utilizing the proviso to section 40(a)(ia) of the Act. The Ld. Departmental Representative also referred to the following discussion in the order of the CIT(A) wherein the claim has been denied on the basis of the provisions of section 80A(4) of the Act :- "However, the contention of the appellant that the said amount on wh .....

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ductions in respect of certain incomes", where, In the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit .....

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d under any other provisions of the Act for such assessment year. The above amendment has been brought about to curb the claim of multiple deduction by the assessee, though sec 80IA(a) also controls double deduction. These sections are overlapping in nature however, sec 80A(4) has far greater reach. 4.3 In the present case the appellant has already been allowed deduction u/s 1GB on ₹ 59,43,736/- in respect of the business profits derived from EOU unit, the same cannot be considered again f .....

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er Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid within the period prescribed therein then such expenditure shall not be allowed as a deduction while computing the income chargeable under the head profits and gains of business or profession. The proviso to section 40(a)(ia) of the Act also specifies that where in respect of such sum, tax has been deducted in any subsequent year or has been deducted during the previous year but paid after the due date sp .....

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ngth of the proviso to section 40(a)(ia) of the Act in the current assessment year i.e. assessment year 2010-11, the case setup by the assessee is that such sum be allowed as a deduction in computing the income because the same has been paid during the year under consideration. Having regard to the explicit provisions of section 40(a)(ia) of the Act, no fault can be found with the claim of the assessee. In-fact, in so far as the wording of section 40(a)(ia) of the Act is concerned, even the Reve .....

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an application of the proviso to section 40(a)(ia) of the Act. According to the Revenue, it would result in a double benefit to the assessee. Apart therefrom, reliance has been placed on section 80A(4) to support the denial of assessee's claim. The provisions of section 80A(4) of the Act, read as under :- "80A(4) Notwithstanding anything to the contrary contained in Sec 10A or sec 10AA or sec 10B or Sec 10BA or in any provisions of Chapter under the heading "C-Deductions in respect .....

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igible business, as the case may be." 7. Section 80A(4) of the Act prescribes that where in the case of an assessee any amount of profits and gains of undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction u/s 10A or section 10AA or section 10B or section 10BA or in any provisions of Chapter VI-A under the heading "C-Deductions in respect of certain incomes" for any assessment year, then deduction in respect of and to the extent of such profit .....

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ly, the deductions referred to therein are those contained in section 10A or section 10AA or section 10B or section 10BA or under any provisions of Chapter VI-A under the heading "CDeductions in respect of certain incomes". It is also pertinent to note that the said section seeks to deny multiple deductions for the same profits in the same assessment year. The aforesaid becomes amply clear from the phraseology of section 80A(4) of the Act itself. In-fact, a perusal of the notes on clau .....

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e prone to considerable misuse. Further, since the scope of the deductions under various provisions of Chapter VIA overlap, the taxpayers, at times, claim multiple deductions for the same profits.With a view to preventing such misuse, it is proposed to amend the provisions of section 80A of the Income-tax Act to provide the following, namely :- (i) deduction in respect of profits and gains shall not be allowed under any provisions of section 10A or section 10AA or section 10B or section 10BA or .....

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8. Ostensibly, the present claim of the assessee in the current assessment year is for deduction of ₹ 70,35,997/- in terms of the proviso to section 40(a)(ia) of the Act. There is no claim under any of the provisions covered in section 80A(4) of the Act. Therefore, invoking section 80A(4) of the Act in the present case to deny assessee's claim is anyway not justified. So however, even if for a moment, we accept the invoking section 80A(4) of the Act by the Revenue yet it would cover a .....

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to section 40(a)(ia) of the Act. Thus, this stand of the Revenue is liable to be rejected. 9. Now, we may take-up the other plea of the Revenue to the effect that the assessee would derive double benefit if the claim was allowed because in the earlier year such income has not suffered tax on account of the deduction u/s 10B of the Act. In this context, we are unable to find any statutory support to the plea of the Revenue. It is a well-settled rule of law that where language is clear and not ca .....

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the liability to additional income tax on the ground that it had no taxable income otherwise. The Hon'ble High Court held that the claim of the Revenue was unsustainable, and in coming to such conclusion, the Hon'ble High Court made the following observations, as appearing in the Head notes :- "It is a condition precedent to the levy of additional income-tax under clause (ii) of the proviso to paragraph B of Part I of the First Schedule to the Indian Finance Act, 1951, in respect of .....

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