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2016 (2) TMI 875 - ITAT PUNE

2016 (2) TMI 875 - ITAT PUNE - TMI - Computation of deduction under section 80IA - assessee had already claimed deduction under section 80HHC - Held that:- We modify the directions of the CIT(A) and direct the Assessing Officer to first compute the deduction under section 80IA of the Act and restrict the deduction under section 80HHC of the Act to the profits of business that remains after excluding the profits on which deduction under section 80IA of the Act is allowed. Further, the Assessing O .....

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alidhar ORDER PER SUSHMA CHOWLA, JM : Out of this bunch of three appeals, two appeals filed by the Revenue are against consolidated order of CIT(A)-I, Nashik, dated 25.02.2014 relating to assessment years 1989-90 & 1995-96 against respective orders passed under section 143(3) and 143(3) r.w.s. 250 of the Income Tax Act, 1961 (in short the Act ). The Revenue is also in appeal against the order of CIT(A)-I, Nashik, dated 03.03.2005, relating to assessment year 1997-98 against order passed unde .....

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case. The grievance of the Revenue was that there was no justification in the order of CIT(A) in allowing the third party commission paid to various business agents in respect of orders obtained from government agencies amounting to ₹ 23,44,400/-, which in turn, was included in the total payment of ₹ 35,26,887/-. The Revenue in ITA No.894/PN/2014 has raised the said issue by way of grounds of appeal No.1 and 2. Similarly, in ITA No.895/PN/2014, the Revenue has also aggrieved by the .....

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he Revenue against the order of CIT(A) in allowing the deduction under section 80IA of the Act without reducing deduction under section 80HHC of the Act, subject to the condition that the deduction under Chapter VIA does not exceed 100% of the eligible profits. 4. The learned Authorized Representative for the assessee after taking us through the facts of the case, pointed out that the issue raised in the present bunch of appeals is identical to the issue decided by the Tribunal in assessee s own .....

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les (P.) Ltd. Vs. DCIT (2011) 197 TAXMAN 84 (Bom) . 5. The learned Departmental Representative for the Revenue pointed out that the SLP was pending against the order of Hon ble High Court and consequently, there was no merit in the order of CIT(A) in this regard. Further, he stressed that in respect of the allowance of deduction under section 80IA and 80HHC of the Act, the deduction should be re-computed. 6. We have heard the rival contentions and perused the record. The issue arising in the pre .....

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ated 30.01.2012 considered the factual aspects and held as under:- 23. We have carefully considered the rival submissions. We have also perused the orders of the authorities below as well as the assessee s written submissions and other material placed on record, which has been referred to in the course of the hearing before us. Briefly put, as per the material on record, it emerges that the assessee company has customers spread all over India and in order to serve such customers at various locat .....

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uring the orders and also for effecting recoveries and collection of C Form etc. Even with regard to the Government customers, assessee s personnel at the Regional offices are supported by the network of dealers who are based at a closer location to the customers site. In such cases, the responsibility of the dealer is to provide necessary logistic and communication support to the assessee s staff. The warranty services of the product, which include regular service visits to ensure smooth operat .....

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24. All the aforesaid factual aspects of the matter have not been found to be nonexistent by the either of the authorities below during the year under consideration. It is also not the case of the Revenue that the commission expenses have not been regularly incurred by the assessee as in the past years. In fact, one of the points raised by the Assessing Officer is with regard to the commission paid to dealers where the customers include Government agencies. In this regard, we find that the asses .....

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emote sites of the customers. In this situation, the dealer responsibility for such Government customer is to provide logistics and communication support for follow up and securing the orders from the various Departments, etc. We do not find any material adverse to the aforesaid explanation of the assessee. Even otherwise, it has been pointed out that commission payment to dealers with respect to the orders from a Government agency was a subject matter of consideration by the Tribunal in the ass .....

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egard to the verification exercise carried out by the Assessing Officer, we find nothing adverse so as to infer that the impugned commission payments were ingenuine. The Assessing Officer issued summons to 17 randomly selected parties, out of which 12 replies were received and 4 summons came back unserved. In relation to one party, no response was received in-spite of service of summons. With regard to such solitary party, learned counsel for the assessee referred to page 215 of the Paper book w .....

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sessee s own case wherein the practice of paying commission to dealers/agents, stand established, we find no reasons to interfere with the ultimate conclusion of the Commissioner of Income-tax (Appeals) of having deleted the disallowance made by the Assessing Officer. Resultantly, Ground Nos. 1 & 2 are dismissed. 7. The issue in the present set of appeals before us is identical to the issue before the Tribunal in earlier years and following the same parity of reasoning and applying the ratio .....

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appeals. 8. Now, coming to the ground of appeal No.3 raised by the Revenue in assessment year 1997-98 i.e. computation of deduction under section 80IA of the Act, where the assessee had already claimed deduction under section 80HHC of the Act. The learned Authorized Representative for the assessee has placed reliance on the decision of Hon ble Bombay High Court in Associated Capsules (P.) Ltd. Vs. DCIT (2011) 197 TAXMAN 84 (Bom) . The Hon ble High Court vide para 35 observed as under:- 35. In th .....

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e above said parity of reasoning, where the assessee had claimed deduction under section 80IA of the Act, then the deduction under section 80HHC of the Act is to be restricted to the profits of business that remains after excluding the profits allowed as deduction under section 80IA of the Act. The Hon ble High Court had further vide para 26 had elaborated the provisions of section 80IA(9) of the Act to hold that the deduction allowable under Chapter VI-A is to be computed as under:- 26. To illu .....

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ng the profits of the business reduced by the amount of profits allowed under section 80IA(1). According to the assessee, deduction under section 80HHC has to be computed on the profits of the business of ₹ 100 and not on ₹ 70 as contended by the Revenue, because, according to the assessee, section 80IA(9) does not affect the computation of deduction under section 80HHC but affects the allowance of deduction computed under section 80HHC, so that the aggregate deduction does not excee .....

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exceed 100 per cent of the profits of the business of the assessee. Our above view is also supported by the C. B. D.T. Circular No. 772 dated 23-12-1998, wherein it is stated that section 80IA(9) has been introduced with a view to prevent the tax-payers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits. Thus, the object of section 80-IA(9) being not to curtail the deductions computable under various provisions under .....

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