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2016 (4) TMI 475 - ITAT DELHI

2016 (4) TMI 475 - ITAT DELHI - TMI - Deduction u.s 80IC - Held that:- Merely because the industrial undertaking earned higher profits does not call for an inference that claim of deduction is to be wily nily reduced on presumption. The Tribunal also held that the provisions of section 80IC of the Income-tax Act, 1961 have been introduced by Legislature to promote the industrial activity and their profitability.Therefore, it is vividly clear from the above that the issue stands covered in favour .....

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mstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to allow deduction u.s 80IC of the I.T. Act, 1961 on market brand value, market value of services and profit attributable to branches. 3. At the time of hearing, at the very outset, it was conveyed to us that the issue raised in this appeal regarding allowing of deduction u/s 80IC of the Income-tax Act, 1961 ['the Act' for short] stands covered in favour of the assessee by the Tribunal order dated 12.02.2015 pa .....

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or the department and have also gone through the Tribunal order in assessee s own case [supra] and have also carefully treaded through the appellate order as well as the decision of the Hon'ble High Court. 5. We find that against the order passed by the AO, the assessee was in appeal and the ld. CIT(A) has allowed the appeal of the assessee on the following reasoning: Sub-clause 8 & 10 of section-801 A are in itself clear to mention that adjustments has to be made only in case transactio .....

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pplied his own. Presumptive base that since 23% of the salary and wages pertains to haridwar hence 23% of the profit will be pertaining to haridwar and rest from others, which is wrong and void and against the provisions of law. On the merit of the case sec-80IC provides that where the gross total income of assessee includes any profit or gains derived by an undertaking from any business referred to in subsection 2. Subsection 2 provides that this section applies to any undertaking or enterprise .....

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the manufacturing should be taken place from the notified area only on exclusive basis but the other activities like sales, purchase, administration etc. can be carried from branch, head office, depo etc. Although in the present case entire sale /purchase was made from the industrial undertaking at Hardwar only and the role of head office at Delhi and branches at Mumbai, Kolkata and bang lore etc. was only to promote the sales & provide after sale services. The Ld. A.O. has not brought on r .....

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haridwar which are reflected in head office at Delhi and in other words 77% of the expenses debited to p&l a/c have been incurred at place other than haridwar, which is the evidence that most the income earning activities resulting in profit to the assessee is being carried out from places other than the eligible unit. We would like to mention here that all the expenses of head office at delhi and branches are booked in the books of head office at delhi and the expenses directly incurred at .....

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the nature of salary & business promotion expenses paid to staff engaged in the business of providing sales promotion and after sales services to the products manufactured & sold from Haridwar only. Similarly expenses at the head office at Delhi were in the nature of directors remuneration, audit fees, rent and administration charges, loans & advances were availed from Delhi Branch (Though secured against equitable mortgage of factory & building at Haridwar). Hence were booked in .....

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ot be presumed to be carried form works at Haridwar is wrong and against the provisions of law. In the present global market restricting the business activities to a limited area is against the market strategy. Tata, bilra, ambanis and all other major business concerns have branches, depos, distribution arrangements so as to sale their products in the entire india & abroad which does not mean that their products have not been manufactured at their works or the profit has not been generated f .....

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ial activity and the balance profit is not from eligible undertaking, if it was not income from this business then it was the duty of the A.O. to prove then what was the source of the income earned from any other activity, the ball was in the court of the A.O. to prove his contention which he has not brought on record any material fact to justify his contention except to apply his presumptions & assumptions, presumptions & assumptions cannot be a base to reject the claim of deductions, s .....

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the decision of the AO on this ground is not sustained. The honable ITAT has also confirmed the action of than CIT (A) on this ground. The appellant has relied on the judgement of Hon ble Income Tax Appellate Tribunal in appellant s own case for Assessment Year 2008-09 wherein Hon ble Income Tax Appellate Tribunal vide order dated 10/1/2014 has decided the issue by observing as under:- The provisions of section 80 1C have been introduced by legislature to promote the industrial activity and thei .....

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