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The Income Tax Officer, Ward 2 (2) , Jaipur Versus M/s. OMIL-JSC (JV) Kameng

2016 (7) TMI 1050 - ITAT JAIPUR

Allowing deduction u/s 80IE - technical services receipts treated by assessee itself as income from other sources - Held that:- Undisputedly, there is no dispute that amount relates to manufacturing of eligible article or thing. The revenue has not doubted or placed any material on record suggesting that what the assessee has manufactured is not eligible or the undertaking is not eligible for the benefit of deduction as provided under section 80IE of the Act. The only objection of the revenue is .....

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pect of foreign currency fluctuation - Held that:- Assessee is a JV concern, which sources its raw materials locally and also imports a substantial part from international market. For imported raw materials, payments are being made in foreign currencies, which are quite volatile, there is no dispute in this regard. The foreign currency gain is the part of raw material there is nothing wrong in this claim. Assessee is entitled for deduction u/s 80IE of the Act, on this also.The revenue has not re .....

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ry creditors. It’s an excess provision made for some expenses, not made in the current year but booked excess in earlier years and once it is reversed i.e. written back, assessee has to offer for taxation. This is perfectly correct as per accountancy principle. As such, this is the expenditure, which has been booked in excess in earlier year and by this amount the deduction u/s 80IE has been reduced in the said year since the deduction is available for the unit for consecutive 10 years. AO’s act .....

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llowing grounds of appeal :- (i) Whether on the facts and in the circumstances of the case and in law the ld.CIT (Appeals) has erred in allowing deduction u/s 80IE of the I.T. Act, in respect of technical services receipts of ₹ 42,20,330/- which was treated by assessee itself as income from other sources. (ii) Whether on the facts and in the circumstances of the case and in law the ld.CIT (Appeals) has erred in allowing deduction u/s 80IE of the I.T. Act, in respect of foreign currency flu .....

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e order dated 11th March, 2015. While framing the assessment, the AO made addition of ₹ 65,25,818/- as income from other sources, declining the deduction claimed under section 80IE of the Act by the assessee. The assessee aggrieved by this order, preferred appeal before ld. CIT (A), who after considering the submissions allowed the appeal of the assessee and directed the AO to grant deduction under section 80IE of the Act. Now the revenue is in appeal before us. 3. Ground No. 1 of the reve .....

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articular area. The ld. D/R submitted that under the facts of the present case, the ld. CIT (A) was not justified in deleting the addition. 3.2. On the contrary, the ld. Counsel for the assessee supported the order of ld. CIT (A) and reiterated the submissions as are made in the written submissions. The ld. Counsel submitted that for the purpose of grouping of the income, the income was treated as Income from other sources. However, the same was derived from the manufacturing unit. Therefore, th .....

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ix of the case as also applicable legal position. Since the technique of steel liners and steel radial gates has been developed in this unit, therefore, when such material was required at another project sites of Om Metals, then the same was designed and manufactured from this unit and it was sold & dispatched to Om Metals sites. As such, though it is categorized as income from other sources since it was not related to the project for which the unit is working, but it is the income from Indu .....

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im made under the head Income from other sources and there is nothing wrong in this. Income of this NE unit is linked with manufacturing unit and AO has not doubted that. Further, it is also a fact that the deductions u/s 80IE are available on manufacturing of any eligible article or thing and the unit has been established in North Eastern state which has been manufacturing there articles from on or after April, 2007 onwards (till April, 2017) and AO has not made any adverse comments on that. AO .....

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brication, manufacturing and fixing the steel liners apart from supervision, technical consultancy, post verification of steel liners. The contention of the ld. Counsel for the assessee is that all these have been related to manufacturing and cannot be taken into isolation. 3.4. We have given our thoughtful consideration to the rival submissions. Undisputedly, there is no dispute that amount relates to manufacturing of eligible article or thing. The revenue has not doubted or placed any material .....

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e absence of such specific material, we are of the considered view that the AO was not justified in declining the deduction as available u/s 80IE of the Act. Therefore, we do not see any reason to interfere into the order of ld. CIT (A). The same is hereby affirmed. This ground of appeal of the revenue is rejected. 4. Ground No. 2 is against allowing deduction of ₹ 22,41,619/- u/s 80IE of the Act in respect of foreign currency fluctuation. 4.1. The ld. D/R supported the order of the AO and .....

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ed factual matrix of the case as also applicable legal position. Assessee is a JV concern, which sources its raw materials locally and also imports a substantial part from international market. For imported raw materials, payments are being made in foreign currencies, which are quite volatile, there is no dispute in this regard. The foreign currency gain is the part of raw material as assessee contends that raw materials have been booked by less amount of ₹ 22,41,619/- there is nothing wro .....

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