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2016 (3) TMI 1115 - ITAT CHENNAI

2016 (3) TMI 1115 - ITAT CHENNAI - TMI - Addition of deduction u/s. 80IB - computation of deduction - Held that:- As decided in assessee's own case for assessment years 2002-03, 2003-04 each of the unit had to be separately considered for working out deduction under Section 80-IA or 80-IB or 80HHC of the Act, once separate accounts were being maintained and there was no interlacing and interdependence. In the given case before us, assessee had positive gross total income. Therefore, each underta .....

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ll under category of royalty or fee for technical services under section 9(1 )(vi) . Even otherwise, since commission paid to non-residents was not taxable in India, assessee was not required to deduct tax at source while making said payments. See Faizan Shoes (P) Ltd case [2014 (1) TMI 440 - ITAT CHENNAI] - Decided in favour of assessee - I.T.A. No. 1143/Mds/2014 - Dated:- 31-3-2016 - SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant : Shri. .....

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leting the addition of deduction u/s. 80IB of the Act relying on the judicial decisions. (ii) The Commissioner of Income Tax (Appeals) erred in deleting the disallowance of commission paid to foreign agent without deduction of tax u/s.195 of the Act. 3. The Brief facts of the case, the assessee is in the business of manufacture and sale of Metallic powders and filed Return of income on 12.10.2010 with total income of ₹ 20,26,75,167/- and return was processed u/s.143(1) and granted refund. .....

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s of Aluminum alloy Ingot plant and claimed deduction on positive income but the ld. Assessing Officer found that as per the earlier order of assessee s own case for assessment year 2006-07, the aggregate of two units has to be considered for claiming deduction u/s.80IB of the Act and relied on the Commissioner of Income Tax (Appeals) order, and made disallowance of ₹ 1,10,37,553/-. The Assessing Officer found that the company had paid foreign agency commission in foreign currency to forei .....

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F Boilers and Driers Pvt. Ltd (AAR No.983-984 of 2012) and elaborated the findings in order relying on the provisions applicable u/sec. 195 of the Act and disallowed ₹ 47,36,182/- for non deduction of TDS u/s.40(a)(i) of the Act. The ld. Assessing Officer with above additions and other disallowances assessed total income ₹ 25,14,99,930/-. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). 4. The ld. Authorised Representative raised g .....

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as under:- ITAT in its order in ITA NO.782 to 787/Mds/2012 & ITAT 869 to 874/Mds/2012 dated 21.02.2013 has allowed the issue in favour of the assessee with the following remarks: In later decision in the case of CIT Vs. MEPCO Industries 294 ITR 121 it was held that the deduction u/s.80IA and 801B could be worked out independently without effecting any inter se adjustment of loss and profit between various units. If an assessee had different units resulting in positive gross total in view of .....

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income. Therefore, each undertaking had to be considered separately for working out deduction u/s.80IA of the Act, since, the gross total income was positive. We are of the opinion that the CIT(A) was justified in giving such directions. 5.3 Thus the issue is squarely covered by the above order of Hon'ble ITAT in Appellants own case for earlier years which is in its favour. The addition is deleted . Following the above decisions, the Commissioner of Income Tax (Appeals) has deleted the addit .....

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6. The ld. Authorised Representative of the assessee submitted in assessee s own case, the Tribunal has allowed the deductions in ITA Nos.782, 783 and others for the assessment years 2002-03, 2003-04 wherein referred at page 4 to 7 is as under:- We have perused the orders and heard the rival submissions. For all the impugned years, what we note specifically from the orders of ld. CIT(Appeals) is that gross total income of the assessee was positive. Assessee had no carried forward loss of earlier .....

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IA and 80-IB can be worked out independently without setting off losses of units on which such deduction was not being claimed. In our opinion, this question stands already answered by Hon'ble jurisdictional High Court in their decision in the case of Chamundi Textiles (Silk Mills) Ltd. v. CIT (341 ITR 488). There the question was regarding claim of deduction under Section 80HHC and whether such deduction could be allowed without considering the results of a unit, which was not having any pr .....

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loss, claim for deduction was to be rejected. Sections 80HHC or 80-IA or 80-IB for that matter, are all controlled by Section 80AB of the Act. Gross total income means gross total income computed as per the provisions of the Act. This was clearly reiterated by Hon'ble Apex Court in the case of Synco Industries Ltd. (supra). Hon'ble Apex Court held that gross total income had to be arrived at after making deductions as per appropriate computation provisions, including income under Sectio .....

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ourt in the case of IPCA Laboratories Ltd. (supra) and Synco Industries Ltd. (supra) would have not much applicability. In such cases, where an assessee is carrying on various activities, even if centralized accounts are maintained, so long as interlacing, interconnectivity or interdependence of various units was not there, various activities have to be treated as separate and distinct, as held by Hon'ble Apex Court in the case of Water Fall Estates Ltd. v. CIT (219 ITR 563). Hon'ble Ape .....

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resh B. Mehta (291 ITR 462) and CIT v. M. Gani And Co. (301 ITR 381), each of the unit had to be separately considered for working out deduction under Section 80-IA or 80-IB or 80HHC of the Act, once separate accounts were being maintained and there was no interlacing and interdependence. In the given case before us, assessee had positive gross total income. Therefore, each undertaking had to be considered separately for working out deduction under Section 80-IA of the Act, since the gross total .....

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, the Commissioner of Income Tax (Appeals) heard the submissions and considered the findings and also made elaborate discussions of the advance ruling and CBDT circulars and the submissions at para 6.2 of the order and statement at para 6.3 as under:- Appellant filed the details of the evidence for the commission paid in the form of the invoices raised by the Appellant, where the word commission is clearly mentioned including details of the export order to which the commission relates to. also f .....

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ss, Lang horn pa 19047, USA 20704.50 1,007,895.06 Aug, 09 Quimialmel, S.A. Spain CL san Roque, 15 Castelloon De La Plana Spain 1600.00 77,984.00 Aug, 09 Bowin Success Company, Kawloon Flat C 4/F, 946 Canton Road, Kawloon, Hongkong 570.00 27,898.50 Aug, 09 Percept General Trading Co LIC Sharagh P.O.Box 26475 Sharagh UAE 42113.83 2,052,627.59 Sep. 09 Aurn K. Chotopadyay 4206, Harpers Cross, Lang horn pa 19047, USA 7721.76 380,050.59 Dec. 09 Quimialmel, S.A. Spain CL san Roque, 15 Castelloon De La .....

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elied on the Co-ordinate Bench Tribunal decision of ITO vs. Faizan Shoes (P) Ltd (2013) 34 taxmann.com 79 and deleted the addition of the Assessing Officer. 9. Before us, the ld. Departmental Representative vehemently argued the grounds that the ld. Commissioner of Income Tax (Appeals) erred in deleting the addition without considering the facts and provisions of Sec. 195 and applicability of Sec. 210(a)(i) and CBDT circular and relied on lower authorities order and prayed for set aside the orde .....

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