Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home

2019 (12) TMI 141

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ty of the provision of Sec. 194C or Sec. 194J to such nature of payments. It is also a fact that Sec. 40(a)(ia) after its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residents as specified in Sec. 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the expenditure so claimed by the assessee. If that be so, the disallowance of entire expenditure of ₹ 7,65,700/- for drawing charges and ₹ 2,84,050/- towards PLC Programming Charges ought not to have been made by the authorities below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee’s appeal are partly allowed. - I.T.A. No.2837/Ahd/2014 And I.T.A. Nos.3055 & 3056/Ahd/2013 - Dated:- 14-10-2019 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Parin Shah, A.R. For the Respondent : Shri S. K. Dev, Sr.D.R. ORDER PER Ms. MADHUMITA ROY - JM: The bunch of appeals filed by the assessee a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... is for separately charged for this work. In addition to supervision charges received against our sales we have also done supervision work for other client who place order because we are having speciliasion on account of in this line of business hence this income also treated as income-from manufacturing business. Moreover, the company has to depute representative for supervision work. In view of what we have stated above this income is derived from the manufacturing business of the company and our claim of deduction under section 80-IB on this income is proper and lawful. Therefore there is no question of any disallowance of claim of deduction under section 80-IB on account of supervision income." However, such argument advanced by the assessee was not found acceptable by the Learned Assessing Officer. The Learned AO, thus, following the disallowances made by his predecessor in A.Y. 2010-11 of ₹ 6,68,727/- as the income from manufacturing activities of the assessee disallowed ₹ 12,18,000/- , the claim u/s. 80IB of the Act in the year under consideration. In appeal, the same has been confirmed by the Learned CIT(A). Hence, the instant appeal is before us. 5. The Le .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... es and maintenance facility to the clients of the assessee is allowable since it relates to the goods manufacturing and supplied to the industrial undertaking. Thus the assessee is eligible for deduction u/s.80IA of the Act as claimed before the Revenue; the relevant portion of the said order is reproduced herein below: …3. While admitting this appeal on 17.02.2003, the Court had formulated the following substantial question of law:- "Does the Income derived from an industrial undertaking include income from Service/maintenance contracts in respect of the goods manufactured and supplied by the industrial undertaking soas to be eligible for deduction under section 80I of the Income Tax Act" ? 4. Mr.Shah, learned advocate for the appellant-assessee has contended that the Tribuna has failed to appreciate the fact that in previous years Section 80I relief was granted to the assessee in respect of service charges, and therefore, it ought to have been granted in this year also. He further submitted that the aforesaid fact has already been ascertained before the Assessing Officer. , 4.1. He further contended that in the assessment Years 1989-90 and 1990-91, similar relief .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... t and the main business activity of the assessee. There was also recorded as a finding offact by the Tribunal. The assessee was entitleto deduction under Section 801 in respect of that income. 9. Considering the facts of the case and also considering the principle laid, down in the case of Excel Industries Ltd. (supra) and International Date Management Ltd. (supra), we are of the considered opinion that the Tribunal ought to have granted the benefit to the assessee under Section 801 of the Income Tax Act for the assessment Year 1992-92 also. 10. In view of the above, the present appeal-deserves to be allowed and the same is accordingly allowed. The question of law raised in this appeal is answered in negative i.e. in favour of the assessee and against the revenue. Therefore, we hold that the assessee is eligible for deduction under section 801..of the Income Tax Act… Taking into consideration the entire aspect of the matter, the case made out by the assessee, the documents in support of such claim on record before us and respectfully relying on the ratio laid down on this issue of allowability of supervision charges by the Jurisdiction High Court, we find no alternative but .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ment to the contractor exceeds ₹ 20,000 nor aggregate payments to only single contractor exceeds ₹ 50,000/-. Hence, question of deduction of tax even under section 194C is not justifiable. Such stand of the assessee was also reiterated before us by the Ld. AR at the time of hearing of the instant appeal. He has also relied upon the Circular No. 715 dated 08.08.1995 regarding TDS payment to electrician. Apart from that, it was the argument, that where the assessee is of a bona fide wrong impression regarding the applicability of Sec. 194C or 194J to such nature of payments i.e. for short deduction, if any, the same can be considered as assessee-in-default, under Section 201 but still no disallowance under section 40(a)(ia) of the Act can be made. Alternatively, he further argued that in the event the assessee is found to be not complied with the TDS provision under section 194C of the Act, the disallowance shall be restricted to 30% of the expenditure claimed under section 40(a)(ia) of the Act in terms of its amendment brought by Finance (No. 2) Act, 2014, which reads as follows:- 14.4 Accordingly, Section 40(a)(ia) of the Income-tax Act has been amended to provide that .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Site Map - Recent || Site Map ||