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2019 (3) TMI 1687 - ITAT CHANDIGARHDisallowance of CSR expenses - allowable expenditure u/s 37(1) - HELD THAT:- I.T.A.T. holding the CSR expenses to be in the nature of business expenses and Explanation-2 to section 37 of the Act as being prospective in nature and the Ld. DR not having brought our notice any divergent view of the I.T.A.T., nor any distinguishing facts, the decision rendered in the above two cases will squarely apply to the present case also, following which we hold that the CSR expenditure incurred by the assessee amounting to ₹ 16,03,01,431/- were allowable for the impugned year. The disallowance so made is therefore directed to be deleted. Taxability of interest of income tax refund u/s 244A - HELD THAT:- Contention of the appellant that the tax on income is a pass through item and hence interest received by him u/s 244A of the Income Tax Act is not his income cannot be accepted. The act of the A.O. is upheld and this ground of the appeal is dismissed. Determining Minimum Alternate Tax (MAT)payable as per the provisions of section 115JB - HELD THAT:- Admittedly the addition, of interest on income tax refund of ₹ 2.16 crores received by the assessee, to the Book Profits of the assessee for the purposes of MAT u/s 115JB of the Act, has been made on consideration of the factual matrix that the same was not included in it. This fact has been demonstrated by assessee as being incorrect, which has not been controverted by the Revenue. Further even we have noted that interest on income tax refund received by the assessee was reflected as other income in its Profit and Loss account as part of Schedule 2.22, in para 14 above. We hold, that the addition to the Book Profits of the assessee of the Income Tax Refund was wrongly made and direct deletion of the same. The order of the Ld.CIT(A) in this regard is therefore set aside. Allowance of deduction u/s 80IA on scrap sales - AO denied the claim of deduction u/s 80IA on the said income by holding that the income was not derived from the manufacturing activity of the Industrial undertaking - CIT(A) allowed the claim on finding that the assessee had clearly brought out the nature of scrap generated and the linkages to the manufacturing activity - HELD THAT:- The fact the scrap sold related to unserviceable/damaged spares retrieved from the plant is not disputed. That the cost of new spares replaced in place of the damaged spares was being charged fully to the Profit and Loss account has also not been controverted by the Revenue. The scrap sold therefore, we agree with the Ld.CIT(A) resulted in reduction in the cost of new spares purchased, and thus higher manufacturing profits to the assessee. And merely because the scrap sale was shown separately, it did not tantamount to a new source of income. The real and ultimate impact of the scrap sold was reduction in cost of spares purchased during the year. Therefore, we agree with the CIT(A) that the profits commensurate with the scrap sold was directly earned from the manufacturing activity of the assessee and the assessee was entitled to claim deduction u/s 80IA of the Act on the same. Disallowance of deduction u/s 80IA on sundry creditors written back and insurance claim received from repairs - A.O. had disallowed the said claim holding that the income was not derived from the manufacturing activity of the industrial undertaking - HELD THAT:- We restore the issue of claim of deduction u/s 80IA of the Act on sundry creditors written back and insurance claim received ,back to the A.O to adjudicate the same in accordance with the direction given by the ITAT in the case of the assessee in A.Y 2008-09. Addition of interest received from bank and interest from employees to the book profit of the assessee for the purpose of Minimum Alternate tax (MAT) as per the provisions of section 115JB - HELD THAT:- Since it is an admitted fact that the impugned incomes were disclosed in the Profit & Loss Account, it is but obvious they form part of the book profit of the assessee also. The addition made by the A.O., therefore, is nothing but a double addition and the same is, therefore, directed to be deleted. Ground No.III raised by the assessee is allowed. Eligible for deduction u/s 80IA - HELD THAT:- The factual findings of the Ld.CIT(A) that both the recoveries were received on account of damages/expenses incurred by the assessee on its projects,which had been debited to the profit and loss account of the assessee,has not been controverted by the Revenue. We therefore find no infirmity in the conclusion of the LD.CIT(A),based on these facts,that the recoveries were directly related with the running of projects /plants of the assessee and are therefore eligible for deduction u/s 80IA
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