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2015 (1) TMI 1501 - ITAT CHANDIGARHDeduction u/s 80IC - recomputation of profits - assessee was purchasing gas stove bodies at much below the market price and the sister concern had also borne the expenses of freight - addition to taxable profits made by AO by applying the provisions of section 80IA(10) - as argued the assessee firm has not earned any extra profits by making transactions with the sister concern - HELD THAT:- CIT(A) has correctly adjudicated the issue particularly because of the higher GP rate was accepted by Revenue in the earlier years. We find that Ld. CIT(A) was justified because she had restricted the disallowance by applying 9.29% GP rate returned by the sister concern known as M./s Shivam Enterprises. Therefore, we find nothing wrong with the order of Ld. CIT(A) and we confirm the same and hence ground No.1 of the Revenue as well as of the assessee is rejected. Deduction u/s 80IC on account of royalty - as mainly submitted that royalty was paid @ Rs. 2/- per gas stove in the immediately preceding year which was accepted by the Revenue in the assessment framed u/s 143(3) - as per CIT(A) addition made by the Ld. A.O. is found to be without any cogent basis - HELD THAT:- CIT(A) had correctly adjudicated the issue particularly in the light of the fact that lower royalty was accepted in the earlier years . Further, the assessee had paid the huge commission of Rs. 2,23,27,903/- to M/s BPCl, therefore, we find nothing wrong with the order of Ld. CIT(A) and we confirm the same. Deduction u/s 80IC - Addition on account of non debiting of the partner’s remuneration provided in the Partnership deed - As argued debiting of such remuneration will only result into reduction of manufacturing profits and no taxability will arise - HELD THAT:- As decided in I.T.O. NAHAN VERSUS M/S GNG ENTERPRISES [2014 (11) TMI 1280 - ITAT CHANDIGARH] before allowing deduction u/s 80IC the income has to be computed as per the provisions of Sections 32 to 43 of the Act. Deduction could have been allowed only after computing the income under a particular head. In this case the income in the hands of the a firm was computed in terms of Sec 28 to 43D and Sec 40(b) in respect of allowance of interest and salary falls between these two provisions and therefore full effect has to be given to this provisions also. As later on it was decided not to pay salary and interest to the partners. This does not seems to be correct because before the Assessing officer it was admitted that remuneration and interest has not been paid as per the partnership deed. Further there is no evidence for the same and in any case this will not make a difference - tHUS for making deduction under chapter VIA the profits has to be computed specifically as per a particular provision of a particular head of income because of the definition of gross total income u/s 80B(5). In view of the above clear position the deduction u/s 80IC was allowable only after reducing the interest and remuneration payable to the partners. we set aside the order of Ld. CIT(A) and restore that of the Assessing office - Decided against assessee.
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