2011 (5) TMI 969 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to the allocation of expenses between manufacturing units for computing deductions u/s 80IB, reduction of brought forward losses from profits eligible for deduction u/s 80IA and 80IB, disallowance of deduction u/s 80HHC, and disallowance of bonus u/s 43B.

Allocation of Expenses for Deductions u/s 80IB:
- The assessee challenged the allocation of expenses from Mumbai unit to Banaskatha unit for computing deductions u/s 80IB.
- The AO allocated expenses to Banaskatha unit based on turnover ratio, including head office expenses.
- The CIT(A) upheld the allocation, considering head office expenses as partly attributable to Banaskatha unit.
- Tribunal upheld the decision, stating that all expenses, direct or indirect, must be deducted from net profits for deductions u/s 80IA/80IB.

Reduction of Brought Forward Losses for Deductions u/s 80IA and 80IB:
- The AO reduced brought forward losses from profits eligible for deductions u/s 80IA and 80IB.
- Tribunal upheld the reduction, citing the overriding effect of section 80AB and the need to consider both profits and losses for income computation.

Disallowance of Deduction u/s 80HHC:
- The assessee contested the disallowance of deduction u/s 80HHC based on interpretation of provisions.
- Tribunal referred to a Bombay High Court judgment and directed the AO to recompute the deduction u/s 80HHC in line with the court's decision.

Disallowance of Bonus u/s 43B:
- The assessee argued against the disallowance of bonus u/s 43B, stating it was paid before the due date of filing.
- Tribunal directed the AO to delete the disallowance after verifying the payment date of the bonus.

Conclusion:
- The Tribunal partly allowed the appeals, addressing issues related to expense allocation, reduction of losses for deductions, recomputation of deduction u/s 80HHC, and disallowance of bonus u/s 43B.