2009 (9) TMI 980 - AT - Income Tax

Summary

Issues involved: Appeal against disallowance under section 40(a)(ia) and treatment of income from other sources instead of business income for deduction under section 80IB.

Issue 1: Disallowance under section 40(a)(ia)

The assessee, engaged in manufacturing, claimed deductions for transport, security charges, and commission expenses. The Assessing Officer disallowed these deductions under section 40(a)(ia) due to delayed TDS deposit and non-deposit of TDS on commission expenses. The Commissioner of Income Tax(Appeals) upheld the disallowance, stating that allowing deduction under section 80IB would result in double benefit for the assessee. The Authorized Representative argued that disallowance increased eligible profits for deduction under section 80IB. The Tribunal found that disallowance of business expenditure led to an increase in eligible unit profits, making the assessee eligible for deduction under section 80IB. The fear of double deduction expressed by the Commissioner was deemed unfounded, and the Tribunal directed the Assessing Officer to allow deduction under section 80IB for the entire profit derived from the industrial undertaking, considering the provisions under section 40(a)(ia).

Key Takeaways:
- Disallowance under section 40(a)(ia) due to delayed TDS deposit.
- Commissioner's concern of double deduction deemed unfounded.
- Tribunal directed Assessing Officer to allow deduction under section 80IB for entire profit derived from industrial undertaking.