2011 (8) TMI 1242 - AT - Income Tax

Summary

Issues Involved:
- Appeal filed by assessee and Revenue against the order of CIT (A)-XVI, Ahmedabad for Assessment Year 2003-04 and 2006-07.
- Common grievance of Revenue in both years regarding deletion of addition made on account of deduction u/s. 80IB.

Assessment Year 2003-04 and 2006-07 - Deduction u/s. 80IB:
- Assessee engaged in trading of shares, securities, equity mutual funds, and manufacturing & selling soft drink concentrate.
- Claimed deduction u/s. 80IB in A.Y. 2003-04. AO found less than 10 workers in manufacturing process, denied deduction.
- CIT (A) held assessee employed more than 10 workers, eligible for deduction u/s. 80IB.
- AO relied on muster roll sheets showing 6-7 workers, denied deduction.
- CIT (A) considered evidence of two units, bottle washing unit workers not in muster roll.
- CIT (A) accepted appellant's arguments, allowed deduction u/s. 80IB.
- ITAT upheld CIT (A)'s decision, dismissed Revenue's appeal.

Disallowance of Salary Expenses:
- As assessee was found to employ more than 10 workers, salary expenses were allowed by CIT (A).
- ITAT found no infirmity in CIT (A)'s decision, dismissed Revenue's appeal on salary expenses.

Cross Appeal - Eligibility for Deduction u/s. 80IB:
- CIT (A) denied claim u/s. 80IB due to lack of positive Gross Total Income after setting off losses.
- ITAT clarified deduction u/s. 80IB limited to available gross total income, not exceeding it.
- Directed matter back to A.O. for re-computing eligible deduction u/s. 80IB.

Interest u/s. 234D:
- ITAT referred to Delhi High Court decision that section 234D applies from A.Y. 2004-05 onwards.
- As A.Y. 2003-04 is under consideration, directed A.O. not to charge interest u/s. 234D.

Conclusion:
- Revenue's appeals dismissed, assessee's appeal partly allowed.
- Order pronounced on 12-08-2011 by ITAT Ahmedabad.