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2021 (8) TMI 1342 - HC - Income TaxAddition u/s 32(1)(iia) read with the second proviso - left over additional depreciation brought forward from immediately preceding assessment year - HELD THAT - The identical issue in the case of assessee herein has already been considered by this Court in 2021 (8) TMI 1341 - KERALA HIGH COURT and decided in favour of the assessee and against the revenue. Hence Question No.1 is answered in favour of the assessee and against the revenue. Deduction u/s 80-IA - Whether DG Power Generation Units constituted an undertaking for the purpose of deduction? - HELD THAT - The identical issue in the case of assessee herein has already been considered by this Court in 2021 (7) TMI 1387 - KERALA HIGH COURT and decided in favour of the assessee and against the revenue. Hence Question No.3 is answered in favour of the assessee and against the revenue. Addition made u/s.36(1) (va) r.w.s.2(24)(x) in respect of belated payment of employees' contribution to PF - HELD THAT - The identical issue has already been considered by this Court in 2019 (4) TMI 370 - KERALA HIGH COURT and answered in favour of the revenue and against the assessee. Hence Question No.4 is answered in favour of the revenue and against the assessee. Weighted deduction under Section 35(2AB) in respect of the salary paid on outdoor R D facility - question refers to salary paid at an outdoor R D facility and the payment is without qualification of the DSIR - HELD THAT - The question does not refer to the circumstances considered and accepted by the DRP while appreciating the claim of expenditure to accept the salary paid by the assessee company to Mr.Peter Becker, an employee of subsidiary of the assessee as an allowable expenditure. The assessee demonstrated the utilisation of services and once the salary paid to Mr.Peter Becker is accepted as expenditure, the reason to disallow weighted deduction is completely wanting. The department could not before the Tribunal demonstrate that the expenditure accepted in respect of Mr.Peter Becker is untenable in fact. The services are stated to have been taken and remuneration paid to the employee in the field, section accords weighted deduction as additional deduction. The findings of fact recorded by the DRP and the Tribunal are available in the circumstances of the case, we are convinced that the question framed is without merit. Hence question is answered in favour of assessee and against the revenue.
Issues:
1. Interpretation of Section 32(1)(iia) regarding additional depreciation. 2. Whether DG Power Generation Units constitute an "undertaking" for deduction u/s 80-IA. 3. Application of Kerala High Court's judgment in Merchem Ltd. 378 ITR 443. 4. Claim of weighted deduction under Section 35(2AB) for salary paid on outdoor R&D facility. Interpretation of Section 32(1)(iia): The appeal challenged an ITAT order regarding the allowance of additional depreciation brought forward from the preceding assessment year. The High Court referred to a previous case and ruled in favor of the assessee, stating that the ITAT's decision was against the law. Deduction u/s 80-IA for DG Power Generation Units: The High Court examined whether DG Power Generation Units constituted an "undertaking" for deduction u/s 80-IA. Citing a prior case, the Court ruled in favor of the assessee, stating that the ITAT's decision was correct in law and fact. Application of Kerala High Court's judgment in Merchem Ltd.: The issue revolved around the application of a Kerala High Court judgment in Merchem Ltd. 378 ITR 443. The High Court referred to a previous case and ruled in favor of the revenue, stating that the ITAT's decision was correct in not following the judgment in Merchem Ltd. Weighted Deduction under Section 35(2AB) for R&D facility salary: The case involved a claim for weighted deduction under Section 35(2AB) for salary paid on an outdoor R&D facility. The Court analyzed the expenditure incurred by the assessee and the nature of the R&D activities. The Court upheld the claim of the assessee and dismissed the department's challenge, ruling in favor of the assessee and against the revenue. In conclusion, the High Court allowed the appeal in part, answering in favor of the assessee on substantial questions 1 to 3 and in favor of the revenue on question 4. No costs were awarded.
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