9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 895 - AT - Income TaxDeduction u/s. 80IC - manufacturing activity u/s 2(29BA) - profit derived from its Rudrapur, Uttarakhand unit - Whether activities carried out at Rudrapur, Uttarakhand unit comes under the definition of manufacture as defined u/s. 2(29BA)? - HELD THAT -We are of the considered view that the issue needs to go back to the file of the AO to decide the eligibility of the assessee to claim deduction u/s. 80IC of the Act and thus, we set aside the issue to the file of the AO and direct the Assessing Officer to re-examine the claim of the assessee in light of various averments, including necessary evidences placed to justify the activity carried out in the unit for claiming deduction u/s. 80IC of the Act for both the assessment years. Disallowance of weighted deduction claimed u/s. 35(2AB) - weighted deduction claimed for in house R D expenditure incurred - AO has disallowed expenditure claimed over and above, what was certified by the competent authority in Form no. 3CL- as the argument of the assessee that, once the facility has been approved by the competent authority, then irrespective of quantification of the expenditure incurred for R D purpose, the assessee is entitled to claim deduction u/s. 35(2AB) of the Act. - HELD THAT - We find that, an identical issue has been considered by the Tribunal in assessee s own case 2017 (5) TMI 1749 - ITAT CHENNAI , where held that the assessee is not entitled for weighted deduction u/s. 35(2AB) of the Act for expenditure incurred over and above, what was certified by the competent authority - Decided against assessee. Depreciation on UPS - @ 15%OR @ 60% - HELD THAT - As relying on M/s. Sundaram Asset Management Ltd case 2014 (2) TMI 224 - ITAT CHENNAI we are of the considered view that the AO and CIT(A) erred in not allowing 60% depreciation claimed on UPS and thus, we direct the AO to allow 60% depreciation on UPS as claimed by the assessee. Addition u/s 14A r.w.r. 8D - HELD THAT - Although, the assessee claims that interest expenditure cannot be disallowed because of availability of own funds in excess of investments made in shares and securities which yield exempt income, but no details has been furnished to prove the claim. As regards, second argument of the assessee that, only those investments which yielded exempt income needs to be considered, we agree with the arguments of the assessee because the issue is settled by various decision of courts and Tribunals. However, once again there is no details from the assessee on this aspect also. Therefore,issue needs to go back to the file of the AO for further examination of facts, in light of various averments made by the assessee and also suomoto disallowance computed u/s. 14A r.w.r. 8D of the IT Rules, 1962. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the issue, in light of various averments made by the assessee as discussed herein above and re-compute disallowance u/s. 14A - In case, disallowance computed by the AO u/s. 14A r.w.r. 8D of the IT Rules, 1962 works out to lesser than amount of suomoto disallowance computed by the assessee, then the AO is directed to restrict the disallowance to the extent of suomoto disallowance. TDS u/s 195 - disallowance u/s. 40(a)(i) - non-deduction of TDS on payment made to non-resident - HELD THAT - In assessee s own case for assessment years 2006-07 to 2009-10 2017 (5) TMI 1749 - ITAT CHENNAI where, under identical set of facts, the Tribunal held that payment made to non-resident without deducting the tax at source u/s. 195 of the Act, does not come under the provisions of section 9(1)(vii) of the Act and consequently, assessee need not to deduct TDS u/s. 195 of the Act and thus, question of disallowance of said payment u/s. 40(a)(i) of the Act does not arise - Decided in favour of assessee.
Issues Involved:
1. Disallowance of deduction claimed under Section 80IC. 2. Disallowance of weighted deduction claimed under Section 35(2AB). 3. Restriction of depreciation on UPS. 4. Disallowance of expenses related to exempt income under Section 14A read with Rule 8D. 5. Deletion of addition made towards disallowance under Section 40(a)(i) for non-deduction of TDS on payment made to non-resident. Issue-wise Detailed Analysis: 1. Disallowance of Deduction Claimed under Section 80IC: The assessee claimed deduction under Section 80IC for profits derived from its unit in Rudrapur, Uttarakhand, asserting that the unit was engaged in manufacturing turbochargers and parts. The Assessing Officer (AO) disallowed the deduction, arguing that the process did not qualify as manufacturing under Section 2(29BA). The Tribunal referenced its earlier decision in the assessee's own case, where it had set aside the issue for further verification. Consequently, the Tribunal directed the AO to re-examine the claim, considering all relevant evidence and averments. 2. Disallowance of Weighted Deduction Claimed under Section 35(2AB): The assessee claimed weighted deduction for in-house R&D expenditure. The AO disallowed the expenditure exceeding the amount certified by the competent authority in Form 3CL. The Tribunal upheld the disallowance, referencing its previous decision in the assessee's case, which concluded that deductions are limited to amounts certified by the competent authority. 3. Restriction of Depreciation on UPS: The assessee claimed 60% depreciation on UPS, treating it as part of computers and software. The AO restricted the depreciation to 15%, classifying UPS as electrical equipment. The Tribunal referred to its earlier rulings, including the case of Sundaram Asset Management Ltd, and held that UPS is an integral part of computers, thus eligible for 60% depreciation. The AO was directed to allow the higher depreciation rate. 4. Disallowance of Expenses Related to Exempt Income under Section 14A read with Rule 8D: The AO disallowed expenses related to exempt income under Rule 8D, resulting in an additional disallowance of Rs. 3,76,846. The assessee argued that it had sufficient own funds to cover investments yielding exempt income and that only investments yielding exempt income should be considered for disallowance. The Tribunal agreed but noted the lack of detailed evidence from the assessee. The issue was remanded to the AO for re-examination, with the directive that disallowance should not be less than the assessee's suomoto disallowance. 5. Deletion of Addition Made towards Disallowance under Section 40(a)(i) for Non-deduction of TDS: The AO disallowed payments made to a non-resident service provider under Section 40(a)(i) for non-deduction of TDS, classifying the payments as managerial services taxable under Section 9(1)(vii). The CIT(A) deleted the disallowance, following a precedent in the assessee's own case, which held that the services did not fall under managerial or technical services and were rendered outside India without a permanent establishment. The Tribunal upheld the CIT(A)'s decision, affirming that the payments were not subject to TDS under Section 195. Conclusion: The appeals filed by the assessee for both assessment years were partly allowed for statistical purposes, and the appeals filed by the revenue were dismissed. The Tribunal directed further examination and re-computation by the AO on specific issues, ensuring compliance with legal provisions and precedents.
|
