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TMI Blog2011 (12) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 12,64,763/- without bifurcating the expenses between two units on the basis of turnover for the purpose of computing deduction under section 80IB. 2.2. In ground no. 3, the department is objecting in deleting the addition of ₹ 8,66,365/- made under section 40(a)(ia) of the Act. 3. During the assessment proceedings, the Assessing Officer noticed that assessee has earned interest on FD at ₹ 2,19,117/-, interest on deposit with AVVNL at ₹ 22,344/-, job receipt at ₹ 67,35,629/- and deduction on account of directors remuneration/salary at ₹ 12,64,763/-. The assessee was required to explain why these amounts should not be disallowed for the purpose of computing deduction under section 80IB. Detailed submissions were filed. However, Assessing Officer was not satisfied with the explanation. Accordingly he reduced the amount of interest on FDR, interest on deposit with AVVNL and job receipts. The Assessing Officer also reduced the amount of directors remuneration/salary at ₹ 12,64,763/- by bifurcating the salary on the basis of turn over. Detailed submissions were filed before ld. CIT (A) which were tabulated by him at pages 4 to 18. Each and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been discussed by ld. CIT (A) in para (c) and (d) at pages 22 to 27 of his order, are as under :- (c) As regards, the exclusion of job receipts of ₹ 67,35,629/- for computing the eligible profit for deduction u/s. 80IB of the Act, I have examined the order and verified the records and found that the AO has made the addition by excluding job receipts on the basis of his observation that the appellant company is not entitled to deduction u/s. 801 of the Act in respect of service charges for erection and commissioning of machinery. During appellate proceedings, the AR has submitted that the facts of the case were not properly appreciated by the AO and the ratio of judgments referred by the AO is not at all applicable considering the true and real facts of the appellant. The AR further submitted that the job receipts in question were there on account of installation and commissioning of control rooms, control panels, control desks etc at the sites of ultimate users mentioned by the customers of appellant in their purchase orders. In the case of appellant the main customers for the period under consideration were BHEL, Banglore, Instrumentation Limited Kota, Areva T D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for requirement as per Excise and Commercial Taxes Law. The job receipts in the case of the appellant company cannot be segregated from manufacturing activity as the job works were executed by utitilizing very same machinery and labour/employee. Further the job work carried out for those customers only to whom the company has made sales i.e. supply of control rooms, control panels, control desks etc. and these services are inextricably linked with the manufacturing of control rooms, control panels, control desks etc. Therefore, the AR submitted that the installation and commissioning charges received by the appellant company is i purely a business income having direct nexus with the manufacturing and supply of control rooms, control panels, control desks etc to the buyers. Further the AR submitted that the appellant company is utilizing the very machinery, labour and employees conversed the direct nexus with the manufacturing activity of the appellant company, hence the job income is derived from industrial undertaking eligible for benefit i/s. 80IB of the Act. The job work got done by the manufacturer or under the supervision of the manufacturer is considered to be part of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. Hence, cording to the AR the calculation as well as the reduction in the amount of the deduction limed u/s. 880TH is wrong on this account also. In. view of the above discussion, I found that the. facts of the case under consideration are different with the facts of the case referred by the AO. I found force in submission of the AR that there is direct nexus between the income and the industrial undertaking 4onsidering the whole facts and evidences placed on records. The discussions made herein above establishes and proves that the activity of job of installation and commissioning is inextricability linked with the manufacturing of control room, control rooms, control panels, control desks etc manufactured, supplied, installed and commissioned by the appellant company. Further the case referred by the AR is applicable in the case of the appellant company considering the nature of production; installation and commissioning etc. are inextricably linked with the manufacturing of control rooms, control panels, control desks etc and is also integral part of production of undertaking and cannot be separated for determining the profit derived on the production activities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the appellant company and the records of the company produced before him. It was clearly mentioned i the submission that both the Units of the appellant company are situated at different lace i.e. Unit-I at F-16A, Road No. 3, MIA, Udaipur and Unit-II at E-329, Road No. 12, IIA, Udaipur with different line of production. Unit-I deals with electronics products whereas Unit-II deals with electrical products. The appellant company is not having any common Head Office or Corporate Office to control both the Units. Both the Units are run and controlled itself. Unit-I is looked after by one of the Directors, Shri CP Talesara who BE (Electronics M.Tech. having vast experience of R D and production work) whereas Unit-11 is looked after by Director, Shri PS Talesara who is BE (Electricals Wing vast experience of electrical stream). Both the Units are 2 Kms. away from each her and complete independent set up of infrastructure and manpower. The books of account are separately maintained and separate balance sheet and P L Accounts of both the Units have been ' prepared since inception. The department has been regularly accepting the separate accounts of both the Units for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious decisions already decided and these findings remained uncontroverted, therefore, we see no reason to interfere with these findings of ld. CIT (A). Accordingly, we confirm the finding of ld. CIT (A) on this issue. In this way ground nos. 1 2 of the department fails. 7. Remaining ground is in respect of deleting the addition of ₹ 8,66,365/- made under section 40(a)(ia) of the Act. 8. During the assessment proceedings, the Assessing Officer noticed that assessee has made total payment of ₹ 9,78,635/- to three parties i.e. M/s. Jai World Wide Movers, M/s. Exel India Pvt. Ltd. and M/s. DHL Express. Out of the above payments, ₹ 97,679/- related to service charges on which tax was duly deducted. Balance payment of ₹ 8,66,365/- were paid on account of reimbursement of expenses. The Assessing Officer noted that the assessee was required to deduct tax in view of section 194C which he failed to do so. Accordingly he made disallowance by attracting provisions of section 40(a)(ia) of the Act. 9. Detailed submissions were made before ld. CIT (A). It was submitted that all these expenses are on account of reimbursement payment to Clearing and Forwarding A ..... 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