Tribunal decision: Revenue appeal dismissed, Assessee appeal partly allowed. Brand value reduction deleted, MAT upheld.

The Tribunal dismissed the Revenue's appeal and partly allowed the Assessee's appeal. The Tribunal deleted the 10% reduction for brand value but upheld the applicability of Minimum Alternate Tax (MAT) under Section 115JB.

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Issues Involved:
1. Deduction under Section 80-IC.
2. Applicability of Section 115JB (Minimum Alternate Tax - MAT).

Detailed Analysis:

1. Deduction under Section 80-IC:
- Assessee's Claim and AO's Reduction:
- The assessee, an industrial undertaking in Haridwar, claimed deduction under Section 80-IC for manufacturing auto parts. The AO acknowledged the eligibility but reduced the deduction, attributing high profitability to brand value, directors' experience, and branch activities.
- The AO estimated 20% of sales as profit due to brand value and 5% due to directors' experience, reducing the eligible profits for deduction.

- CIT(A) Ruling:
- The CIT(A) reduced the brand value attribution from 20% to 10% but upheld the AO's decision on MAT applicability.
- The CIT(A) disagreed with the AO's reduction based on directors' experience and branch activities, restoring the deduction on these grounds.

- Tribunal's Decision:
- Brand Value: The Tribunal found no justification for reducing the deduction based on brand value, as the brand was owned by the assessee and integral to its operations. The reduction of 10% by CIT(A) was deleted.
- Directors' Experience: The Tribunal upheld CIT(A)'s decision that adequate compensation to directors negated the need for further reduction based on their experience.
- Branch Activities: The Tribunal confirmed that all sales and manufacturing activities were conducted at the Haridwar unit, and expenses were properly accounted for, dismissing the AO's allocation of profits to other branches.

2. Applicability of Section 115JB (MAT):
- Assessee's Argument:
- The assessee argued that it should be exempt from MAT under Section 115JB(6), which exempts income from business carried on in a unit or Special Economic Zone (SEZ).

- Authorities' Interpretation:
- Both AO and CIT(A) held that the exemption under Section 115JB(6) applies only to SEZ units and not to other units.

- Tribunal's Conclusion:
- The Tribunal upheld the authorities' interpretation, confirming that the exemption under Section 115JB(6) is restricted to SEZ units. Consequently, the assessee's liability under MAT was affirmed.

Conclusion:
- Revenue's Appeal: Dismissed.
- Assessee's Appeal: Partly allowed, with the deletion of the 10% reduction for brand value but upholding the applicability of MAT under Section 115JB.

(Order pronounced in open court on 10.1.2014.)

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