Appeal partially allowed: 80-IB deduction upheld for units, DEPB disallowed. Ad-film expenses relief upheld.

The appeal was partly allowed as the Tribunal upheld the deduction u/s.80-IB for the adhesive unit and Epoxy M-Seal unit but disallowed the deduction for Duty Entitlement Pass Book (DEPB) entitlements. The relief for ad-film expenses was upheld based on precedent, and the addition u/s.14A read with rule 8D was sent back to the Assessing Officer for determining the disallowance on a reasonable basis, not rule 8D.

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Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) for assessment year 2006-2007.

Deduction u/s.80-IB:
The appeal raised grounds against granting deduction u/s.80-IB. The Tribunal upheld the deduction for adhesive unit at Bhimpore, Daman, and Epoxy M-Seal unit at Kadaiya, Daman, based on precedent from earlier years where similar deductions were allowed. The grounds related to deduction u/s.80-IB failed.

Deduction u/s.80-IB on DEPB:
The appeal contested the claim of deduction u/s.80-IB on Duty Entitlement Pass Book (DEPB). Citing a Supreme Court judgment in Liberty India Vs. CIT, it was held that no deduction can be made u/s.80-IB for DEPB entitlements. This ground was allowed.

Relief for ad-film expenses:
The appeal challenged the relief granted for expenses of &8377; 84,27,270 incurred on ad-film. The Tribunal upheld the relief based on a previous decision in the assessee's favor. Following precedent, the impugned order on this issue was upheld, and the ground failed.

Addition u/s.14A r.w.r. 8D:
The final ground was against the deletion of addition u/s.14A read with rule 8D. Citing a judgment of the Bombay High Court in Godrej & Boyce Limited Vs. ACIT, it was decided that the disallowance under section 14A should be worked out by the Assessing Officer on a reasonable basis, not rule 8D. The matter was restored to the AO for deciding the quantum of disallowance as per the judgment. The appeal was partly allowed for statistical purposes.

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