Eligibility for claiming deduction U/s 80IA of the income tax.

[RAJAGOPALAN R]

OUR MAIN BUSINESS IS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA OF THE IT Act. ONLY THE PORTION OF THE BUSINESS/UNDERTAKING COVERED FOR THE ELIGIBLE PERIOD FOR AVAILING DEDUCTION UNDER THE ACT HAVE TO BE CALCULATED SEPARATELY FOR CLAIMING DEDUCTION U/S 80IA. FOR THAT P&L a/C AND BALANCE SHEET OF EACH UNDERTAKING NEEDS TO BE PREPARED SEPARATELY. SINCE WE HAVE VERY LARGE NUMBER OF SMALL/MINI UNDERTAKINGS IT IS NOT PRACTICABLE TO PREPARE AND AUDIT THE P&L OF EACH UNDERTAKING SEPARATELY. IN SUCH CASES IS THERE ANY OTHER METHOD TO CALCULATE AND AUDIT THE UNDERTAKING FOR CLAIMING DEDUCTION U/S 80IA. IN MTNL VS. ACIT (2010) 38 SOT 24 (DELHI) HAS STATED ABOUT APPORTIONING OF TOTAL INCOME PROPORTIONATELY ON THE BASIS OF TOTAL UNDERTAKING VIS A VIS NEW UNDERTAKING CAN BE ADOPTED IN THIS CASE. KINDLY SUGGEST

AI Summary

Clarification on Section 80IA: Profits for each undertaking must be computed separately for tax deductions eligibility. A query was raised regarding the eligibility for claiming deductions under Section 80IA of the Income Tax Act, specifically concerning the calculation of profits for multiple small undertakings. The query highlighted the impracticality of preparing separate financial statements for each undertaking. A response suggested that profits for each eligible undertaking must be computed separately, with no exceptions. However, if certain expenses or income cannot be accurately determined, a reasonable formula may be used for distribution. The responder noted that they had not reviewed the MTNL vs. ACIT case but emphasized that exemptions require separate profit computations per undertaking.