TaxTMI 
TaxTMI 
2011 (12) TMI 577
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....eposit with AVVNL at Rs. 22,344/-, job receipt at Rs. 67,35,629/- and deduction on account of directors remuneration/salary at Rs. 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 Rs. 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 every issue was explained before ld. CIT (A) by these written submissions. The ld. CIT (A) after considering the submissions and perusing the material on record has held that interest income of Rs. 22,344/- on deposit with AVVNL was rightly reduced for the purpose of deduction under section 80IB. However, interest on FDR and job receipts were held that the Assessing Officer was not justified in reducing the same as they are income derived from the under....
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..... 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 Limited Noida, Secure Meters Solan, Department of Atomic Energy, Reliance Energy Limited, Jingal Steel and Power Limited and NTPC Vishakaapatnam etc. The appellant company is sub-contractor of the above said companies who had accepted turn key project contracts from the various power units who are ultimate users. The appellant company supplies the control rooms, control panels, control desks etc to the various customers at their sites which requires re-as....
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....ufacturing 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 manufacturing process for getting the benefit u/s. 8OIB of the Act. The AR placed reliance on the following case laws: i) CIT Vs. Unitherm Engineers P) Ltd. (2004) 141 Taxman 38 (Mum). ii) CIT Vs. International Data Management Ltd. 261 ITR 177 (Bom) iii) Asst. CIT Vs. Biotech Medicals (P) Ltd. (2009) 121 TTJ (Hyd) 858. iv) Mihir Engineers Ltd. Vs. Jt. CIT (2007) 112 TTJ (Mum) 940. The AIR has further submitted that in....
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....g 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 undertaking. The ultimate supply/sale completed after completion of installation and commissioning as well as proper running of control rooms, control panels, control desks etc. The job work was done under the supervision of appellant's engineer and supervisors and the site of ultimate users utilizing the very same machinery and labour conversed a direct nexus with the manufacturing activity of the appellant. Hence, the inc....
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....s 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 purposes of assessment of the come of the appellant company since inceptions of both the Units. For such purposes and for the purposes of company law returns, the balance sheet is got consolidated. Similarly, both the Units are having separate sales, purchases, and production-department and regularly booked their receipts and. expenses in separate set of books of account. The decision related to management of Units is being taken by each Un....
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....the Assessing Officer noticed that assessee has made total payment of Rs. 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, Rs. 97,679/- related to service charges on which tax was duly deducted. Balance payment of Rs. 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 Agents on receiving their bills as they have made expenses on behalf of the assessee already. It was also submitted that at the end of the year there was no amount payable. Therefore, for this reason also no disallowance could have been made. Reliance was placed on the decision of JVVNL, 123 TTJ 888. 10. After considering the submissions, the ld. CIT (A) found that these expenses are on account of reimbursement and, therefore, there was no liabili....