2009 (9) TMI 980

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.... Rs. 1,25,073/- under the head income from other sources instead of treating it as business income and granting deduction under section 80IB on the same. 3. The brief facts of the case are that the assessee firm engaged in the business of manufacturing of corrugated boxes, trays, plats and sheets. The manufacturing unit is located in the union territory of Daman which has been notified by the Central Government as a backward area so the profit from this manufacturing unit is eligible for 100% deduction under section 80IB of the Income Tax Act for the first five years since the commencement of manufacturing activity. The return of income for Assessment Year 2005-06 was filed on 30.10.2005 showing Nil income. The Learned Assessing Officer ....

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.... 80IB due to disallowance and when it pays less tax and in the next year due to proviso under section 40(a)(ia) it get deduction of this payment and pays less tax in the next year also. 4. The Learned Authorised Representative of the Assessee has disputed the above findings of the Learned Commissioner of Income Tax(Appeals) and has submitted that the assessee is allowed 100% deduction for the profits earned under section 80IB. The expenditure on which there was delay in depositing the TDS was claimed deduction against the profits earned from the eligible industrial undertaking. Since, the expenditure was disallowed, therefore, the profit from the eligible undertaking of the assessee increased which was allowable deduction under section 8....

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....d Commissioner of Income Tax(Appeals) also confirmed the above action of the Learned Assessing Officer on the ground that allowance of deduction under section 80IB in the year will tantamount to double deduction to the assessee. We find that the undisputed facts of the case are that business expenditure of eligible unit stands disallow in the year under consideration due to application of provisions of section 40(a)(ia). Thus, in other words, the said amount is deemed as expenditure not incurred by the assessee for computing its business income. Thus, as the expenditure of eligible unit stands disallowed consequently the same results in increase of the profit of the eligible unit. The deduction under section 80IB is allowable in respect of ....