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The only issue before Hon’ble court is that whether assessee is entitled to claim deduction u/s 80 IA even though it have been set off losses against the profits from other sources. CIT VS. GR Thangamaligai Firm (Madras High Court)
There is nothing in Section 80I(2)(iv) to say that the relationship in order to qualify for the term employment must be one of master and servant and cannot extend to contractual employment. That the concept of permanent or direct workmen is the precondition envisioned in Section 80I(2) when it was the term employs does not appear to be reflected in the statute.
If the production of cinematograph film amounts to manufacture of an article or goods within the meaning of section 104(4)(a) as it then stood, it follows that the said activity must be treated as an industrial undertaking within the purview of section 80J of the Income-tax Act, 1961. Apart from the circular, we are satisfied that, even on a common sense view, “film production” will have to be considered as a manufacturing activity and the undertaking will have to be considered as an industrial undertaking.
Sadbhav Engineering Ltd. vs. Dy. CIT (ITAT Ahemdabad)- In the instant case, the assessee claimed deduction u/s.80IA(4) of the Act for all the years which were disallowed by the AO on the ground that as per provisions of section 80IA(5) of the Act the computation of deduction has to be done by setting off of brought forward losses and depreciation of eligible business against their respective eligible incomes.
key issue is whether the ownership of an industrial undertaking is a relevant factor for the purposes of construing the provisions of Section 80-I of the said Act. We find ourselves to be in agreement with the submission made by Mr Ganesh that Section 80-I does not speak of the ownership of an industrial undertaking.
Whether the expenditure incurred by a unit can be reallocated to another unit engaged in job work and claiming deduction u/s 80IA and 80IB, as the case may be, merely because the profits were significantly higher than profits earned by the assessee from other units.
Issue – The facts relating to the two issues are stated in brief. The assessee is a Kerala State owned public limited company, engaged in the business of providing infrastructural facilities to industries. It runs an industrial park at Kakkanad, Kochi.
A perusal of the provisions of section 80IA(4) of the Act shows that in the explanation ‘infrastructure facility’ has been specified to mean a road including a toll road, a bridge or a rail system. Admittedly, the assessee is doing the business of development of railway tracks and bridges thereof as also roads.
On the question as to whether the assessee is entitled to deduction u/s 80IA of the Act on the net interest income on employees loans & advances, interest on margin money and interest income on dues towards income tax refund adjustment from Essar Project Ltd., we are of the opinion that the issue involved in the present case is no more res-integra and is covered by the decision of the Hon’ble Apex Court in the case of Liberty India (supra) wherein it has been held that duty drawback, DEPB benefits, rebates, etc., cannot be credited against the cost of manufacture of goods debited in the profit and loss account for purposes of section 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking.
In this case, assessee was carrying on business of conversion of Jumbo Rolls of photographic films into small flats and rolls in desired sizes. It claimed deduction under secs. 80-HH and 80-I as well as investment allowance under sec. 32AB. The controversy arose whether conversion of jumbo rolls into small sizes amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I of the Income-tax Act, 1961/ Hon’ble Supreme Court has held that this activity amounts to manufacture or production.
