INCOME TAX ACT, 1961

Section 80IC

Deduction under section 80IC - Allowability - Rendering services of job work -

Assessee was engaged in rendering services of the job work to M/s. G Healthcare Ltd. According to AO, the job work was only of packaging of 'Horlicks', 'Boost' and another products of the company 'Glaxo', whereas according to assessee, it was engaged in contract manufacturing of those products for the said company. Assessee claimed deduction under section 80IC. AO noticed that, even out of the expenses, the majority of the expenses related to generator, electricity expenses and observed that the activity of assessee did not satisfy the manufacturing defined in said section. AO disallowed claim of deduction under section 80IC. Held: In the instant case, section 80IA(8) and 80IA(10) were relevant to find out the reason of the abnormal profit and examine whether assessee had shifted profit or expenditure to eligible business or to any other business carried on by assessee or shifted profit or expenditure to any other person. For application of section 80-IA(8) and 80-IA(10), Commissioner (Appeals) was required to examine all the expenses incurred by the assessee for ascertaining shifting of any expenses to any other business of the assessee or to any other concern. From the finding of the Commissioner (Appeals), it could not be ascertained that he had examined the expenses as per the requirement of the section 80IA(8) or 80IA(10). CIT (Appeals) was having coterminous power of AO, and thus, he was required to examine this issue thoroughly. It was appropriate to restore this issue back to the file of AO for deciding applicability of section 80IA(8) and 80IA(10) over the affairs of the assessee.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2010-11 and 2011-12

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