INCOME TAX ACT, 1961

Section 80IB

Deduction under section 80IB - Quantum of - Process of outsourcing/job work whether an integral part of processing and manufacture -

While completing assessment under section 143(3), deduction under section 80IB was allowed by AO. Subsequently, in reassessment proceedings, AO alleged that deduction claimed and allowed in original assessment was excessive. While framing assessment under section 143(3) read with section 147, AO re-computed deduction under section 80IB by excluding job work from turnover and proportionately allowing claim of deduction. CIT(A) held that process of outsourcing/job work was an integral part of processing and manufacture undertaken by assessee, and therefore, was entitled to claim deduction under section 80IB entirely. Held: AO while completing reassessment admitted that assessee was eligible for deduction, but granted proportionate deduction by excluding job work estimated at 25% of gross total income. Assessee satisfied all conditions for claiming deduction under section 80IB and proportionate disallowance of job work for purpose of computing deduction under section 80IB was unwarranted and uncalled for. Therefore, CIT(A) was correct in directing AO to grant deduction under section 80IB.

Followed:Rajiv Bhatnagar v. DCIT [ITA No.1026/Del/2011, dt. 17-12-2012]

REFERRED : Daman Computers Pvt. Ltd. v. CIT [Income Tax Appeal No.1 of 2008, dt. 10-8-2018] : 2018 TaxPub(DT) 5221 (Bom-HC) R And P Exports v. CIT (2005) 279 ITR 536 (All.-HC) : 2005 TaxPub(DT) 1501 (All-HC)

FAVOUR : In assessee's favour

A.Y. : 2004-05

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