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Service Charge Earned on Pattern Development is eligible profit for Deduction u/s 80IA of IT Act: ITAT Ahmedabad [Read Order]

The Ahmedabad bench of the ITAT, on Wednesday allowed deduction under Section 80IA of the Income Tax Act, 1961 and held that the service charges earned by the assessee on pattern development will be considered as eligible profit for grant of deduction under section 80IA.

In the instant case, the sole grievance of the assessee was that the first appellate authority has erred in holding that the gross service charges received by the assessee for pattern development is not eligible for grant of deduction under section 80IA or 80HHC of the Income Tax Act.

Earlier, the Tribunal has allowed deduction under section 80IA that the alleged service charges earned by the assessee on pattern development. In that case, the division bench had observed that the pattern development activity undertaken by the assessee was a part and parcel of the business of manufacturing of components and parts for process control instrumentation and other products and the same was not a separate and independent business of the assessee.

Following the above decision, the Judicial Member directed the Assessing Officer to grant deduction under section 80IA of the Act for service charges earned by the assessee for pattern development.

Read the full text of the Order below.

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