Eligible Profit for Deduction u/s 80IC

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Anuj Bansal (Querist)
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16 July 2010 An Manufacturing Public Limited Company has been established in Himachal pradesh having its Registered Office at Rajasthan.

The Company's sales its 25% of production directly from the plant to third party and transfers remaining 755 to the head office in Rajasthan. From Head office certain portion is sold and some portion is send to C&F established in another states.

a) What will be the eligible profit for deduction u/s 80IC?
b) What will be the Tax Treatment of 75% of the transferred product to the Head Office at Rajasthan? And the profit arising thereafter from the sale from Head Office is eligible for deduction u/s 80IC or not?

RAJIVE KUMAR

RAJIVE KUMAR (Expert)
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21 July 2010
Dear Anuj,
Business income on which deduction is available should be calculated taking transfer of 75% goods to Rajasthan unit at market price. or transfers in view of AO should not result into extraordinary profits at Himachal and below normal profits at HO.

Profits of Himachal unit are to be looked and not profit at HO unit for 80-IC.

So 100% profits at himachal are eligible for 80-IC.

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