Section 80IA(8) of the Income Tax Act

No substantial question of law arises regarding a subsidy granted for setting up a new industrial unit in a backward area for employment generation, as held by the Bombay High Court. This decision was subsequently set aside by the Supreme Court.

Inter-unit transfer of power by an industrial undertaking eligible for Section 80IA deduction constitutes a specified domestic transaction under Section 92BA, requiring valuation at arm's length. This decision clarifies the application of Section 80IA(8) and transfer pricing regulations for such transactions.

Deduction under Section 80IA is allowable for captive power generation. The price for calculating this deduction is the rate at which the electricity board supplies power to its consumers, rather than the rate at which power generating companies supply to the electricity board.

The market rate for self-generated electricity, relevant for computing deductions like Section 80IA, is the rate at which the State Electricity Board supplies power to other industrial units in the same area. This rate reflects the price at which power is available to consumers, irrespective of restrictions on the assessee's open market sales.

Expenditure is laid out wholly and exclusively for the purposes of trade or business when it is incurred by the assessee as incidental to their trade, for the purpose of keeping the trade going and making it pay, and not in any other capacity than as a trader.

The headcount method is an appropriate allocation key for indirect expenses between eligible and non-eligible units when it has been consistently accepted by revenue authorities and there is no just cause for abandoning it. Deviation from a consistently followed and accepted method can disturb or distort profits.

Disallowances of expenses cannot be made based on mere suspicion or unsubstantiated statements of higher expenses; tangible evidence is required to justify additions.

Indirect expenses not directly relatable to an industrial undertaking cannot be considered for computing income eligible for deduction under Section 80-1A. The income and expenditures to be reckoned for this deduction must be directly related to the industrial unit.

Goodwill arising on amalgamation is a capital asset. Depreciation is allowable on goodwill if it has been acquired by the assessee. The cost of acquisition for depreciation purposes is the amount paid for goodwill at the time of amalgamation.