Tribunal allows appeals: Freight charges surplus included in sale price for section 80-I deduction

The Tribunal allowed the appeals, determining that the surplus from freight outward charges should be considered part of the sale price for the purpose of section 80-I deduction. The Tribunal found that the freight charges were bifurcated separately and formed part of the sale price, as supported by relevant case law. Consequently, the Assessing Officer was directed to allow the deduction under section 80-I on the surplus of freight charges in both years, overturning the decision of the CIT(A).

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Issues:
1. Whether freight charges constitute the sale price of manufactured products for the purpose of section 80-I deduction.

Analysis:
The appeals were initially decided, but later a misc. application was allowed to reconsider whether freight constitutes the sale price for section 80-I. The Assessing Officer did not agree that freight outward charges should be excluded for the deduction under section 80-I. The appellant argued that the freight collected was part of the sale price fixed by the Electricity Board and was not income from activities other than manufacturing. The CIT(A) dismissed this argument.

Before the Tribunal, the appellant presented purchase orders showing the bifurcation of sale price and freight charges. The appellant claimed the benefit of section 80-I only on the surplus from freight outward charges. The appellant contended that the surplus arose due to the policy of the Electricity Board, and it should be considered part of the sale price. The appellant cited a judgment of the M.P. High Court regarding the inclusion of railway freight in turnover. The Tribunal did not consider the issue of bank interest deduction as it was beyond the limited purpose of the recall order.

The Tribunal found merit in the appellant's argument regarding freight outward charges. It observed that the purchase price was divided into segments including freight, and the freight charged was part of the sale price bifurcated separately. Citing the judgment of the jurisdictional High Court, the Tribunal agreed that the surplus from freight charges should be considered part of the sale price for allowing deduction under section 80-I. Consequently, the order of the CIT(A) was set aside, and the Assessing Officer was directed to allow the deduction under section 80-I on the surplus of freight charges in both years.

In conclusion, the appeals were partly allowed based on the finding that the surplus arising from freight outward charges was deemed part of the sale price for the purpose of section 80-I deduction.

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