Tribunal upholds scrap sales deduction under Section 80IB, directs AO to include sales for deduction calculation.

The Tribunal rejected the challenge to the initiation of proceedings under Section 153A as no specific arguments were presented. Regarding the claim of deduction under Section 80IB for scrap sales, the Tribunal sided with the assessee, following a favorable decision by the High Court, holding that scrap sales should be included in computing the deduction. Consequently, the Tribunal directed the Assessing Officer to calculate the deduction including scrap sales. The appeals of the assessee were partly allowed by the ITAT Delhi.

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Issues involved: Validity of initiation of proceedings u/s 153A and claim of deduction u/s 80IB in respect of scrap sales.

Validity of initiation of proceedings u/s 153A:
The appeals by the assessee challenged the order of the learned CIT(A)-I, New Delhi for the AY 2008-09 & 2009-10, specifically contesting the initiation of proceedings u/s 153A of the Income-tax Act, 1961. Ground No.1 in both years was against the validity of the initiation of proceedings under Section 153A. However, during the hearing, no specific arguments were presented against the validity of the notice under Section 153A. Consequently, the Tribunal treated ground No.1 as not pressed and rejected the same.

Claim of deduction u/s 80IB in respect of scrap sales:
The second ground of the assessee's appeal related to the claim of deduction under Section 80IB concerning scrap sales. The Assessing Officer had allowed the deduction under Section 80IB but excluded the scrap sales from the profit of the industrial undertaking for the years under consideration. The learned counsel argued that the issue was favorably decided for the assessee by the Hon'ble Jurisdictional High Court in a specific case. The Departmental Representative, however, contended that the facts of the present case differed from the case relied upon by the assessee. After considering the arguments and facts, the Tribunal agreed with the assessee's contention, citing the decision of the Hon'ble Jurisdictional High Court which held that receipts from scrap sales are part of the gains derived from the industrial undertaking for computing deduction under Section 80IB. Consequently, the Tribunal directed the Assessing Officer to compute the deduction under Section 80IB by including the scrap sales. As a result, the appeals of the assessee were partly allowed.

Decision:
The decision was pronounced in the open Court on 20th December 2013 by the Appellate Tribunal ITAT Delhi, with Shri G.D. Agrawal, Vice President, and Shri Aby T. Varkey, Judicial Member presiding over the case. The legal representatives for the appellant and respondent were Shri Niren Gupta, CA, and Shri S.N. Bhatia, DR, respectively.

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