TaxTMI 
TaxTMI 
2010 (2) TMI 874
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....ity and by not allowing the claim of deduction under section 80-IB. 2. The CIT(A) erred by holding that the contract works undertaken by the assessee company is separate line of activity whereas it is extension of manufacturing activity. 3. Without prej udice to the above, the CIT(A) erred by not relying on the explanation put forward for erroneous division-wise profitability statement filed by the assessee-company without apportioning the common expenditure like salaries and wages, admin. Selling expenses and financial charges incurred for the company as a whole. 4. The CIT(A) should have allowed the apportionment of common expenditure among divisions as per the generally accepting accounting principles.  ....
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...., he disallowed the claim of the assessee under section 80-IB of the Act. With the above disallowance inter alia he determined the income at Rs. 1,04,63,750. On appeal to CIT(A), the order of the Assessing Office is confirmed. Further aggrieved the assessee is in appeal before us. 4. The learned AR submitted that the assessee carried on the activities of contract for the purpose of facilitating the industrial activity of the assessee. According to assessee counsel contract works carried on by the assessee is having direct nexus with the industrial undertaking and had the assessee not carried on this activity, the assessee could not have run the industrial undertaking. According to the assessee counsel contract works is part and pa....
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....d that interest earned by assessee on RBI Bonds is the income derived by it from the business of industrial undertaking so as to be eligible for deduction under section 80-HHB of the Income-tax Act. Further they held that the assessee entitled for deduction under section 80-IA of the Act in respect of receipt from the transportation of sleepers at railway site. 5. Without prejudice to the above arguments, the learned counsel submitted that the assessee has been maintaining consolidated books of account both for manufacturing and as well as for the contracts executed. At the time of assessment, the assessee without knowing the consequences and without the knowledge of appropriating indirect expenses gave some figures on which the A....
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....g the profit from manufacturing activities which is only after-thought and self serving. He relied on the order of the Tribunal, Larger Bench in the case of B. T. Patil and Sons, Belgaum Construction (P.) Ltd. v. Asstt. CIT [2010] 35 SOT 171 (Mum.) for the assessment years 2000-01 and 2001-02. 7. We have heard both the parties and perused the material on record. The main contentions of the assessee counsel is that the contract was carried out by the assessee as part and parcel of the industrial activity of the industrial undertaking of the assessee. The word 'derived from' in section 80-IB must be understood as something which has direct or immediate nexus with the assessee's industrial undertaking. Although, the assessee earned i....
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....g pipes and in our opinion, laying of pipes have no nexus with the manufacturing activity of the assessee. Accordingly, the assessee is not entitled for relief under section 80-IB on income earned from laying of pipes. 7.1 Further the assessee counsel argued to recompute the allocation of expenses between manufacturing activity and non-manufacturing activity and file a statement of allocation of expenses on activity-wise. We have carefully considered this argument. The argument of the assessee counsel is not based on any evidence on record. The assessee has filed division-wise profitability statement before the lower authorities. Now the assessee wants to revise the same by saying that on earlier occasion, at the time of the assessment, ....