2013 (11) TMI 206

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....receipt of insurance claim for loss of raw material of Rs.10,91,347, (ii) compensation for not supplying the raw material in time of Rs.3,00,000, and (iii) interest on L/C margin of Rs.71,409. The learned AR did not press the claim of deduction in respect of third item, being, interest on LC margin. To this extent the impugned order is upheld. 4. First issue is against the denial of deduction u/s 80-IB(4) in respect of receipt of insurance claim for loss of raw material. Briefly stated the facts of the case are that the assessee received insurance claim of Rs.10,91,347 and adjusted the same against cost of raw material. On being called upon to explain as to why deduction should not be granted on this item, the assessee submitted that in ....

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....during the year. As per assessee's own version, a sum of Rs.5.84 lakh was towards Plant and machinery out of the total insurance claim of Rs.90.91 lakh. By no stretch of imagination this part of insurance claim, being on capital account, can be considered as eligible for deduction as recoupment of loss of raw material cost. As regards the remaining amount of Rs.5.07 lakh, we find that the same is on account of raw material cost. The learned AR has placed on record a copy of the order passed by the Mumbai Bench of the Tribunal in M/s.Castrol India Ltd. v. ACIT in ITA No.3938/Mum /2010. Vide its order dated 14.09.2012, the Tribunal has granted deduction u/s 80-IB in respect of insurance claim. This view has been canvassed by following another....

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....4) on this amount. No relief was allowed in the first appeal. 7. After considering the rival submissions and perusing the relevant material on record, it is observed that the assessee claimed deduction u/s 80-IB(4) on the compensation amount of Rs.3 lakh received by it from Crescent Chemsole Pvt. Ltd. The case of the assessee for deduction is based on the foundation that it had to purchase raw material from market after cancellation of the contract with Crescent Chemsole Pvt. Ltd. at a higher price. On a pointed query, the learned AR could not lead any evidence to show as to the alleged higher purchase price of the raw material from a third party justifying the compensation of Rs.3 lakh. In our considered opinion this compensation of Rs.....