2014 (3) TMI 216

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....years read as under, though quantum may differ : "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO, to allow deduction u/s. 80IA(4) to the assessee on sales tax incentive of Rs. 74,75,000/- without appreciating the fact that such a receipt is not in the form of an income derived from the business activity of the assessee, and as such not eligible for deduction u/s. 80IA(4) of the Act." 3. During the course of the scrutiny assessment order, the Assessing Officer noticed that the assessee has claimed a deduction of Rs. 98,93,741/- u/s. 80IA. On perusing the Audit report, the AO found that the profit of the unit named Kohinoor Power Co. which included sale of Sales Tax Benefit of Rs. ....

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....om the transfer of sales tax incentive is to be treated as income derived from industrial undertaking consisting of business of generation and distribution of electricity and accordingly to be considered for calculating the deduction u/s. 80IA(4)(iv) of the I.T. Act and accordingly directed the AO. 6. The assessee also raised an additional ground before the Ld. CIT(A) stating that entire Rs. 74,75,000/- being the sales tax incentive is to be considered in the nature of capital subsidy and accordingly not subject to tax at all. The Ld. CIT(A) was of the view that the ratio of the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd 284 ITR 323 does not allow him to entertain any additional ground which was not claim....

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....rived from" the Parliament intended to cover the sources not beyond the first degree. It was held that DEPB/duty draw back are incentives which flow from the relevant schemes framed by the Central Govt. and they are not profits derived from eligible business but belong to the category of ancillary profits of such undertaking. It was held that the incentive received as per the scheme of the Central Govt., therefore, had no first degree connection with the industrial undertaking of the assessee and the immediate source of the same being the relevant scheme of the Central Govt., it could not be considered as profit eligible for deduction u/s. 80IA/80IB." 11. The Tribunal while coming to this conclusion has relied upon the decision of the Ho....