TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 469
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....u/s.80IB." 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) dated 29.12.2009 were that the assessee company is in the business of manufacturing of Polypropylene and HDPE woven sacks, Kraft Paper lined bags and multiwall paper sacks. It was noted by the AO that in the P & L A/c. there was an amount of "Insurance Claims" of Rs.2,90,00,764/-. According to AO, there was an amount of Insurance Claim of Rs.83,67,780/- are pertained to the claim in respect of machineries. The AO has thus held that the Insurance Claim was not a revenue receipt but it was received on the loss of a capital asset. Further, it was also noted that the assessee has received a sum of Rs.2,06,32,984/- as Insurance Claim against stock ....
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....judgment was that insurance claim for loss of goods on fire is "derived from" the business of the industrial undertaking and therefore is includable in profits and gains for computing deduction u/s. 8o-IA. The Hon'ble HC also approved the finding of the ITAT that when the cost of goods was debited in the P & L a/c. and the insurance receipt was credited in the same P & L a/c, the net effect will be nil. In other words the Hon'ble HC have approved the netting off of cost of goods and the insurance receipts thereof and the profits/gains arises if any was eligible for deduction u/s. 80 IA. I have also come across a decision of the Hon.'ble Punjab & Haryana High Court in the case of CIT v/s. Khemka Containers Pvt. Ltd., (2005) 193 C....
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.... above, it is clear that the sum of insurance receipts constituted for both capital and business assets. The AO rightly held that of insurance claim on Plant & Machinery of Rs. 83,67,780/- and the balance of Rs. 2,06,32,987/- was towards Raw Materials, Work-in-Progress and Finished goods. Further I am in agreement with the observation of the AO that the insurance claim of Rs.83,67,780/- towards the Plants & Machinery is receipts for capital assets and therefore, cannot be included for computation u/s. 80-IB. With regards to the balance of Rs.2,06,32,987/-towards Raw Materials, Work-in-Progress and Finished goods, the amount includable was not the gross but the net amount after the cost was reduced. The total amount of RM/WIP and Finished go....
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....r. O.P. Batheja appeared and pleaded that the Insurance Claim in respect of loss of machinery was nothing but a receipt of "capital in nature'; hence, he has pleaded that the case law cited from the side of the assessee were in respect of loss of raw material/finish goods; hence, not applicable on the facts of the case. 7. Having heard the submissions of both the sides, we are of the considered opinion that this issue is required to be decided in the light of the precedent cited hereinabove. In the case of CIT Vs. Shree Rama Multi Tech Limited (supra), it was held by the Hon'ble Court as under: "We have no reason to take a different view. If the assessee had either consumed the raw material in its industrial activity or sold the finished ....
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....ion is further made clear from sub-section (2) of section 80-IA whereby such businesses are not considered for taking advantage of the deduction under section 80-IA if either it is formed from splitting up of an existing business or by use of machinery or plant previously used and so on. The object is clearly to give fillip to the economy and to investment. This object will have to be kept in view while interpreting the provisions of section 80-IA. 6. We find that for a similar provision of section 80-IB, two decisions have been rendered by two Division Benches of this Court in the judgments reported as CIT v. Eltek SGS (P.) Ltd. [2008] 300 ITR 6 1 and CIT v. Dharam Pal Prem Chand Ltd. [2009] 221 CTR (Delhi) 133. In the Eltek SGS (P.) Ltd.....