AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 396
X X X X Extracts X X X X
X X X X Extracts X X X X
..../-; truck hire charges of Rs. 43,37,289/- and similar nature of interest or other incomes. (Mandali Division)." [2] "Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expenses after verifying nexus with various income such as Interest income of Rs. 3,825/-; Truck hire charges of Rs. 2,40,000/- (Trikampura Division)". [3] "Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expenses after verifying nexus with various income such as Job charges of Rs. 25,590/-; F.D interest of Rs. 1,82,180/-; other interest Rs. 4,481/-; Insurance claim of Rs. 1,76,305/-; Misc. income of Rs. 30,716/-; truck hire charges of Rs. 1,45,796/- and similar nature of interest or other incomes. (Kanpur Division)." [4] "Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Trikampura division of the assessee, for the purpose of calculation of deduction under Section 80IA of the I.T Act and directing Assessing Officer to allow the same, while relying upon its own decisions in the cases of Nirma Limited for A.Y 1993-94; 1994-95 and 1995-96 have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded ?" [8] "Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowances of Rs. 66,84,193/- made by the Assessing Officer on account of sale of various items such as of plastic waste (Rs.53,341/-); sale of gunny bags (Rs.63,92,021/-); sale of other bardan (Rs.2,05,437/-); sale of iron scrap (Rs.33,394/-) in respect of Kanpur Division of the assessee, for the purpose of calculation of deduction under section 80HH of the I.T Act and directing A.O to allow the same, while relying upon its own decisions in the cases of Nirma Limited for A.Ys 1993-94; 1994-95 & 1995-96 have not reached finality and without considering the fact that such expenses incurred from the business income only and not for ear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in law and on facts in confirming the order of CIT (A) deleting the disallowance of Soda Ash Project Expenses [other than interest expenses] of Rs. 1,33,31,447/- and Rs. 3,46,83,209/- (other than interest expenses) Lab Project Interest expenses ?" [14] "Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) directing the Assessing Officer to allow depreciation on the expenses claimed for Rs. 9,41,53,106/- in respect of Soda Ash Project expenses and Rs. 36,60,38,78/- (in respect of Lab Project expenses), if they are held to be treated as of expenditure in capital nature ?" 2. We have heard learned senior counsel Shri S.N Soparkar with Shri Bandish Soparkar, learned advocate for the respondent and Mr. Nitin Mehta, learned standing counsel for the Department. 3. At the outset, it needs to be noted that this Tax Appeal arises for the A.Y 1998-98 in a case of respondent-company which is engaged in the business of manufacturing and marketing toiletry products. The company filed its return of income declaring the total income at Rs. 43,63,56,523/- after claiming deductions under Sections 80I, 80IA, 80HH & 80HHC of the Act. The assessment was co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Heavy reliance was placed in the case of Topman Exports v. CIT, 342 ITR 49 (SC). Extending such logic, it was further held that even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act. Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. It was observed as under : "If we now apply Explanation (baa) as interpreted by us in this judgment to the facts of the case before us, if the rent or interest is a receipt chargeable as profits and gains of business and chargeable to tax under section 28 of the Act, and if any quantum of the rent or interest of the assessee is allowable as as expense in accordance with sections 30 to 44D of the Act and is not to be included in the profits of the business of the assessee as computed under the head "Profits and gains of business or profession", ninety per cent of such quantum of the receipt of rent or interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... counsel for the parties, we see no reason to entertain this tax appeal. The Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra) has already laid down the foundation for the logic for excluding the net profit and not the gross profit from the claim of deduction when it is found that the source of income does not qualify for such deduction under section 80HHC of the Act. It is true that section 80HHC represents vastly different scheme of deduction and also provides for complex formula for deriving for the eligible profit for deduction under different situations depending on whether the exporter is also engaged in the local business or not. However, this distinction would not be material insofar as central question of exclusion of certain profit from the activity which is not eligible for deduction under section 80HH and 80-I are concerned. The logic being when the profit is being excluded from the claim of deduction, not the gross profit but the net thereof, that is the gross profit minus the expenditure incurred for earning such profit should be excluded. That is precisely how this Court in the case of Rajoo Engineers (supra) viewed the situation. That is how t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tax Act in the present Tax Appeal, in Tax Appeal No. 811 of 2013, such Questions are raised at serial nos. 3, 6, 9 & 15. The Court, while holding this issue in favour of the assessee, observed thus - "So far as questions Nos. 3, 6, 9 and 15 are concerned, the same are stated to be covered by the decision of this Court in the case of Nirma Industries Limited v. Deputy CIT, 283 ITR 402 (Guj) in which the Court upheld the assessee's claim for deduction under section 80I of the Act on the interest received on late payment of sale consideration as amount derived from eligible business. These questions are, therefore, not required to be considered." 11.1 While so holding, reliance is placed on the decision in case of Nirma Industries Limited v. Deputy CIT, reported in 283 ITR 402 (Guj). This issue accordingly is answered in favour of the assessee. 12. In the present Tax Appeal, Questions [12], [13] & [14] have been raised, which in Tax Appeal No.811 of 2013 was raised in the form of Question no. 13. 13. At this stage, it is necessary to make a mention of the submissions made by learned senior standing counsel Shri Mehta that the Question in Tax Appeal No. 811 of 2013 pertains to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Tribunal upheld in the impugned judgment. Having heard the learned counsel for the parties and having perused the documents on record, we notice that CIT (Appeals) and the Tribunal concurrently came to the conclusion that there was interconnection, inter-lacing and inter-dependence of the management, financial and administrative control of various units of Nirma Limited. It was on this ground, the Tribunal held that the business in question is continuation of the existing business and not a new business. In this context, the decision relied on by the authorities below of this Court in the case of Alembic Glass Industries Ltd. (supra) laid down tests for ascertaining whether a business was part of existing business or the assessee was starting a new unit. It was held that merely because the unit was coming to a distant point by itself would not mean that it was a new business. If the facts as recorded by the CIT (Appeals) and the Tribunal can be said to have achieved finality, it would emerge that the assessee through its existing administrative mechanism started a new facility for production of soda ash and had also set up facility for production of a material called 'lab&....