2014 (10) TMI 544

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....& 1997-98. On 26.08.2009, both the appeals were admitted by a Co-ordinate Bench on the following substantial question of law:- "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal have erred in law in holding that sub section (10) of section 80-1A was not applicable to the case relying on the ratio of law laid down by the Apex Court in the case of Bajaj Tempo Ltd. Vs. CIT (1992) 62 Taxman 480 ignoring the ratio of law laid down by the Apex Court in the case of CIT Vs. Sterling Foods Ltd. reported in 237 ITR 479 and CIT Vs. N.C. Buddhiraja & Co. (1993) 204 ITR page 142?" The brief facts of the cases are that, during the assessment year under consideration, the assessee company set up a new un....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ame to others. It sold the import entitlements that it had earned to others." It was also held that:- "There must be, for the application of the words "derived from", a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus was not direct but only incidental. The industrial undertaking exported processed sea foods. By reason of such export, the Export Promotion Scheme applied. Thereunder, the assessee was entitled to import entitlements, which it could sell. The sale consideration therefrom could not be held to constitute a profit and gain derived from the assessee's industrial undertaking. The receipts from the sale of import entitlements could not be included in the income of th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ion to a particular amount, so he made a request to set-aside the order passed by the Tribunal. On the other hand, Sri Suyash Agrawal, learned counsel for the assessee had justified the impugned order passed by the Tribunal. He submitted that the Himachal units was established with the funds which came out from the head office. The expenses were debited with the head office account and the Himachal unit is not commensurate with the comparative figures with the sales effected at the head office and at the eligible unit. He also submitted that the assessee maintained the separate account books for the eligible units therefore, the A.O. has made out a case purely on presumption and surmises. According to learned counsel for the assessee, Se....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....held that benefit under Section-80 IA is not applicable when the assessee had not maintained the accounts for manufacture of yarn actually produced as a part of the industrial undertaking. In the instant case, the assessee was maintaining the separate accounts for each unit as mentioned by the Tribunal, so, the assessee is entitled for the benefit under Section-80 IA and specially when the necessary condition of Section-80 IA (!0) has not been fulfilled by the A.O. to prove that the business between the eligible units and other units are so arranged that the business transaction between them produces more profit to the eligible business. The A.O. has not given any adverse finding on the basis of books of account produced by the assessee.....