2015 (10) TMI 168

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.... under MAT provisions. The assessment was completed by the Assessing Officer determining the total income at Rs. 1,78,51,426 by reducing other income of Rs. 1,64,11,809 from the eligible profits while calculating the deduction u/s 80IB of the Act. 3 The assessee claimed deduction of Rs. 1,84,68,405 u/s 80IB in respect of the profits and gains of industrial undertaking. The AO observed that that assessee has other income of Rs. 1,64,11,809 which cannot be said to be derived from industrial undertaking. The other income consisted of various items of other incomes like freight receipts, CENVAT, MODVAT receipts, agricultural income, education cess receipts which needs to be excluded from the business profits of eligible business for computing ....

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....on the decision of Delhi High Court in the case of Dharmpal Premchand Limited reported in 317 ITR 353, which held that the decision of the Supreme Court in the case of Liberty India Limited (317 ITR 218) will not apply to excise duty refund but only applies to DEPB credit, which is different being an incentive. It was submitted that this decision of Dharmpal Premchand has become final by dismissal of SLP filed by the Department before the Supreme Court as observed by the ITAT, Delhi in the case of M/s JK Aluminium Company, for A.Y. 2007- 08 vide ITA No. 3303/Del/2010 dated 29-4-2011. 5 Regarding freight receipts of Rs. 8,23,241, the assessee contended that they form part of sales and cannot be treated separately as 'other income' r....

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.... receipts in the profits of the business for the purpose of computation of deduction u/s 80IB. On appeal by the Department, the ITAT, vide ITA No. 754/Hyd/2009 dated 16-7-2010, in assessee's own case, reversed the order of the CIT (A)-II, Hyderabad, and held that the CENVAT/MODVAT receipts have to be excluded from the eligible profits of business for deduction u/s 80IB, relying on the decision of the Supreme Court in the case of Liberty India vs. CIT (317 ITR 218) and the facts of the case-law cited by the assessee in the case of Dharampal Premchand Limited are not applicable to the facts of the assessee. The CIT(A) following the Tribunal's decision referred to above held that the CENVAT/MODVAT and education cess receipts which are ....

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....the first degree has to be removed. Not only receipts which are not related closely to the business of the undertaking should be removed but also expenditure incurred for earning such excluded income should also be excluded from the computation of relief under these sections. This has been held by the Apex Court in the case of ACG Associated Capsules Pvt. Ltd. vs. CIT (343 ITR 89), which is as follows: "Under Clause (1) of Explanation (baa), ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to be deducted from the profits of the business as computed under the head "Profits and Gains of Business or Profession". The expression "in....