AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 125
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....12.2007. 2. The first common issue in this appeal of revenue and the cross objection of assessee is as regards to the order of CIT(A) in allowing the deduction u/s. 80IC of the Act in respect to insurance claim of Rs. 9.52 lacs and receipts from sale of salvages from fire of Rs. 3,25,988/- and disallowing the claim of deduction u/s. 80IC of the Act on transport subsidy of Rs. 95,55,289/- and interest subsidy of Rs. 37,715/- on the issue of, whether these incomes are derived from Industrial Undertaking or not. For this, revenue has raised following ground no. 1 and assessee has raised following ground no. 1: Revenue's ground: "1. That on the facts and in the circumstances in the case, the Ld. CIT(A) has erred in law in a....
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.... exemption, transport and other subsidies to those new industrial undertakings, where those commencing their commercial production on or after 24th December, 1997 for a period of 10 years. That on the basis of the N. E. Industrial policy, 1997 assessee is registered and incorporated on 10.04.2001 under the Companies Act, 1956 in the State of Meghalaya. That the assessee set up manufacturing units for manufacturing Ferro Silicon and commenced its commercial production on 05.04.2003 as per the assurance given by the Ministry of Industries, Govt. of India and Govt. of Meghalaya duly issued Single Window Agency clearance bearing No. M/Dind/Genl.70/99/130 Dt. 21.03.2001. That the assessee is eligible under the N.E. Industrial Policy 1997 declare....
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....ve considered assessee's submissions. It is seen that the insurance premia have been deducted by the assessee arrived at the profit of the Industrial Undertaking consistently and department has also accepted this treatment in the past. This would mean that the expenses towards insurance premia are relatable to the industrial unit. Therefore, it is only logical that any insurance claim received by the assessee is also treated as income relatable to the industrial unit. Therefore, in my view, the compensation received from the insurance should be treated as income derived from the industrial undertaking and deduction u/s. 80IC should be allowed in respect of the same. 6.7. I have considered the submissions of the A/R. There is no dis....
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....en reached on the interpretation of the schemes of subsidies. The assessee was entitled to claim deduction either under section 80-IB or under section 80-1C on the transport subsidy, interest subsidy, power subsidy and insurance subsidy because: (a) the subsidy on transportation of raw materials as well as finished goods, was promised to be made available to the industrial units concerned in a manner which would directly affect the cost of production inasmuch as the transportation subsidy, on the raw materials, was not meant to cover all the raw materials but only that part or portion of the raw materials, which was actually required and used by an industrial unit in its manufacturing programme approved by the Government concerned ....
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....rom, or derived by, the industrial undertakings concerned entitling the assessees to claim deduction under section 80-IB or section 80-IC, as the case may be. (c) The scheme of the interest subsidy clearly showed that it reduced the interest payable on working capital advanced to an industrial undertaking by a scheduled bank or Central/State financial institutions. The interest subsidy aimed at reducing the interest payable on working capital by an industrial undertaking helped directly in reducing the cost of manufacturing or production activities and establish thereby direct and the first degree nexus between the industrial activities of the assessee, on the one hand, and the interest subsidy on the other, received by the assesse....