2016 (2) TMI 294

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....ged in the manufacturing and trading of ayurvedic medicines and herbal products. During the assessment proceedings, the Assessing Officer asked the assessee to justify this claim of deduction under section 80IC of the Income Tax Act, 1961 (in short 'the Act'). The assessee replied that registration charges are received by the assessee from new customer as and when they are appointed. Since this amount is towards the product kit, which is nothing but a normal sale and part of the normal business sales. Therefore, deduction under section 80IC of the Act is allowable on the sale. Regarding other heads, interest received, miscellaneous income and scrap sale, it was contended that all these are consequential to business. Therefore, deduction....

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....n fee to the extent of cost of products, the kit containing but did not allow it the benefit of interest received on miscellaneous income and scrap sales. 4. Aggrieved by this order, the Department has come in appeal against the action of the learned CIT (Appeals) in allowing deduction under section 80IC of the Act on registration fee, while the assessee has filed Cross Objection against the action of the learned CIT (Appeals) in disallowing the deduction under section 80IC of the Act on interest received, miscellaneous income and scrap sales. 5. The learned D.R. relying on the order of the Assessing Officer, submitted that the registration charges received by the assessee cannot be held to be related to the normal business of the ass....

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.... of 'registration fee', it is noted that the company charges Rs. 1,450/- per kit from new appointees as advisors. The kit contains products worth Rs. 1,258/- and literature etc., worth Rs. 192/-. So, the 'registration fee' has product components which are manufacture by the company and sold in the kit to the new appointees as advisors. Similar to the availability of claim of deduction of 80IC on income generated through products sold by the company, the deduction u/s 80IC is also available on the products sold through the kit. Therefore, out of the total amount credited under head 'registration charges', an amount of Rs. 51,70,380/- being on account of products is found to be eligible for deduction u/s 80IC of the Ac....

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....nd miscellaneous income. With regard to sale of scrap, reliance was placed on an order of the I.T.A.T., Chandigarh Bench in the case of M/s Ansysco Vs. Addl.CIT in ITA No.895/Chd/2012 dated 15.9.2014, in which case, it has been held that sale of scrap is eligible for deduction under section 80IC of the Act, relying on an earlier order in the case of M/s Ansysco only, in assessment year 2008-09. 11. The learned D.R. in reply submitted that the Department has gone in appeal before the Hon'ble Punjab & Haryana High Court on the issue of deduction under section 80IC of the Act on sale of scrap in the case of ACIT Vs. Ansysco Sunrise Complex for assessment year 2008-09. Copies of the documents evidencing filing of appeal were placed on re....