AI Drafter 
TaxTMI 
TaxTMI 
2010 (9) TMI 1207
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....der section 80IB of the Act by excluding following receipts from the profits derived by the eligible undertakings of the appellant company Particular of receipts Dadra undertaking (Rs). Barotiwala undertaking(Rs) Total (Rs) Plating and services charges 6,400/- 33,615 40,015 Scrap sales 11,90,405 4,40,822 16,31,227 Insurance claim 25,344 0/- 25,344 Interest from customers for delayed payments 10,06,470 13,95,882 24,02,352 Total 22,28,619 18,70,319 40,98,938 3. The assessee is having two units one at Dadra and another at Barotiwala. Both are eligible for deduction u/s 80IB. During the assessment proceeding, the AO noticed that the assessee has inc....
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....cturing, therefore the scrap is also a part and parcel of the industrial undertaking and eligible for deduction. As regards insurance claim is concerned, the ld. AR has submitted that though it is not recorded by any authorities as for what purposes the insurance claim was received by the assessee, however, as per the instructions received by him this insurance claim was received for damage of sock- in- trade. Therefore, the same is eligible for deduction u/s 80IB. He has relied upon the decision of the jurisdictional High Court in the case of CIT V/s M/s Pfizer Ltd In Income Tax Appeal (Lodg) No.128 of 2009 wherein the honorable High Court has held that the insurance claim on account of stock-in-trade does not constitutes independent incom....
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....218(SC) as well as the orders of the lower authorities. 9.. We have considered the rival contentions and relevant record. Since the plating and service charges were the income earned by the assessee for doing the job work and service charges by utilizing the plant and machinery and infrastructure of the undertaking itself, therefore, the same is part of the profit and gain derived from the business undertaking the same is illegible for deduction u/s 80IB. The provisions of section 80IB requires that the profits and gains should be derived from any business of the industrial and not from the undertaking. This Tribunal has been decided the issue in assessee's own case for the assessment years 2003-04 in ITA No.1353/MUM/2007 vide order date....
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....supra) have also considered this issue regarding the profit and gain derived from the business of the industrial undertaking after considering the decision of the Hon. Supreme Court in the case of Liberty India V/s CIT (supra). Accordingly, we are of the view that when the income was earned by the assessee by using the industrial undertaking or plant and machinery of the industrial undertaking the same is eligible for deduction. 11. As regards, the scrap sale is concerned this issue is also covered by the order of this Tribunal in assessee's own case (supra) as well for the assessment year 2005-06, wherein this issue was considered in paragraph 10 and 11 in ITA No.6121/Mum/2008. We further note that when the scrap has been generated duri....
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....s of the stock- in- trade. The indemnification that is made to the assessee must stand on the same footing as the income that would have been realized by the assessee on the sale of the stock in trade. In these circumstances, we are clearly of the view that the insurance claim on account of the stock in trade does not constitute an independent income or a receipt of a nature similar to brokerage, commission, interest rent or charges. Hence, such a receipt would not be subject to a deduction of ninety per cent under clause (1) of Explanation (baa). 11A Counsel appearing on behalf of the revenue submitted that the insurance claim has no element of export turnover and that consequently it must sustain a reduction of ninety percent und....
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.... the purposes of explanation (baa), the incomes which are susceptible to a reduction of ninety percent are those which are specifically prescribed by the legislature. These are inter alia the incomes referred to in clauses (iiia), (iiib) and (iiic) of section 28 and receipts by way of brokerage, commission, interest, rent charges or receipts of a similar nature included in such profits. Therefore, before a receipt is liable to be excluded to the extent of ninety percent, it must be a receipt of a nature similar to brokerage, commission interest, rent or charges. For the reasons which we have already indicated, we have come to the conclusion that the claim on account of insurance for the stock in trade did not constitute a receipt of a simil....