AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 1191
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.... for assessment year 2002-2003 and came to be admitted on the following question of law: "Whether the Appellate Tribunal is right in law and on facts in allowing the claim of deduction u/s. 80IA on the interest amounting to Rs. 86,66,390/- received on margin money?" 4. Tax Appeal No.2093 and 2094 of 2010 challenge the order dated 08/01/2010 passed by the ITAT in ITA No.2072/Ahd/2006 and in ITA No.2073/Ahd/2006 for the assessment year 2003-2004 and 2004-2005 respectively and came to be admitted on the following questions of law: "[A] Whether the Appellate Tribunal is right in law and on facts in allowing the claim of deduction u/s.80IA on the interest amounting to Rs. 86,66,390/- received on margin money? [B] Whether the Appellate Tribunal is right in law and on facts in setting aside the issue of netting of interest to the file of the Assessing Officer?" 5. The facts of the case are that the AO made certain additions viz., disallowance of claim of deduction under Section 80IA on interest amounting to Rs. 76,90,674/- received on margin money on the ground that the same is not derived from an industrial undertaking and is not eligible for deduction; disallowance of cla....
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.... are relevant for allowing assessee's claim of depreciation. If the Revenue had any doubt, with respect to existence of the machinery itself or its use, it was incumbent upon it either to bring sufficient evidence on record to prove that machines under reference was not available with the assessee and had not been used for assessee's business or to allow the assessee an opportunity to establish the existence of the machinery with it as well as user of the same was in assessee's business but in the present case, nothing is on record on this account." 9. Learned Senior Counsel for the assessee has invited the attention of this Court to the decision rendered in Tax Appeal No.371 of 2002 by this Court and contended that issue is now squarely covered and therefore the appeal of the department may be dismissed. He has pleased reliance on the following paragraphs: "6. We have heard learned advocates for both the sides and perused the papers on record. The issue involved in Tax Appeals Nos. 186 of 2003 and 371 of 2002, so far as question no. 1 is concerned is squarely covered by the decision of this Court in the case of Nirma Industries (supra) which reads as under: ....
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....rofits and gains of an amount equal to twenty per cent thereof. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:- (i) it has begun or begins to manufacture or produce articles after the 31st day of December, 1970 6 but before the 1st day of April, 1990 ], in any backward area; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence in any backward area: Provided that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the reestablishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose in any backward area; (iv) it employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. Explanation.- Where any machinery....
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....signed and verified by such accountant. 1 (6) Where any goods held for the purposes of the business of the industrial under- taking or the hotel are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the business of the industrial under- taking or the hotel and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the business of the industrial undertaking or the hotel does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of the industrial undertaking or the business of the hotel shall be computed as if the transfer, in either case, had been made at the market value of such goods as on that date: Provided that where, in the opinion of the Assessing] Officer, the computation of the profits and gains of the industrial undertaking or the business of the hotel in the manner hereinbefore specified presents exceptional difficulties, the Assessing] Officer may compute such profits and gains on such reasonable ba....
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....t equal to eight per cent. thereof, in computing the total income of the company." 7. In view of the above decision, we are of the opinion that the Tribunal has erred in reducing the other income received by the appellant as the entire income is incidental to manufacturing activities and therefore the deduction under section 80-I is required to be allowed on the gross total income before deduction of 80-HHA and income from others. Therefore, question no. 1 in Tax Appeals Nos. 186 of 2003 and 371 of 2002 is required to be answered in the affirmative i.e. in favour of the assessee and against the revenue. 8. So far as question no. 2 of Tax Appeal Nos. 186 of 2003 and 371 of 2002 is concerned, the institution with which the assessee was carrying on business is required to be borne in mind. The interest from Bajaj Institution has direct nexus with the business and therefore the interest is required to be considered as derived from business. Question no. 2 is therefore answered in the affirmative i.e. in favour of the assessee and against the revenue. 9. So far as the question raised in Tax Appeal No. 187 of 2003 is concerned, the issue is squarely covered by the decision of th....