2004 (8) TMI 68

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in giving deduction under section 80-I amounting to Rs. 1,50,733 received as compensation from insurance company against loss of raw material in fire? 2. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in deleting the addition made by the Assessing Officer being 1/6th of car maintenance and depreciation amounting to Rs 12,763 and Rs. 17,241, respectively?" During the relevant year, the assessee received an amount of Rs. 1,50,733 towards insurance claim on account of loss of raw material in fire. The assessee included the said amount in profits and claimed deductio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e, that the words 'derived from' in section 80HH of the Income-tax Act, 1961, must be understood as something which has direct or immediate nexus with the appellant's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with Electricity Board cannot be said to flow directly from the industrial undertaking itself." Similarly, in Sterling Foods [1999] 237 ITR 579 (SC), the question was whether income derived by the assessee by sale of import entitlements was profit and gain "derived from" its industrial undertaking of processing sea food.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s answered in favour of the Revenue. Following the aforesaid decisions and in particular, the decisions of the apex court in Pandian Chemicals [2003] 262 ITR 278 and Sterling Foods [1999] 237 ITR 579, we are clearly of the view that the amount of insurance claim received by the assessee cannot be held to be income derived from the industrial undertaking so as to qualify for deduction under section 80-I of the Act. We, however, make it clear that the amount of Rs. 1,50,733 is the amount received from the insurance company in respect of the claim of raw material destroyed in fire. However, while computing the profits of the industrial undertaking for the purposes of deduction under section 80-I, what has to be excluded is not the gross rec....