TaxTMI 
TaxTMI 
2017 (5) TMI 1595
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.... (b) Interest on deposits and others Rs. 7,54,03,024/- (c) Compensation received on machinery breakdown Rs. 3,53,33,667/- (d) Expense provision written back Rs. 37,40,951/- (e) Recovery of rent Rs. 6,00,583/- (f) Miscellaneous Income Rs. 96,43,323/- (ii) Whether various types of incomes which though incidental but having direct nexus to the carrying on of the business of the undertaking, should not be considered as forming part of the profits & gains derived by such undertaking. (iii) Whether the words "profits and gains derived by an undertaking" has such a narrow meaning to excluse from the profits of an undertaking the incomes like compensation from machinery breakdown, interest, rent and miscellaneous incomes which are incidental to the main operational activities of the Undertaking." 3. Counsel for the appellant Mr. Jhanwar has taken us to the order of the CIT(A) wherein it has been observed as under:- It was further submitted by the appellant that out of the total receipts of Rs. 19,23,38,637/- disallowed by the Assessing officer, Rs. 5,73,61,237/- relates to the units other than the Gadepan I project G....
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....onsideration the aforesaid pointed out that issue No.1(a) is squarely covered by the decision of the Supreme Court in ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income Tax, (2012) 343 ITR 89 (SC) wherein it has been held as under: "12.If we now apply Explanation (baa) as interpreted by us in this judgment to the facts of the case before us, if the rent or interest is a receipt chargeable as profits and gains of business and chargeable to tax under Section 28 of the Act, and if any quantum of the rent or interest of the assessee is allowable as an expense in accordance with Sections 30 to 44D of the Act and is not to be included in the profits of the business of the assessee as computed under the head "Profits and Gains of Business or Profession", ninety per cent of such quantum of the receipt of rent or interest will not be deducted under clause (1) of Explanation (baa) to Section 80HHC. In other words, ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included in the profits of business of the assessee as computed under the head "Profits and Gains of Business or Profession", is to be deducted under cla....
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....ome from cashew business and hence in terms of Explanation (baa), ninety per cent of the gross total income arising from processing charges had to be deducted under Explanation (baa) to arrive at the profits of the business. In this case, this Court held that the processing charges received by the assessee were part of the business turnover and accordingly the income arising therefrom should have been included in the profits and gains of business of the assessee and ninety per cent of this income also would have to be deducted under Explanation (baa) under Section 80HHC of the Act. In this case, this Court was not deciding the issue whether ninety per cent deduction is to be made from the gross or net income of any of the receipts mentioned in clause (1) of the Explanation (baa)." 6. Regarding issue No.1(b), interest on deposits and so on, he relied on decision in CIT Vs. Advance Detergents Ltd. (2010) 228 CTR (Del) 356 wherein while considering the provisions of 80IA, the Delhi High Court considered the issue and held in favour of the assessee against the revenue. He has specifically relied upon the following observations which reads as under: "7. As pointed out above,....
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.... of Sections 80-IA and 80-IB it becomes clear that any industrial undertaking, which becomes eligible on satisfying Sub-section (2), would be entitled to deduction under Sub-section (1) only to the extent of profits derived from such industrial undertaking after specified date(s). Hence, apart from eligibility, Sub-section (1) purports to restrict the quantum of deduction to a specified percentage of profits. This is the importance of the words 'derived from industrial undertaking' as against 'profits attributable to industrial undertaking'. 6.1 He contended that the view taken by the Delhi High Court is required to be accepted in favour of assessee. 6.2. In support of contention regarding expenses returned back he relied on decision of Punjab & Haryana High Court in CIT vs. Metalman Auto (P.) Ltd. (2011) 336 ITR 434 wherein it has been held as under: 6. The Assessee admittedly did the job work qualifying as eligible business under Section 80-IB. On the said issue, view taken by the Tribunal earlier was upheld by this Court vide judgment dt. 5th Dec, 2008 in case of IT Appeal No. 543 of 2008 (CIT v. Impel Forge & Allied Industries Ltd.). The view take....
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....e account. This is not an income derived. The issue is decided in favour of Department and against the assessee. 6.6 For issue No. 1(e) recovery of rent of Rs. 6 lacs, he has relied upon decisions reported in Commissioner of Income Tax vs. Indo Swiss Jewels Ltd. and Anr. (2006) 205 CTR (Bom) 158 wherein it has been held as under: 6. Though the Assessing Officer did not accept the explanation of the assessee, the appellate authority in the facts of the case and in the light of the material placed by the assessee on record, was satisfied that the funds were kept by the assessee in the various companies for short-terms for payment for imported machinery. In this connection the appellate authority held that the balance-sheet for the next year also showed that all these deposits were withdrawn and paid for the machinery. The appellate authority was satisfied with the explanation put forth by the assessee. The Tribunal did not find any error in the approach of the appellate authority. That the machinery was in fact imported by the assessee is not in question. From the facts and circumstances of the present case it is clear that the inter-corporate deposits were made by the as....
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....to the following observations: 5. At the outset, while determining the meaning to be attributed to this expression, one must keep in mind that Section 80-IA is a part of fascicules of provisions whereby benefits are granted to certain industrial undertakings, businesses etc. including those which are located in certain special locations/areas. The object is generation of new investment and employment with respect to particular industries in certain areas and in certain locations besides generation of revenue for the government and industries from whom plant etc. will be purchased by the new industrial undertaking. The object of the provision is further made clear from Subsection (2) of Section 80-IA whereby such businesses are not considered for taking advantage of the deduction under Section 80-IA if either it is formed from splitting up of an existing business or by use of machinery or plant previously used and so on. The object is clearly to give fillip to the economy and to investment. This object will have to be kept in view while interpreting the provisions of Section 80-IA. 9. At this stage, it may be stated that the fact that there was a fire in the unit o....