TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 638
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....ers ought to have appreciated that all the receipts for which deduction u/s 801B of Income Tax Act was claimed are based on the activities of the appellant firm and that the industrial undertaking though leased out, carried out manufacturing activity, which is sufficient compliance of law for the purpose of 80IB of the Income Tax Act. 5. The learned Commissioner (Appeals) erred in concluding that other income amounting to Rs. 99,097/- does not qualify for deduction u/s 801B. It is incidental to business. 6. The learned Commissioner (Appeals) erred in sustaining the addition of Rs. 10,08,618/- in respect of alleged bogus purchases having been made by the appellant out of undisclosed sources. The findings of the Commissioner of Income Tax (Appeals) is bad in law. However, the Ld. AR did not press grounds relating to denial of deduction of job work charges and sale of scrap and hence, they are dismissed as not pressed. 2.1 The only argument of the Ld. AR was with regard to denial of deduction u/s. 80IB of the Act on subsidies. The assessee claimed deduction u/s. 80IB on receipt of subsidies but the same was rejected by the Assessing Officer and the CIT(A). 3. Against this, the ....
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.... invoices produced by the assessee and actual entries shown in the books of account of the assessee. Being so, we are of the opinion that it is appropriate to opportunity to the assessee to reconcile the same before the Assessing Officer. Hence, this issue is remitted to the file of the Assessing Officer with a direction to the Assessing Officer to give opportunity to the assessee to reconcile the same and decide thereof. Hence, the appeal of the assessee in ITA No. 325/Coch/2017 is partly allowed for statistical purposes. 11. The grounds raised in assessee's appeal in ITA No. 326/Coch/2017 are as follows: 1. The learned officers ought o have held that income by way of subsidies, lease rent, job work charges and sale of scrap amounts to profit of business for the purpose of deduction u/s. 80IB of the Act. 2. The learned officers failed to note that the above receipts are directly connected to the manufacturing activity of the assessee and therefore, qualified for deduction u/s. 80IB of the Act. 3. The learned officers ought to have appreciated that all the receipts for which deduction u/s. 80IB was claimed are based on the activities of the appellant firm and that the indust....
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....e. The Ld. AR also relied on the judgment of the Supreme Court in the case of CIT vs. Vikram Cotton Mills Ltd. (169 ITR 597) wherein it was held that when an assessee leases out its assets and the intention of the assessee is not to discontinue the business but to lease out its assets for a temporary period as part of exploitation, lease rent received from letting out the assets is assessable as income from business and not as income from other sources. Therefore, the assessee would be eligible for deduction u/s. 80IB of the Act and the profit derived from the factory either by lease or otherwise would be attributable to the priority industry. The assessee must have something to do with the factory and the income earned must have nexus with the priority industry. If these attributes are satisfied, then the assessee would be eligible for deduction u/s. 80IB of the Act. Therefore, the rental income would have to be taken as eligible for relief u/s. 80IB of the Act. 16. On the other hand, the Ld. DR submitted that the relevant part of Section 80-IB of the Act reads as follows; "(1) Where the gross total income of an assessee includes any profits and gains derived front any business .....
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....for the purposes of the claim under Section 80HH of the Act. Therefore, certain incomes falling within the parameters of being incidental to business can fall within the scope of the business of the assessee, and yet it cannot be said to have been derived from the eligible industrial undertaking of the assessee, so as to be eligible for deduction under Section 8O-IB of the Act. 17. We have heard the rival contentions and perused the record. The main contention of the Ld. AR is that the industrial undertaking was closed down and let out to other assesses and consequently, earned lease rent from the industrial undertaking. According to the Ld. AR, the lease rent was earned from the eligible industrial undertaking and hence, deduction u/s. 80IB is to be granted. Thus, the controversy before us is centred around the interpretation of the word "derived from" used by the legislature u/s. 80IB of the Act. The Hon'ble Supreme Court in the case of Cambay Electrical Supply Co. Ltd. 113 ITR 84 (SC) held that the expression 'derived from' is much narrower than the expression "attributable to". According to the Court, whenever legislature intended to give narrower meaning, it has u....
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....another Company to manufacture certain component parts, which were automobile accessories. The products so manufactured by the other company were made available to the assessee. The assessee's claim that the rent received by it from the lease of the machinery was to be treated as profits attributable to the priority industry and hence, would qualify for deduction u/s. 80I of the I.T. Act, 1961, was accepted by the ITO. The Addl. Commissioner, however, held that the assessee was not entitled to the relief and revised the order by the ITO. The Tribunal, in the appeal by the assessee, restored the order of the ITO. In the present case, the assessee leased out the entire industrial undertaking to another company for the business of manufacturing and production. There were no payments made to the lessee by the present assessee (lessor) for making available those components used as accessories for manufacturing or production of its products. However, in the case of CIT vs. Universal Radiators (P) Ltd. cited supra, the products manufactured by the lessee was made available to the lessor (assessee) so as to enable manufacture or production of its products. Being so, the ratio laid down by ....