2015 (6) TMI 1227

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....has on wrong interpretation of Sec. 153 A has erred in confirming the additions made by AO which are not based on any material found in the search or concealed income. That the addition not being sustainable in law be deleted." 2. Ld. Counsel for the assessee has not pressed this ground of the appeal of the assessee which is accordingly dismissed. 3. Identical ground of appeal No. 2 of the assessee for both the years reads as under:- 2. "That the CIT(A) has erred in confirming the disallowance u/s 80IB in respect of scrap sales calculated at Rs. 1231865, for the assessment year 2006-07 and Rs. 1840749/- for the assessment year 2007-08 contrary to provisions of law. That it may be held that sale of scrap generated in ....

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....T-III vs. Sadhu Forging Ltd. (supra) was distinguishable on facts and in that case the assessee was in the business of forging resulting in generation of scrap to a large extent and in the case of the assesee the scrap could not be said to be a by product of the process. She submitted that the CIT(A) has rightly distinguished the decision of Hon'ble Jurisdictional High Court in the case of CIT-III vs. Sadhu Forgings Ltd. (supra) and observed that in that case the items manufactured was iron/steel forging whereas in the case of assessee the item manufactured is DG sets and the scrap is generated while cutting, resizing and fabricating the base frame, control panel and stand, fuel tank, silencer etc. The CIT (A) has held that the two cases th....

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....material being undertaken by the assessee would also generate scrap in the process of manufacturing, receipts of sale of scrap being part and parcel of activity and being proximate thereto would also be within ambit of gains derived from industrial undertaking for purpose of computing deduction u/s 80IB of the Act. We find that the assessee is in the business of manufacturing/assembling of DG sets and it would necessarily result in the generation of scrap in the process undertaken by it for the purpose of making the DG sets. The manufacturing process would generate scrap and the sale thereof being part and parcel of activity and being proximate thereto would also be within the ambit of gains eligible for deduction u/s 80IB of the Act. The D....