AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 213
X X X X Extracts X X X X
X X X X Extracts X X X X
....tivities in an industrial undertaking with effect from November, 2013 relevant to assessment year 2014-15. Return of income was filed on 29.09.2015 reporting total income of Rs. 5,65,320/-. Case of the assessee was selected for scrutiny through CASS for which statutory notices were issued u/s 143(2) and 142(1), all of which were duly complied with. In the course of assessment, ld. AO vide notice u/s 142(1) dated 10.02.2017 required the assessee to furnishing, inter alia, copy of Form 10CCB and details of statutory liabilities along with proof of payments. Assessee made its written submission, complying with the said notice. While computing the assessed income, ld. AO allowed deduction u/s 80IE claimed by the assessee of Rs. 13,88,272/-. The assessment was completed u/s 143(3) of the Act at Rs. 7,33,280/-, that is at the returned income. 3.1. Subsequently, ld. PCIT, Guwahati-2 noted that income shown by the assessee from the eligible business includes income from other sources, amounting to Rs. 21,59,935/- which according to him does not qualify for the purpose of deduction u/s 80IE. Ld. PCIT noted that a deduction of Rs. 13,88,272 was allowed u/s 80IE towards VAT Remission which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ofits and gains derived from such business for ten consecutive assessment years commencing with the initial assessment year. (2) This section applies to any undertaking which has, during the period beginning on the 1st day of April, 2007 and ending before the 1st day of April, 2017, begun or begins, in any of the North-Eastern States,- (i) to manufacture or produce any eligible article or thing; (ii) to undertake substantial expansion to manufacture or produce any eligible article or thing; (iii) to carry on any eligible business. (3) This section applies to any undertaking which fulfils all the following conditions, namely :- (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the reestablishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B, in the circumstances and within the period specified in the said section; (ii) it is not formed by the transfer to a new business of machinery or plant prev....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 705(E), dated the 2nd September, 1999 and S.O. 698(E), dated the 17th June, 2003; and (d) goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), produced by petroleum oil or gas refineries; (v) "eligible business" means the business of,- (a) hotel (not below two star category); (b) adventure and leisure sports including ropeways; (c) providing medical and health services in the nature of nursing home with a minimum capacity of 25 beds; (d) running an old-age home; (e) operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and paramedical, civil aviation related training, fashion designing and industrial training; (f) running information technology related training centre; (g) manufacturing of information technology hardware; and (h) bio-technology.] 6.1. From the reading of the above section, it is noted in the context of present case that eligible assessee is entitled to claim deduction in respect of profits and gains derived by an undertaking in computing the total inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rresponding expenditure incurred under those heads and resultant profit would be the profits and gains of the business of the industrial undertaking eligible for deduction under section 80-IC of the Incometax Act. The Tribunal also took the view that all these subsidies were interlinked, interlaced and had a direct nexus with the manufacturing activities of the assessee which are inseparable from the related expenditure incurred by the assessee. So far as the, central excise duty refund and value added tax remission are concerned, the hon'ble Tribunal took the view that this has a direct nexus with the manufacturing business of the assessee and hence were eligible for deduction under section 80-IB/80-IC of the Income-tax Act. It was pointed out that the Revenue in most of the cases before the hon'ble Gauhati High Court vide its order dated September 16, 2010, passed in the case of CIT v. Meghalaya Steels Ltd. [2011] 332 ITR 91/201 Taxman 135 (Mag.)/12 taxmann.com 451 (Mag.) held that the transport subsidy did not have any direct nexus with the profits and gains derived by the assessee from its industrial activity but so far the central excise duly refund is concerned, it wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a particular business would have to be included under the head profits and gains of business or profession and not under the head income from other sources. The relevant extracts from the said judgment in para 28 is reproduced as under: "Para 28. Assistance by way of subsidies which are reimbursed on the incurring of costs relatable to a business, do not fall under the head "income from other sources", which is a residuary head of income that can be availed only if income does not fall under any of the other four heads of income. Section 28(iiib) specifically states that income from cash assistance, by whatever name called, received or receivable by any person against exports under any scheme of the Government of India, will be income chargeable to income tax under the head "profits and gains of business or profession". If cash assistance received or receivable against exports schemes are included as being income under the head "profits and gains of business or profession", it is obvious that subsidies which go to reimbursement of cost in the production of goods of a particular business would also have to be included under the head "profits and gains of business or profess....