TaxTMI 
TaxTMI 
2023 (12) TMI 1088
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....u/s. 80IB of the Act amounting to Rs. 4,88,493/- being the compensation received by the assessee from the insurance company. 3. The brief facts are that the assessee company engaged in the manufacturing of garments which are sold through franchisees in various locations all over India. The assessee had filed its return of income dated 30.10.2001, declaring total income at Rs. 3,2560,300/- and the same was processed u/s. 143(1) of the Act. The assessee's case was selected for scrutiny and the assessment order u/s. 143(3) of the Act was passed by the ld. Assessing Officer ('A.O.' for short) dated 27.02.2004, determining the total income at Rs. 3,77,10,303/- after making a disallowance u/s. 80IB of the Act amounting to Rs. 6,56,151/- ....
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....r to this, the ld. AR submitted that the assessee manufactures garments which are sold by its franchisees where the unsold garments lying with the franchisees remains with that of the assessee and when shortage of stocks were discovered, the same are debited to the franchisees account to the extent of the cost of the goods where the claims and compensation are credited in the assessee's account during the year under consideration amounting to Rs. 8,76,817/-. The ld. AR conteded that these are compensation for lost goods which have to be credited to the material consumed by the assessee rather than crediting the same in the P & L account. The ld. AR placed reliance on the decision of the Hon'ble Gujarat High Court in the case of CIT(4) vs. S....
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.... (SC) and M/s. Srinivasa Cystine Ltd. (in ITA No. ITA No.800/Hyd/2011 vide order dated 28.06.2012) cannot be considered as the facts of the present case are distinguishable from these. 14. Per contra, the ld. AR has placed reliance on the decision of Hon'ble Gujarat High Court in the case of Shree Rama Multi Tech Ltd. (supra), wherein it has been held that the compensation received by the industrial undertaking from insurance company on account of loss of raw material and finished goods would be eligible for deduction u/s. 80IA of the Act. The relevant extract of the said decision is cited hereunder for ease of reference: 6. Section 80-IA of the Act, as is well known, provides for deduction in respect of profit and gains from industrial ....
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.... interpreting the provisions of section 80-IA. 6. We find that for a similar provision of section 80-IB, two decisions have been rendered by two Division Benches of this court in the judgments reported as CIT v. Eliek SGS (P) Lid. [2008] 300 ITR 6 (Delhi), and CIT v. Dharam Pal Prem Chand Lid. [2009] 317 ITR 353 (Delhi): (2009] 221 CTR (Del) 133. In the Eltek SGS (P) Lid. case [2008] 300 ITR 6 (Delhi) duty drawback was held to be profits/gains derived from an industrial undertaking and hence eligible for deductions under section 80-IB. In the case of CIT v. Dharam Pal Prem Chand Ltd. [2009] 317 ITR 353 (Delhi) refund of excise duty was held to be profits and gains derived from an industrial undertaking within the meaning of an expression ....