TaxTMI 
TaxTMI 
2007 (10) TMI 298
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....as filed an appeal under section 260A of the Income-tax Act, 1961 ("the Act"). 2. The assessee has urged that the following questions of law arise for consideration by this court. "(a) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the order of the Assessing Officer in reducing the profit earned on sale of spare parts arid imported gensets from the income of the eligible undertaking(s) for the purpose of computing deductions under section 80HH and 80-I of the Act? (b) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the profit from the sale of spare parts and imported gensets could not be regarded as income derived from the elig....
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....e appeal filed by the assessee, the Commissioner of Income-tax (Appeals) ("CIT(A)"), by an order dated April 22, 1999, held that the profits arising from the sale of spare parts was integral to the manufacturing activity and, therefore, the deduction in respect of such profits under sections 80HH and 80-I of the Act was admissible. The Commissioner of Income-tax (Appeals), however, upheld the order of the Assessing Officer disallowing the deduction under sections 80HH and 80-I of the Act in respect of profits derived from the sale of imported gensets. 6. Aggrieved by the order of the Commissioner of Income-tax (Appeals), both the Revenue and the assessee filed appeals. The assessee contended before the Tribunal that deduction under secti....
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....tivity of import of gensets was integral to the business activity of the assessee. He sought to draw a distinction between the expression "profits and gains derived from an industrial undertaking" in section 80HH(1) of the Act and the conditions subject to which an undertaking could be considered to be an industrial undertaking for the purpose of section 80HH(2) of the Act. His submission was that an industrial undertaking which satisfies the requirement of section 80HH(2) could derive its profits from activities not confined to those mentioned in section 80HH(2) and, therefore, a broad meaning had to be given to the expression used in section 80HH(1) of the Act. He submits that it is possible, as in the assessee's case, for an industrial u....
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....n qualify for deduction under section 80HH of the Act. Inasmuch as both sections 80HH and 80-I use the expression "profits and gains derived from an industrial undertaking", the burden is on the assessee to show the income earned from an activity, the profits from which are claimed to qualify for deduction, has an immediate and direct nexus to the essential activity of the industrial undertaking. 10.We are in agreement with the approach adopted by the Tribunal in the instant case, which is to examine the claim in the background of the purpose of providing deductions from business profits under section 80HH which was to encourage industrial activity in India. It is inconceivable that the deductions should be made available in respect of p....