TaxTMI 
TaxTMI 
2025 (8) TMI 142
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....f appeal: - "1. On facts and circumstances of the case and in law, whether the CIT (A) was justified in ignoring the fact that, the assessee' income earned due to excess provisions written back and late payment surcharges received on which it had claimed deduction under section 80IA of the Income Tax Act, 1961, had no direct nexus but only incidental or attributable to the assessee's eligible business activities of power generation and distribution that qualify for deduction under section 80IA of the Income Tax Act, 1961. 2. On facts and circumstances of the case and in law, whether the CIT (A) was correct in ignoring the Assessing Officer's (AO) remark made in the light of the Hon'ble Apex Court's deci....
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....he assessee on the debtors outstanding in its books as on 31.03.2020. 5. That, the appellant craves leave to add or amend any other more ground of appeal as stated above as and when needs for doing so may arise." 2.1 The sole substantial issue raised in this appeal is that whether the Ld. CIT(A) is justified in deleting the disallowance of deduction made under section 80IB of the Income Tax Act ('the Act') on the reasoning that the income derived from the excess provisions written back and late payment surcharges received having no direct nexus with the assessee's business activities of power generation and the issue of perversity of the impugned order in the finding of the Ld. CIT(A) wherein he, on one hand, has deleted the....
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....d the sole issue of disallowance of claim of deduction under section 80IA of the Act made by the Assessing Officer ('AO') on the income derived from the excess provisions written back and late payment surcharges on debtors on the reasoning that such income has not any direct nexus with the eligible business activities of the assessee. 4. Before us, the Ld. Senior Departmental Representative ('Sr. DR') submitted that the core issue in dispute; i.e. the disallowance of claim of deduction under section 80IA of the Act on the income derived from the excess provisions written back and the late payment surcharges on debtors had already been decided by the Tribunal in assessee's own cases for AYs 2008-09 to 2015-16 as mentioned in grounds of ap....
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.... in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years'. A perusal of the mandate of sub-section (1) manifestly divulges that the deduction is available at the rate of 100% of the profits and gains 'derived from' the eligible business. The expression 'derived from' has received the attention of the Hon'ble Apex Court in several cases. In Liberty India (supra), the question was as to whether DEPB/duty drawback is eligible for deduction u/s 80-IB. Repelling such contention raised on behalf of the assessee, the H....
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....equired for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with Electricity Board cannot be said to flow directly from the industrial undertaking itself. Where the words are unequivocal, there is no scope for importing any rule of interpretation as submitted by the appellant'. It is discernible from a survey of the above and several other decisions on the point that the expression 'derived from' is narrower in scope vis-à-vis the expression 'attributable to it.' An income to be 'derived from' a particular source, must have a direct and immediate nexus with such source. In other words, such income must directly emanate from the eli....
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....ality, the excess provision written back is not an income in itself, but, a reduced amount of eligible deduction in the computation of profits derived from eligible enterprise. We, therefore, approve the view taken by the ld. CIT(A) on this issue. II. Late payment charges: 9. The ld. CIT(A) has recorded that this receipt represented extra payment received by the assessee from its customers on account of late payment of their dues. The character of this receipt has not been disputed by the ld. DR. In essence, the late payment charges are nothing, but, part of sale consideration which cannot be viewed differently. Once deduction is available on sale consideration, there can be no reason to deny deduction on such late payment....