TMI Blog2009 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of goods damaged by fire and there being no element of profit involved therein, the same cannot be treated as any income separately earned by the assessee so as to exclude them for the purpose of computing deduction u/s 80IA – Held that - we accept the contention of the assessee and reject the contention of the Revenue – revenue appeal dismissed. - 1232/2008 - - - Dated:- 19-8-2009 - A.K. SIKRI and VALMIKI J. MEHTA, JJ. Mr. Sanjeev Sabharwal, Mr. Mohan Prasad Gupta, Mr. Arvind Kumar Verma, Advocates, for the appellant. Mr. Kaanan Kapoor, Advocate, for the respondent. JUDGMENT VALMIKI J. MEHTA, J. - The assessee company is an industrial undertaking within the meaning of the expression in Section 80-IA of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking......................." 4. The issue, therefore, which falls for consideration is, whether the insurance claim which has been received cannot be considered while making deductions in respect of the profits and gains from an industrial undertaking under Section 80-IA. The matter boils down to the meaning of the expression "derived from any business of an industrial undertaking" as appearing in Section 80-IA. 5. At the outset, while determining the meaning to be attributed to this expression, one must keep in mind that Section 80-IA is a part of fasciculus of provisions whereby benefits are granted to cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking within the meaning of an expression under Section 80-IB. 7. In fact, the Supreme Court way back in 1952 in the judgment reported as Raghuvanshi Mills Ltd. vs. Commissioner of Income Tax, (1952) 22 ITR 484 held that where the assessee had taken policy known as "consequential loss policy" against loss of profit and its mills were completely destroyed by fire the amount received under the policy was held to be inseparably connected with the conduct of the business and hence was held to be a Revenue receipt. Para 18 is relevant and is re-produced herein:- "18. The assessee is a business company. Its aim is to make profits and to insure against loss. In the ordinary way it does this by buying raw material, manufacturing goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion "derived from any business of an industrial undertaking". As held by the Supreme Court in the case of Raghuvanshi Mills Ltd. definitely a nexus to the business is there in case the goods of a business are destroyed and for which an insurance amount is claimed. 10. We also note with approval the following passage in the judgement of the ITAT which shows that the net effect of the profit and loss account is nil in the facts and circumstances of the present case: "Moreover, the said receipts on account of insurance claim, in our opinion, are in the nature of reimbursement of loss actually incurred by the assessee as a result of goods damaged by fire and there being no element of profit involved therein, the same cannot be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT vs. Sundaram Clayton Ltd. , 133 ITR 34 and CIT vs. Wheels India Ltd., 141 ITR 745. So far as the judgment of Pandian Chemicals holds that the profit amount received from the insurance company is not a revenue receipt, the same would be at divergence with the view of the Supreme Court in the case of Raghuvanshi Mills Ltd. (supra). We note that the Pandian Chemicals case does not refer to the decision of the Supreme Court in Raghuvanshi Mills Ltd. case which clearly holds that the amount received from an Insurance Company on account of loss of profit is very much a revenue receipt. So far as the Supreme Court decision in the case of Vania Silk Mills P. Ltd., the same cannot be applied to the facts of the present case inasmuc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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