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2015 (2) TMI 1198 - AT - Income TaxEligibility of deduction u/s 80-IB - whether scrap generation was part of manufacturing activities of the industrial undertaking run by the assessee - Held that:- For claiming deduction u/s 80-IB direct nexus between the activities of the industrial undertaking and profits/gains is not a pre-condition. Therefore, income generated out of the sale of scrap is part of activities carried out by the -firm and is eligible for deduction u/s 80IB. We find that Hon'ble Delhi High Court in the case of Sadhu Forging Ltd.(2011 (6) TMI 9 - DELHI HIGH COURT ) has held as under: “With the consent of the counsel for the parties, we have heard the matter finally. To answer the questions in both the appeals, we need to consider, firstly, as to whether the scrap, generated at various stages of manufacturing process, was part of manufacturing activity of the industrial unit and thus represented profits and gains derived from the industrial undertaking on this account were entitled to deduction under section 80-IB.- There cannot be any two opinions that manufacturing activity of the type of material being undertaken by the would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB.” - Decided in favour of assessee
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