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2010 (9) TMI 320 - HC - Income TaxDeduction u/s 80 IB - Freight Subsidy, transport subsidy and refund of excise duty - Held that: - The expression "derived from" occurring In Section 80IB of the Act in relation to the business of an Industrial undertaking is narrower In connotation than the expression "attributable to" the business of an Industrial activity. This was so held long back in Cambay Electric Supply Industrial Co. v. CIT (1978 -TMI - 5174 - SUPREME Court). Therefore, while "attributable to" as used In some other sections of the Act, may cover sources of income beyond the first degree, "derived from" as used in Section 80IB of the Act Is not intended to cover sources beyond the first degree it is keeping this distinction in mind that it must be held that transport subsidy and Interest subsidy cannot be said to be "derived from" the industrial undertaking of the assessee. At best, It can only be ancillary to the profits and gains relatable to or "attributable to" the business of the industrial undertaking and not in the category of profit and gains ''derived from" its industrial activity. The payment of central excise duty has a direct nexus with the manufacturing activity and similarly, the refund of the central excise duty also has a direct nexus with the manufacturing activity. The issue of payment of central excise duty would not arise in the absence of any industrial activity. There is, therefore, an inextricable link between the manufacturing activity, the payment of central excise duty and its refund. - Refund of excise duty is allowed as deduction u/s 80IB.
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