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2010 (11) TMI 421 - AT - Income TaxDeduction u/s 80IB - Penalty - Search and seizure - Interest earned on FDR - only those profits and gains of the business are eligible for deduction u/s 80-IB which have direct and proximate relationship with the manufacturing activities - As regards exclusion of interest on FDRs from the eligible profits for the purpose of deduction u/s 80-IB of the Act, the leading decision is that of the Hon’ble Supreme Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. [1997], 227 ITR 172 which holds that interest earned on deposits placed for the purposes of obtaining loans for business cannot be treated as business income but only as income from other sources - For the purpose of claiming deduction under s. 80-IB of the Act, the assessee is not only required to establish that it was business profit of the industrial undertaking, but also to establish that this was a profit ‘derived from’ the business activity of an industrial undertaking, which means a direct nexus between the profits and industrial undertaking Regarding insurance amount, sales tax refund, inspection charges, packing charges and scrap income - No speaking order - whether or not these receipts were derived from the actual conduct of the business of the industrial undertaking and whether any expenditure was also actually incurred by the assessee in earning these receipts - Appeal is allowed by way of remand
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