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2015 (5) TMI 474 - AT - Income TaxDeduction under Section 80IC - CIT(A) restricted the deduction holding that profit on sale of undertaking & interest income from FDR is not income derived by an undertaking from any business and as such not eligible for deduction under section 80IC - Held that:- The assessee company itself has submitted revised computation of its income before the AO twice, firstly on 27.11.2009 and secondly on 07.12.2009, wherein the short term capital gain on sale of assets and income from FDR interest was reduced from the claim of deduction u/s 80IC. At this juncture, we respectfully take guidance from the decision of Liberty India Ltd. (2009 (8) TMI 63 - SUPREME COURT ) wherein held that the connotation of the words “derived from” is narrower as compared to words “attributable to”. Also that by using the expression “derived from”, the Parliament intended to cover sources not beyond the first degree business activities. From the facts emerged before us, it is vivid that the assessee company sold its business assets and received sale consideration of land and building of ₹ 5,75,00,000/-. The assessee company also earned interest from FDRs by deploying said amount of consideration with the bank in short term fixed deposit account. Therefore, we are inclined to hold that such profits and gains from sale of assets and interest cannot be held as income derived from the activities of the industrial undertaking eligible for deduction u/s 80IC and the word “derived from” covers the source of income not beyond the first degree activities of the business. Disallowance to claim of deduction u/s 80IC of the Act on the income from sale of business assets and income from interest on short term fixed deposits with the banks confirmed. - Decided against assessee. Computation of short term capital gain - addition has been made rejecting the explanation of the assessee that the sale was a slump sale - Held that:- We are included to accept conclusion of the authorities below that sale of assets by the assessee company was not a slump sale in the light of definition given by the statute to the slump sale in section 2(42C) of the Act as the assessee company raised separate bills for each and every asset stating therein value of sale separately assigned to every asset, therefore, the sale of assets by the assessee company cannot be held as slump sale. - Decided against assessee. Prior period expenses disallowed - Held that:- Since the assessee itself admitted before the CIT (A) that the impugned expenditure was incurred towards setting up of a new unit and therefore, the same were rightly treated by the AO as capital expenditure. We further observe that the assessee could not substantiated its claim that the assessee incurred said expenditure, which was incurred from December 2006 to March 2007, was actually made as revenue expenditure against the income earned during the year consideration. Thus, we are of the considered view that when the assessee itself admitted that the expenditure in question was incurred towards setting up of a new unit then the same cannot be allowed as expenditure towards the business which was closed and assets were sold on 16.11.2006. - Decided against assessee.
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