2016 (12) TMI 1764 - AT - Income Tax

Disallowance of deduction u/s 80IC on the manufacturing activity undertaken by it - Held that:- No change in the fact situation has been brought to our notice by the revenue we are an agreement with the order of the CIT( appeal) in this regard, and uphold the assessee’s claim to deduction under section 80 IC on the manufacturing activity carried out by it in this year also. This ground of appeal raised by the revenue is therefore dismissed.

Deduction u/s 80IC on income from job work more so when the activity been carried out by the assessee was nothing but packaging - Held that:- As decided in 2005-2006, 2007-2008, 2008-2009 and 2011-2012 allowed the claim of deduction under section 80IC of the Act on job work charges. Further deduction u/s 80IC was also allowed on insurance claim received and scrap sale, holding the same to be directly attributable to the activities of the business unit. Appeal filed by the revenue allowed the claim of deduction under section 80IC of the Act both on manufacturing, job work charges, insurance claim and scrap sale.

Deduction u/s 80IC on other income such as scrap sale, insurance claim, foreign exchange fluctuation and credit balance when these incomes were not derived in true sense from the business of the eligible undertaking - Held that:- The assessee’s claim having been allowed from year to year there is no merit in the present ground raised by the revenue vis a vis claim of deduction under section 80IC on scrap sales and insurance claim received by the assessee - the amount received on scrap sale, the credit balance written off of parties, insurance claim received towards material damage during transit is directly attributable to the activities of the industrial unit and hence eligible for deduction under section 80IC of the Act. However, the assessee is not entitled to the deduction claimed under section 80IC of the Act on the misc. income received being refund of security deposit and the insurance claim on machinery repairs. In view thereof we direct the Assessing Officer to recompute the deduction allowable under section 80IC of the Act.

Deduction under section 80 IC on foreign exchange fluctuation received - Held that:- It is not disputed that the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuation earned by the assessee is to be treated as its trading receipts/receipts from the manufacturing activity carried out by it and thereby entitling the assessee to claim deduction under section 80IC on the same. In view of the above we find no infirmity in the order of the CIT(A)allowing the assessee’s claim of deduction under section 80IC on the foreign exchange fluctuation received. In view of the above we hold that the assessee is entitled to claim deduction under section 80IC on scrap sales, insurance claim, credit balances written back and foreign exchange fluctuations earned.