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2016 (10) TMI 396 - HC - Income TaxEntitlement to deduction under Section 80IC on Transport subsidy received - whether subsidies goes to reduce the expenditure actually incurred and hence they ought to be regarded as operational profits? - Held that:- It is not the case of Revenue that in the present case, the referred transport subsidy has no bearing on the cost of production of the industrial undertaking of the respondent assessee. In this view of the matter and for the law declared by the Hon’ble Supreme Court in Commissioner of Income Tax v. Meghalaya Steels Limited [2016 (3) TMI 375 - SUPREME COURT] the decision by the Assessing Officer as approved by the Appellate Commissioner to the effect that the transport subsidy cannot be said to be derived from industrial undertaking and would not fall in the category of profits and gains derived from industrial activities could only be disapproved. In view of above, the answers to the basic questions involved in the matter are required to be in the affirmative. We may observe that in question No.(i) as formulated, only Section 80-IC has been mentioned, probably with reference to the question as formulated in the memo of appeal, whereas essentially the claim had been with reference to Section 80-IB (4) of the Act of 1961. With this clarification, answers to the questions involved in this matter are in the affirmative, that is to say that the Tribunal was legally justified in regarding the transport subsidy as part of operational profits; and was justified in holding the assessee entitled to deduction under Section 80-IB of the Act of 1961 on the transport subsidy.
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