2016 (11) TMI 116 - AT - Income Tax

MAT applicability - Held that:- Section 115JB is applicable to the assessee company and therefore, the ground of the assessee is required to be dismissed and we accordingly dismiss this ground in respect of all the appeals. See Amin Merchant Versus Chairman, Central Board of Excise & Revenue & Others [2016 (7) TMI 1063 - SUPREME COURT]

Deduction U/s 80-IC - sale of scrap - Held that:- Both the provisions apply and operates in different fields. Whereas in Section 80HHC revolves around, the issue of export benefit on the turnover whereas in the case of 80-IC the benefit is to be calculated on the profit and loss of an undertaking qualifying as per Section 80-IC(2) of the Act. The treatment of the scrap for the purposes of manufacturing activity is required to be appreciated in the context that the sale of scrap which will goes to reduce the input cost of the undertaking and thereby decline the profit margin of the undertaking whereas in the case of 80HHC if the sale scrap is made a part of the turnover the export benefit of the undertaking will increase and therefore to different effects are therefore for treating the sale being part of the turnover and also treating the receipt of sale scrap being part and parcel of the activity being proximate to the activities of the industrial undertaking while computing the deduction u/s 80-IC of the Act. For the reasons stated above, we uphold the order passed by the ld CIT(A) and dismiss the appeals of the revenue on this ground. We hold that the sale of scrap being part and parcel of the activities of the undertaking and the gains derived from the said activity is arising out of core activity of the assessee and therefore, is required to be taken into consideration for the purposes of computation the deduction under the provisions.

Interest on sale invoices - Held that:- The assessee has claimed that the interest charged on account of delayed payment from the purchaser in respect of the manufactured goods sold to them, is required to be allowed as deduction u/s 80-IC of the Act. However, the assessee itself is engaged in manufacturing activities and trading of goods, therefore, the assessee has itself offered amount for taxation. The assessee has not filed bifurcation of the interest received under the manufacturing and trading activities, considering the complicity, the ld Assessing Officer has allowed 50% of interest received are in respect of trading item and 50% of the interest received/in respect of manufacturing item. Thus, the ld Assessing Officer has allowed the deduction of 50% of ₹ 67,114/- in respect of assessment year 2008-09.

Deduction u/s 80-IC - Held that:- The contention of the ld AR of the assessee that the credit balance of ₹ 48,875/- is required to be reduced from deduction u/s 80-IC of the Act, in our view, is required to be set aside to the file of the Assessing Officer, as the assessee has failed to prove the nexus between the amount of the credit balance of ₹ 48,875/- for the A.Y. 2010-11 and ₹ 70,670/- for A.Y. 2011-12 with that of the manufacturing activities. The assessee is directed to produce all the evidences before the Assessing Officer. In this regard, the Assessing Officer is directed to examine the same and after examination, the Assessing Officer, if found that the creditors were associated with the manufacturing activities of the assessee, then he shall reduce the credit balance from the deduction u/s 80-IC of the Act. Hence, this ground of appeals is allowed for statistical purposes only.