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2019 (3) TMI 638 - AT - Income TaxDeduction u/s 80IB on receipt of subsidies - HELD THAT:- We are of the view that a similar issue was considered by the Supreme Court in the case of Meghalaya Steels Ltd. [2016 (3) TMI 375 - SUPREME COURT] wherein it was held that when income from cash assistance received against export schemes are included as income under the head profits and gains of business or profession, it is obvious that subsidies which go to reimbursement of cost in the production of goods of a particular business would also have to be included under the head profits and gains of business or profession and not under the head income from other sources. Therefore, the assessee is entitled to deduction u/s. 80IB. Bogus purchases - addition u/s 69C - differentials between the amounts being expenses debited in the books of accounts and the amounts substantively supported by invoices, which amounts relate to the transactions carried out with its sister concerns being unexplained - HELD THAT:- The lower authorities had not given an opportunity to the assessee to reconcile the difference between the actual purchases made as per the invoices produced by the assessee and actual entries shown in the books of account of the assessee. Being so, we are of the opinion that it is appropriate to opportunity to the assessee to reconcile the same before the AO. Hence, this issue is remitted to the file of the AO with a direction to the AO to give opportunity to the assessee to reconcile the same and decide thereof. Denial of deduction of lease rent u/s. 80IB - whether receipt of lease of commercial asset is business income or income from other sources? - HELD THAT:- Deduction u/s. 80IB is available only in respect of such profits and gains which have direct proximity and nexus with the activities of manufacturing or production of an article or thing. Profits and gains attributable to the business of the industrial undertaking would not be entitled for deduction u/s. 80IB. The profits and gains accrue to the assessee only in the course of business of manufacturing or production of an article or thing. Viewed from this angle, the lease rent earned by the assessee by letting out the industrial undertaking to other parties cannot be equated with the profits and gains derived from the industrial undertaking. Lease rent received by the assessee by letting out the industrial undertaking is not having any direct connection with the manufacture or production of an article or thing by the assessee and the same cannot be considered as business income eligible for deduction u/s. 80IB of the Act. This ground of appeal of the assessee is dismissed.
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