2023 (1) TMI 376 - HC - Income Tax
Deduction u/s 80IC - deduction on foreign exchange gain - as argued Foreign Exchange Fluctuation Scheme was earned by the assessee on the import in the course of the business and purchase price of the product was reduced due to the rate fluctuations, as is settled, the same is to be held as having direct nexus with the business activity of the assessee undertaking and, thus, would be eligible for deduction under section 80IC - HELD THAT:- The issue is covered by the decision of this Court rendered in the case of ALPS Chemicals (P.) Ltd. [2014 (10) TMI 251 - GUJARAT HIGH COURT] as held that the exchange fluctuation was not on account of a delayed realization of export proceeds. The deposit of the receipts in the EEFC account and the exchange fluctuation which has arisen therefrom cannot be regarded as being part of the profits derived by the assessee from the export of goods or merchandise - Appeal is allowed in part to the extent Tribunal’s decision relates to Section 80IA.
Deduction on exports benefits u/s.80IC - AO disallowed the claim holding that the excess duty refund did not represent the income with first degree of nexus with the manufacturing profits - HELD THAT:- As in the case of Meghalaya Steels Ltd [2016 (3) TMI 375 - SUPREME COURT] has given a categorical finding that whenever the assessee received transport subsidy, interest subsidy, power subsidy, insurance subsidy which are reimbursement of manufacturing cost incurred by the assessee, the deduction of the said subsidies are allowed under sections 80IB and 80IC. Therefore, it held that CIT(A) was not wrong when it granted 80IC deduction to the assessee in respect of its export benefit representing refund of excise duty paid u/s 80IC - It held, therefore, that the assessee is eligible for deduction on export benefit on account of the refund of excise duty. There does not appear to be any error in understanding the ratio laid down by the Apex Court in the case of Meghalaya Steels Ltd (supra).
Both the CIT(Appeals) and the Tribunal have rightly followed the decisions of Dharam Pal Prem Chand [2008 (11) TMI 231 - DELHI HIGH COURT] as well as Meghalaya Steels Ltd (supra) which held that the subsidies, which had been received would be income from other sources.
Deduction on scrap value u/s.80IC - AO held that the scrap income does not represent income with first decree of nexus manufacturing profit - HELD THAT:- The decision of Harjivandas Juthabhai Zaveri and another [1999 (12) TMI 5 - GUJARAT HIGH COURT] when taken into consideration, it endorses the view of the assessee and has held against the Revenue If the assessee was not engaged in industrial activities, there was no question of empty barrels or bardans. Instead of manufacturing if the assessee was doing tranding activities, i.e., deal in in raw material, and if the assessee had sold the material on retain basis and earned amount by sale of bardans, then obviously this section will not apply. In view of what we have stated hereinabove, we find that there is no merit in the appeal, and the appeal stands dismissed.