Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2008 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (11) TMI 278 - AT - Income TaxAccrual of income - treatment of retention money - deduction under s. 80-IA of the Act on the profits of turnover of trading goods. Accrual of income - treatment of retention money - Method of Accounting - installation and commissioning activity - assessee did not make any claim for exclusion of retention money while computing the total income but Subsequently filed a revised calculation - HELD THAT:- The revenue from sale of UPS is to be recognized at the time of delivery of the same to the customer and revenue from installation and service charges is to be recognized at the time of rendering of such services. However, if the assessee is recognizing such revenue prior to that stage i.e., at the time of receiving amount after pre-despatch inspection consistently then, the same can be followed by the assessee. But, the assessee cannot postpone recognition of the same beyond the stages mentioned by us in the preceding lines. In this regard, it is also noted that there is no dispute in regard to these aspects before us, hence, it can safely be concluded that except for amount represented by performance bank guarantee, the assessee is accounting for revenue from such transactions at the appropriate stages and if such stage has not been achieved during the year, then, the same has been shown as advance. Having stated so, we have already taken into consideration factual, accounting, commercial and legal aspects in detail hereinbefore and, accordingly, we hold that there is no merit in the claim of the assessee not to recognize the amount represented by the performance bank guarantee as revenue of the year of sales - this ground of the assessee in all the years under consideration is dismissed. Eligibility of the assessee' s claim for deduction under s. 80-IA of the Act on the profits of turnover of trading goods - whether the profit of trading activities can be considered as eligible for deduction under s. 80-IA of the Act or not? - HELD THAT:- The assessee has placed heavy reliance on the wordings used in sub-s. (1) of s. 80-IA of the Act. In our opinion, the words "any business of" have been used therein as a prefix not only to "undertaking" but these are also with reference to subsequent business(s) such as hotel or operation of ship or developing, maintaining and operating any infrastructure facility etc., mentioned therein, hence, these words have been used to show the nature of business of activities which could be eligible for deduction under s. 80-IA of the Act and, therefore, these words do not enlarge the scope of the deduction - Similarly, as per s. 80-IA(2)(iii) and/or (iv), an industrial undertaking should be engaged in the manufacturing or produce articles or things or to operate its cold storage plant or plants or in the generation and distribution of power that means the words "any business of an industrial undertaking" used in sub-s. (1) has to be read in conjunction with the activities of such undertaking as defined in sub-s. (2) and profits and gains of only those activities could be considered as profits and gains derived of any business of an industrial undertaking, hence, the trading activities carried on by the assessee cannot be considered as eligible for deduction under s. 80-IA of the Act - it is further found that as per the provisions of sub-s. (5) of s. 80-IA of the Act as it stood at the relevant point of time and sub-s. (1) of s. 80-IA brought on statute subsequently and sub-ss. (3) to 11B of s. 80-IB of the Act refer to the profits and gains derived from such industrial undertaking or other specified businesses are only eligible for computing the quantum of deduction which could be allowed to the assessee and if these provisions are read together with sub-s. (1) of respective sections then, it becomes amply clear that the deduction is eligible only on profits and gains derived from such businesses and not from any other activities which may be attributable or incidental to manufacturing activity or which may be carried on simultaneously by the industrial undertaking - the assessee is not entitled for deduction under s. 80-IA of the Act on the profits of trading activities for all the years under consideration. All the appeals of the assessee stand dismissed.
|