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2017 (2) TMI 858 - ITAT BANGALOREDeduction allowable to the assessee u/s. 80IA(4)(iv)(c) - Held that:- Interest income is independent income and it is not reimbursement of manufacturing or selling expenses and hence, it cannot be said to be income derived from an industrial undertaking. Similarly profit on sale of stores also is an independent income and it also cannot be accepted as reimbursement of manufacturing or selling expenses and as a consequence, it is also not an income derived from an industrial undertaking. Misc. receipts from trading also is an independent income and it also cannot be accepted as reimbursement of manufacturing or selling expenses and as a consequence, it is also not an income derived from an industrial undertaking. Rental income also is an independent income and it also cannot be accepted as reimbursement of manufacturing or selling expenses in the absence of this fact that assessee was paying rent of staff quarters which was debited to Profit & Loss account and as such recovery of rental income from staff quarters is going to reduce the expenses of the assessee incurred on rent. As a consequence, it is also not an income derived from an industrial undertaking. Commission for collection of electric duty also is an independent income and it also cannot be accepted as reimbursement of manufacturing or selling expenses and as a consequence, it is also not an income derived from an industrial undertaking. Apart from the miscellaneous recovery we are left with two items i.e., sale of scrap and excess found on physical verification of material stock. Regarding these two items, we are satisfied that this will go to reduce the cost incurred by the assessee and debited to Profit & Loss account and to this extent, these receipts should be reduced from the cost and therefore, these two items should not be reduced from the profit shown by the assessee in the Profit & Loss account for the purpose of computing deduction allowed to the assessee u/s. 80IA(4)(iv)(c). We hold accordingly. Miscellaneous recovery - Held that:- The items included herein are penalty recovered from suppliers/contractor of ₹ 431.07 lakhs, unclaimed balance o/s of ₹ 264.25 lakhs and difference between the WDV and books value of released asset of ₹ 96.77 lakhs. These 3 items are neither any income derived from an industrial undertaking nor a realization to reduce the cost of manufacturing/cost of sale of assessee and therefore, these 3 items are rightly reduced from the profit of the assessee for the purpose of computing deduction allowable u/s. 80IA(4)(iv)(c). Regarding the balance items such as dept. exam fees, sale of dept. books and sale of forms, sale of scrap/stock excess found, meter reading testing charges and BBC theft ca collected etc., in our considered opinion, these receipts reduce the cost of assessee which are debited to Profit & Loss account and therefore, these items should not be reduced from the profit of assessee as per Profit & Loss account for the purpose of computing deduction allowable to the assessee u/s. 80IA(4)(iv)(c). Misc. recovery from employees - Regarding this item, nothing has been shown that these are on account of recovery of certain expenses incurred by the assessee and debited to Profit & Loss account and therefore, regarding reduction of this item from the profit of the assessee, we find no infirmity in the order of ld. CIT (Appeals). Sale of scrap reduced from the profit of the assessee for the purpose of computing deduction allowable to the assessee u/s. 80IA(4)(iv)(c) but the other receipts were rightly reduced from the profit of the assessee because these other receipts are neither income derived from industrial undertaking nor a receipt in the nature of reimbursement of expenses incurred by the assessee for manufacturing and selling of goods. The assessee gets relief to the extent of ₹ 40,22,860/- which should not be reduced from profit of the assessee for computing deduction allowable to the assessee u/s. 80IA(4)(iv)(c).
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