TMI Blog2012 (7) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... count and they do not fall within the expression "profits derived from industrial undertaking" under section 80-IB - profits and gains in question cannot be said to have been derived from the industrial undertaking and, hence, the assessee would not be eligible for relief under section 80IB of the Act - assessee’s appeal is dismissed. - ITA no. 927/Mum./2010 - - - Dated:- 25-5-2012 - SHRI J. SUDHAKAR REDDY, SHRI R.S. PADVEKAR, JJ. Revenue by : Mr. Pavan Ved Assessee by : Dr. P. Daniel O R D E R PER J. SUDHAKAR REDDY The present appeal preferred by the Revenue, is directed against impugned order dated 30th November 2009, passed by the Commissioner (Appeals) XXIV, Mumbai, for assessment years 2006-07. The sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has stated that these receipts related to sale of scrap, job work etc., which are eligible for deduction under section 80IB and therefore the deduction under section 80IB to the extent of Rs. 1,26,40,000 is allowable and the disallowance to this extent is deleted and the appellant gets relief of Rs. 1,26,40,000 for claiming deduction under section 80IB. The balance of Rs. 23,60,000 relating to trading activities is disallowed as not being eligible for section 80IB relief. 4. Aggrieved, the Revenue is in appeal before the Tribunal 5. Before us, the learned Departmental Representative, Mr. Pawan Ved, representing the Revenue, relied on Para-9.1 / Page-4, of the assessment order and submitted that the assessee has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He submitted that the Assessing Officer had not doubted that the assessee has carried on some other activity. Referring to the scheme of the Act, the income has to be assessed under one of the heads of income and in this case the income earned is assessed under the head Income From Business . The learned Counsel relied heavily on the order passed by the Commissioner (Appeals) and submitted that the assessee has income only from manufacturing activity and not from any other sources and that the receipt relating to sale of scrap job work, etc., are connected with industrial undertaking and, hence, the assessee is eligible for deduction under section 80IB of the Act. 7. Rival contentions heard. On a careful consideration of the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80-IA / 80-IB refers to profits derived from eligible business, it is not the ownership of that business which attracts the incentives : what attracts the incentives under section 80-IA / 80-IB is the generation of profits (operational profits). It is for this reason that Parliament has confined deduction of profits derived from eligible businesses mentioned in sub-sections (3) to (11A). Each of the businesses mentioned in sub-sections (3) to (11A) constitutes a stand-alone item in the matter of computation of profits. Sections 80-IB and 80-IA are a code by themselves as they contain both substantive as well as procedural provisions. Section 80-IB provides for the allowing of deduction in respect of profits and gains derived from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government or from section 75 of the Customs Act,1962. Incentive profits are not profits derived from eligible business under section 80-IB : they belong to the category of ancillary profits of such undertaking. Profits derived by way of incentives such as DEPB/Duty drawback cannot be credited against the cost of manufacture of goods debited in the profit and loss account and they do not fall within the expression "profits derived from industrial undertaking" under section 80-IB . Decisions of the Punjab and Haryana High Court in Liberty India v. CIT [2007] 293 ITR 520 and CIT v. Lakhwinder Singh [2009] 317 ITR 209 of the Delhi High Court in CIT v. Ritesh Industries Ltd. [2005] 274 ITR 324 and of the Madras High Court in Shakti Footwea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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