TMI Blog2011 (4) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to Financial year 2003-04. In this regard, the learned AR relied on the decision of Pune Bench of the Tribunal in ITA No. 92/PN/2008 and submitted that depreciation and losses of earlier years were already absorbed against the other business income of A.Y. 2002-03 and 2003-04 and accordingly, there was no question of again notionally carrying forward and setting off the said depreciation and losses against the income for A.Y. 2004-05. The assessee s claim is supported by the decision of the Madras High Court in the case of Velayudhaswamy spinning Mills (P) Ltd. Vs. Asstt. CIT (231 CTR 368) and of the decision of the B Bench of ITAT Chennai in the case of Mohan Breweries and Distilleries Ltd. Vs. ACIT (114 TTJ 532). The assessee also takes support of the unreported decision of the Madras High Court in Tax case (Appeal) No. 715 of 201 in the case of CIT Vs. M/s. Emerald Jewel Industry P. Ltd. It was also submitted that Pune Bench of the Tribunal has taken a similar view in ITA No. 92/PN/2008. 2.1 We also find that in the case of Velayudhaswamy Spinning Mills (P) Ltd., Vs ACIT (2010) 231 CTR (Mad) 368 Hon ble Madras High Court has held that losses and depreciation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for carrying on the business of the assessee, viz., the production of the Sunday Magazine. The use of the machine was therefore an exclusive use for the purpose of the business of the assessee. The making available to its sister concern of the tape obtained from the use of this machine was a subsequent event which might amount to a gratuitous act on the part of the assessee but would not render the user non-exclusive so far as the assessee was concerned for the purpose of its business. The benefit of depreciation and investment allowance could not, as proposed by the Revenue, be reduced by half, since having regard to the nature of the user of the machine, depreciation was inevitable and the replacement of the machine at a later point of time would be necessary. The investment having been made by the assessee, investment allowance was properly claimable by the assessee and by none else. The expenditure incurred by the assessee by way of interest on loans obtained for funding the purchase of that machine was an expenditure which the assessee was required to meet and which expenditure it was entitled to claim as a deduction. 12. Since the Hon ble High Court has held that the mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 by invoking provisions of section 263. The stand of the assessee is that in A.Y. 2004-05 and 2005-06, AO has adopted a possible view in allowing the deduction u/s 80-IA. This view of AO is in line with the decision of B Bench of the Chennai Tribunal in the case of Mohan Breweries and Distilleries Ltd. v. ACIT (114 TTJ 532). In this regard, it was submitted that the AO has adopted a possible view, so the CIT was not justified in invoking the provisions of sec. 263 in both these years. On the other hand, the ld DR supported the order of the CIT with regard to revision of the order of AO by invoking the provisions of sec. 263. After going through the material on record, we are not inclined to concur with the view taken by the CIT while revising the order of the AO by invoking the provisions of sec. 263, because the AO has adopted a possible view available at the relevant point of time. Similar view has been taken by the B Bench of the Chennai Tribunal in the case of Mohan Breweries and Distilleries Ld. Vs ACIT (114 TTJ 532), and we have also taken a similar view on merit in A.Y 2006-07, vide paragraph 2 of this order. In view of above, we are of the opinion that CIT was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of scrap it-self is due to business activity of the appellant. Thus income earned on account of sale of scrap has direct link / nexus with the industrial undertaking and therefore, entitled for deduction u/s 80IB. 3.2 In this connection the reliance is placed on Hon. ITAT Mumbai G Bench s decision in the case of Asia Investments Ltd., Vs. D.C.I.T (90 TTJ 65). In this case issue involved was deduction u/s 80HH in respect of receipts from sale of scrap. Following the decision of Hon. Madras High Court in the case of Fenner (India) Ltd. Vs. CIT (241 ITR 803) the Hon. ITAT held that profit from sale of the scrap material was eligible for deduction u/s. 80HH. 6. On the basis of the above facts we have examined few precedents namely Fenner (India) Ltd., 241 ITR 803, Wheels (I) Ltd. 141 ITR 745. The observation of the courts were that a deduction can be claimed only in respect of profits derived from an industrial undertaking. An industrial undertaking itself must be the source of that profit. Observation has also been made that it is wrong to say that the scrap has no direct nexus with industrial undertaking manufacturing such products. In the other case, Wheels (I) Ltd. (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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