TMI Blog2014 (10) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... be excluded for the purpose of deduction u/s 80HHC of the Act - when the profit is being excluded from the claim of deduction, not the gross profit but the net thereof, that is the gross profit minus the expenditure incurred for earning such profit should be excluded the benefit of deduction u/s 80I of the Act on various incomes, such as, job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste is to be granted Decided against revenue. Soda ash project interest expenses and lab project interest disallowed Held that:- Tribunal rightly came to the conclusion that there was interconnection, inter-lacing and inter-dependence of the management, financial and administrative control of various units of Nirma Limited - the business is continuation of the existing business and not a new business - the assessee through its existing administrative mechanism started a new facility for production of soda ash and had also set up facility for production of a material called lab for its captive consumption for the purpose of its existing manufacturing business - the assessee is engaged in the business of manufacture of soap and the soda ash and lab so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nirma Ltd. Harjivandas which have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded? 4. Whether the Appellate Tribunal is right in law and on facts restoring the issue back to AO to decide for granting benefits of netting to the Assessee and further directing the AO to allow expenses after verifying nexus with various income such as insurance claim of ₹ 72,902/-, Truck hire charges of ₹ 1,40,000/- and other sales of ₹ 63,08,141/- for the purpose of deduction under Section 80I, 80IA and 80HH of the Act for Trikampura Division of the assessee as not derived from and industrial undertaking and further directing that net income should be excluded from the business profit for the purpose of allowing deductions under section 80I, 80IA 80HH of the Act for netting purpose without considering the facts that such expenses were incurred from the business income only and not for earning incomes and hence liable to be excluded? 5. Whether the Appellate Tribunal is right in law and on facts restoring the issue back to AO to decide for granting benefits of ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Truck hire charges of ₹ 90,950/- for the purpose of of deduction under Section 80I, 80IA 80HH of the Act for Kanpur Division of the assessee as not derived from and industrial undertaking and further directing that net income should be excluded from the business profit for the purpose of allowing deductions under section 80I, 80IA 80HH of the Act for netting purpose without considering the facts that such expenses were incurred from the business income only and not for earning incomes and hence liable to be excluded? 9. Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT(A) deleting the disallowances of interest from debtors of ₹ 2,38,97,496/- and ₹ 75,68,786/- made by AO on account of interest from debtors and other sales with respect to profit of Indore Division for the purpose of calculation of deduction under Sections 80I, 80IA 80HH of the IT Act while relying upon its own decisions in the cases of Nirma Ltd. Harjivandas which have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded? 10. Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, while following its decision in the case of Nirma Industries Ltd., which has not reached to finality. Insofar as question Nos.1, 4, 8, 10 and 11 are concerned, they have a common element, namely, whenever certain income is to be excluded for the purpose of deduction under section 80-I, 80-IA and 80HH, etc. gross income is to be excluded or only the net thereof is the question. In a separate order passed by us today in Tax Appeal No.810 of 2013, we have rejected the Revenue s appeal making following observations: The question is when certain income of the assessee is excluded from the claim of deduction under section 80I or 80HH of the Act, should the gross income be excluded or should it be only net, that is, total receipt minus the expenditure incurred by the assessee for earning such income which should be so excluded. Such a question in the context of deduction under section 80HHC came up for consideration before the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd v. CIT, 343 ITR 89 (SC). The Supreme Court held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay also be likewise admitted. He drew our attention to the order dated 6.5.2013 passed by this Court in the case of Bloom Decor Ltd. in Tax Appeal No.447 of 2013 where at the instance of the assessee, similar question was not considered. On the other hand, learned counsel Shri Soparkar for the assessee, in addition to relying on the decision in the case of ACT Associated Capsules Pvt. Ltd. (supra), also placed heavy reliance on an order dated 30.11.2013 in Tax Appeal No.213 of 2006 in the case of Rajoo Engineers Ltd. in which the Revenue s appeal raising such a question came to be dismissed relying on the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). The counsel also relied on a decision of the Delhi High Court in the case of Essel Shyam Communication Ltd. v. Commissioner of Income tax, (2012) 28 taxmann.com 243 (Delhi), in which in detailed consideration, relying on the decision of the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra), exclusion was approved for deduction under section 80-IA of the Act. Having heard the learned counsel for the parties, we see no reason to entertain this tax appeal. The Supreme Court in the case of AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t upheld the assessee s claim for deduction under section 80I of the Act on the interest received on late payment of sale consideration as amount derived from eligible business. These questions are, therefore, not required to be considered. Coming to question No.14, we notice that the issue pertains to the assessee s claim for deduction under section 35AB of the Act. The Tribunal has in the impugned judgment remanded the matter back to the Assessing Officer for full verification of such claim. It is clarified that the issues are kept open and shall be examined by the Assessing Officer, afresh. The sole surviving question No.13, pertains to disallowance of soda ash project interest expenses of ₹ 3.33 crores (rounded off) and lab project interest of ₹ 12..27 crores (rounded off). The Assessing Officer, questioned the assessee on these expenses and deleted the same on two grounds, firstly that the interest was paid by way pre-operative expenditure and secondly the assessee had capitalized such expenditure. The assessee carried the matter in appeal. CIT (Appeals) relying on a decision of this Court in the case of CIT v. Alembic Glass Industries Ltd., 103 ITR 715 (G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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