TMI Blog2015 (10) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. In the light of these facts, we are of the view that the credit balance accrued on account of settlement of rates is certainly eligible for deduction under section 80IB of the Act and we, therefore, find no infirmity in the order of the ld. CIT(A). Accordingly we confirm his order on this issue. - Decided against revenue. Trade liabilities written off under section 41(1) - CIT(A) deleted addition - Held that:- We find that since it is a trade liability which was not required to pay in this year and it was offered as income and deduction was claimed thereon. The Revenue has not brought out anything on record to establish that these liabilities are not trade liabilities. Therefore, we find no merit in the Revenue’s appeal on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The order of the CIT(A), Kanpur being erroneous, unjust and bad in law be vacated and the order of the AO be restored. 2. Apropos grounds No.1 2, relate to the claim of deduction of credit balance appearing under the head Settlement Bargain under section 80IB of the Income-tax Act, 1961 (hereinafter called in short the Act ). 3. The facts in this regard borne out from the record are that the assessee-company is engaged in the manufacturing of Vegetable Ghee and trading in raw materials. It claimed deduction under section 80IB of the Act @ 30% of the income derived from industrial undertaking. As it has installed its factory at Raina, Kanpur Dehat, which is a backward district and included at Sl. No.61 in the list as notified by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, transaction-wise profit/loss accrued in each case along with copies of contract notes, debit/credit notes, invoices for perusal. It was further contended that the transaction pertain to purchase of raw material required by the assessee for manufacturing activity and were entered into by the assessee during the course of manufacturing business to guard against loss through future price fluctuation in respect of contract for actual delivery of goods manufactured by it. It was further stated that the profit/loss due to rate difference where actual delivery made was ₹ 41,55,945/- and the profit/loss due to rate difference where no delivery made was ₹ 1,32,467/-. Therefore, the net amount of Bargain Settlement was ₹ 40,23,47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected. b) Profit/Loss where due to some reasons part delivery of the goods was effected and part delivery due to physical shortage is settled through rate difference. (c) Profit/Loss where there is deliberate part delivery and/or no delivery effected and the account is settled through rate difference. The appellant has filed a statement showing therein the names addresses of the parties, details of the order placed, quantity received, transaction settled with part/no delivery of goods and transaction wise profit/loss accrued in a each case alongwith copies of contract notes, debit/credit notes and purchase invoices. All these transactions pertain to purchase of raw materials required for the manufacturing activities. Total transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on profits earned/accrued due to rate difference in case of actual delivery of goods. In my opinion, this is an income derived from industrial undertaking, therefore is eligible for deduction U/s. 80IB of the Act. 7. Aggrieved, the Revenue has preferred an appeal before the Tribunal and has placed heavy reliance upon the order of the Assessing Officer; whereas the ld. counsel for the assessee has emphatically argued that though this credit was shown under the head Bargain Settlement , but it actually pertains to purchase of raw material for its manufacturing process. The ld. counsel for the assessee has tried to explain the nature of the orders with the submission that the assessee had to import raw material for which it placed orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirm his order on this issue. 9. So far as ground No.3 is concerned, we find that a sum of ₹ 3,47,380/- lakhs was credited in the profit and loss account as liability no longer required. The assessee has claimed that this balance standing in the name of creditors no more required to pay, therefore, the same has been written off and it is directly connected with industrial activities, but it was not accepted by the Assessing Officer and he was of the view that this income is not derived from the industrial undertaking. 10. Before the ld. CIT(A), it was contended that these are trade liabilities which were written off under section 41(1) of the Act, therefore, it is eligible for deduction under section 80IB of the Act. These tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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