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2013 (7) TMI 927

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....e Assessing Officer. The appeal was admitted on the following questions of law:- "1. Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that insurance claim was not in the nature of 'other receipts' and 90% of such receipts could not be reduced from 'profit of business' under clause (baa) of Explanation below Section 80 HHC  (4C) of I.T. Act? 2. Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was correct in holding that the sales tax and CST were not includible in total turnover for computing deduction u/s 80 HCC of I.T. Act, when the sales tax and CST were realized as a part of sale proceeds of the goods manufactured by the respondent? 3.....

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....s)-I, Ludhiana by holding as follows:- "(b) Insurance Claim Rs. 142422/- Insurance claim is not an income or receipt as income but it is reimbursement of the expenditure/loss by Insurance Company suffered by the concern on the repair of machines, vehicles, stocks etc. insured as part of the business activities to avoid losses on account of machinery and vehicle breakdown and fire losses. Therefore, the learned DCIT was absolutely unjustified in reducing the 90% of the insurance claims received ignoring the corresponding expenditure on the repair of machinery and vehicles against which the said claims were received. The total expenditure on vehicle maintenance was Rs. 355846/-. Machinery Repair and maintenance was Rs. 1268805/- and on gener....

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....re to be excluded to the extent of 90% under Explanation (baa) whereas in our case, the Insurance Claim has a direct nexus with the business carried on and therefore, this case is in favour of the assessee." The revenue thereafter filed an appeal before the Income Tax Appellate Tribunal, which was dismissed by holding as follows:- "The next issue pertains to claim of insurance, exchange fluctuation and sundry creditors written back which are the receipts falling in the category of any other receipts or charges. The major argument of the learned CIT DR is that these are not directly derived from the export activities. On the other hand, Mr. Aggarwal supported orders of the first appellate authority. The learned CIT DR further contended tha....

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....for the revenue submits that insurance claim received by the assessee would necessarily enure to his benefit and would, therefore, have to be included within the expression "any other receipt", used in explanation (baa) of Section 80 HHC of the 1961 Act. It is further submitted that by use of the words "any other receipt of a similar nature", the explanation seeks to clarify that receipt of any other income would necessarily be reduced from profit exigible for deduction. Counsel for the assessee, on the other hand, submits that the words "receipt of similar nature included in such profits", cannot possibly include an insurance claim, as such a claim would not fall within the definition of "business income" and therefore, 90% of the same ca....