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2016 (1) TMI 364 - ITAT CHENNAI

2016 (1) TMI 364 - ITAT CHENNAI - TMI - Eligibility for deduction U/s.80IB(4) on freight income not derived from the manufacturing activity - Held that:- The assessee would be eligible for deduction U/s. 80IB(4) of the Act for the income earned from the source of manufacturing activity. The assessee would not be eligible for deduction for any income earned which is attributable to the business of the assessee other than manufacturing activity. Therefore, the Ld. CIT (A) has rightly held that the .....

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f the Act to the assessee and not on the gross freight charges received. It is ordered accordingly. - Decided partly in favour of assessee for statistical purposes - ITA No. 57/Mds/2014 - Dated:- 20-11-2015 - N. R. S. Ganesan, JM And A. Mohan Alankamony, AM For the Appellant : Ms. Jharna B. Harilal, F.C.A For the Respondent : Dr. B Nichal, JCIT, D.R ORDER Per A. Mohan Alankamony, Accountant Member This appeal is filed by the Assessee, aggrieved by the order of the Learned Commissioner of Income .....

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f the Act. 3. The brief facts of the case are that the assessee is a company, engaged in the business of manufacturing, trading and servicing of automobile garage equipments, filed its return of income on 30.09.2010 admitting income of ₹ 3,15,47,240/-. Subsequently, the return was selected for scrutiny and the assessment u/s.143(3) of the Act was completed on 30.11.2012 wherein the ld. Assessing Officer disallowed the sum of ₹ 92,75,813/- by withdrawing the benefit u/s.80-IB(4) of th .....

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evenue ingredient of the manufacturing activity of the assessee. Hence it was argued that the same should be taken into consideration for the purpose of granting benefit U/s.80-IB(4) of the Act. The Ld. D.R on the other hand argued in support of the orders of the Revenue. 5. We have heard both the parties and carefully perused the materials available on record. Section-80-IB of the Act grants deduction to the assessee where the gross total income of the assessee includes any profits and gains de .....

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f the Act and the same is accepted by the assessee. However, while granting deduction the Ld. CIT (A) had disallowed the income of ₹ 27,66,294/- holding it to be on account of income derived from freight charges. While doing so, the Ld. CIT (A) had relied in the decision of the Apex Court in the case of M/s.Pandian Chemicals Ltd., reported in 262 ITR 278(SC). We are also reminded of the decision of the Apex court in the case of Cambay Electrical supply Co. Ltd., reported in 113 ITR 84 whic .....

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to the actual conduct of the business of industrial undertaking yet the same may not fall within the expression of "derived from" so as to be eligible for the benefit envisaged under the provisions of the Act. The Hon'ble apex Court in the case Sterling Foods reported in 237 ITR 53(SC) also opined that where the nexus between the income and the industrial undertaking was not direct but was only incidental, it would not fall within the expression "profit derived from industrial .....

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