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The DCIT, Solan Versus Bio Veda Action Research Pvt Ltd And Vica-Versa

2016 (2) TMI 294 - ITAT CHANDIGARH

Entitlement to deduction under section 80IC - CIT (Appeals) deleted the disallowance - that:- No infirmity in the finding given by the learned CIT (Appeals) as the kit for which registration fee is received by the assessee contains the products of the assessee in which the assessee deals together with the literature explaining the use of the product. By no stretch of imagination, this kit can be said to be not related to the business of the assessee. Since deduction under section 80IC of the Act .....

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L. Karwa, VP And Rano Jain, AM For the Appellant : Shri Tej Mohan Singh For the Respondent : Shri Sushil Kumar, DR ORDER Per Rano Jain, AM The appeal filed by the Revenue is directed against the order of learned Commissioner of Income Tax (Appeals), Shimla dated 6.2.2014 for assessment year 2007-08. The assessee has filed Cross Objections against the same. ITA No. 528 /Chd /2014 2. Briefly, the facts of the case are that the assessee company is engaged in the manufacturing and trading of ayurved .....

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IC of the Act is allowable on the sale. Regarding other heads, interest received, miscellaneous income and scrap sale, it was contended that all these are consequential to business. Therefore, deduction under section 801C of the Act is to be allowed on the same. The Assessing Officer rejecting al these contentions of the assessee disallowed deduction under section 801C of the Acton registration charges amounting to ₹ 59,59,500/-, interest received at ₹ 91,544/-, miscellaneous income .....

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d from the manufacturing activities and as such, eligible for deduction under section 80IC of the Act. Regarding scrap sales, it was submitted that it is part and parcel of the activity of the industrial undertaking and eligible to claim of deduction under section 80IC of the Act. Reliance was placed on the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Sadhu Forging Ltd., 336 ITR 444 (Del). Regarding interest and miscellaneous income, it was submitted that these also qualify fo .....

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ing deduction under section 80IC of the Act on registration fee, while the assessee has filed Cross Objection against the action of the learned CIT (Appeals) in disallowing the deduction under section 80IC of the Act on interest received, miscellaneous income and scrap sales. 5. The learned D.R. relying on the order of the Assessing Officer, submitted that the registration charges received by the assessee cannot be held to be related to the normal business of the assessee. Therefore, deduction u .....

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77; 1258/- on account of goods sold and ₹ 192/- on account of literature, application form, etc. Thus registration charges received is the income derived from the manufacturing activities and as such, the income shown under this head also qualifies for deduction under section 80IC of the Act. It was submitted that the learned CIT (Appeals) has considered the portion of ₹ 192/- as not eligible for deduction, the balance amount being sale of products is definitely entitle to deduction .....

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ee', it is noted that the company charges ₹ 1,450/- per kit from new appointees as advisors. The kit contains products worth ₹ 1,258/- and literature etc., worth ₹ 192/-. So, the 'registration fee' has product components which are manufacture by the company and sold in the kit to the new appointees as advisors. Similar to the availability of claim of deduction of 80IC on income generated through products sold by the company, the deduction u/s 80IC is also available .....

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strial undertaking as discussed in preceding para." 8. From the perusal of the above paragraph, we do not find any infirmity in the finding given by the learned CIT (Appeals) as the kit for which registration fee is received by the assessee contains the products of the assessee in which the assessee deals together with the literature explaining the use of the product. By no stretch of imagination, this kit can be said to be not related to the business of the assessee. Since deduction under .....

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of deduction on interest income, miscellaneous income and sale of scrap. However, at the time of hearing, the learned counsel for the assessee did not make any submission with regard to deduction under section 80IC of the Act on interest and miscellaneous income. With regard to sale of scrap, reliance was placed on an order of the I.T.A.T., Chandigarh Bench in the case of M/s Ansysco Vs. Addl.CIT in ITA No.895/Chd/2012 dated 15.9.2014, in which case, it has been held that sale of scrap is eligi .....

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