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2016 (3) TMI 270 - ITAT DELHI

2016 (3) TMI 270 - ITAT DELHI - TMI - Eligibility of deduction u/s 80IC on freezing charges - Held that:- AO is required to verify whether that the nature of such income is derived from the eligible undertaking or not. If the answer found to that question is yes then the deduction should have been allowed to the assessee on this income.

In our view this income forms part of the composite activity of processing of vegetables and certainly eligible for deduction u/s 80IC of the Act. Th .....

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rges earned by the assessee are part of the composite activity of processing of peas. The decision relied upon by the ld. DR of Hon‟ble Supreme Court in case of Liberty India Vs. CIT [2009 (8) TMI 63 - SUPREME COURT ] does not apply to the facts of this case as in that case held that the DEPB/ duty Drawback which has received from the Govt. of India to support the assessee are not income derived from the industrial undertaking. Here in this case freezing activity, which is carried out by t .....

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- Decided in favour of assessee - ITA No. 1163/Del/2013 - Dated:- 28-1-2016 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Appellant : Sh. P.Dam Kanunjna, Sr. DR For The Respondent : Sh.Ajay Wadhwa, Adv ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue directed against the order of the ld. CIT (A)-I, Dehradun dated 19.12.2012 for the Assessment Year 2009-10. 2. The revenue has raised the following grounds:- 1. Whether Ld. CIT .....

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ed liberally. 3. Whether Ld. CIT (A) has erred in law in adding the word 'preservation in point 4(e) of Part-C of Schedule XIV and accordingly allowing the benefit of deduction u/s 80-IC on rental income. 4. Whether Ld., CIT(A) has erred in law and on facts allowing the benefit of deduction u/s 80-IC on rent income ignoring the decision of the Hon'ble Apex Court in the case of Liberty India Vs. CIT, 183 Taxman 349(2009). 5. That the Ld. CIT (A) has erred in justifying the claim u/s 80-IC .....

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total income of ₹ 970/- after claiming the deduction u/s 80IC of the Act at ₹ 2831216/-. The relevant form No.10CCB etc. were filed before the AO supporting the deduction claimed by the assessee. It is admittedly the 3rd year of the claim of deduction u/s 80IC. The assessee is engaged in the business of processing the packaging of vegetables. This activity is listed in the fourteenth schedule of the Income Tax Act, 1961 and therefore the assessee has been granted deduction u/s 80IC o .....

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ount of storage chares and on which no incentives has been envisaged. 4. The assessee carried the matter before the learned Commissioner of Income tax (Appeals) who allowed the deduction on this income. According to him, the assessee is engaged in the business of processing, preserving and packaging of fruits and vegetables and meat products etc. which is integrated business of handling, storage and transportation of these materials. He held that this rent income is derived from the eligible ind .....

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ocess Ltd and the bills are in facts for freezing charges and not rent. He submitted that erroneously it is shown as rent in profit and loss account. For this, he showed us the bills raised by the assesse, which are for freezing charges. He submitted that merely because in the profit and loss account assessee disclosed it as rent, it could not be said that this income is not derived from industrial undertaking. He further submitted that during the year, it has processed the products of Mother Da .....

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ng of the products and second for the freezing of the same. He submitted that freezing charges are part of the integrated activity of processing. For this argument, he relied on several decisions that substance of the transaction must be seen. He further submitted that definition of the processing is wide and freezing activity is part of the processing of vegetables as defined in various dictionaries. He also submitted that statutory provision governing deductions are to be liberally construed. .....

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n. He submitted that in this case the income itself is from the undertaking and therefore has direct nexus with the undertaking. Therefore, he submitted that reliance of the revenue on this decision of the Hon‟ble Supreme Court is incorrect. 7. We have carefully considered the rival contention and perused the relevant material produced before us. The brief fact is that the assessee is claiming to be eligible for deduction u/s 80IC of the Act on its income derived from its Units set up at P .....

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count, which is the receipt in dispute for this deduction u/s 80IC of the Act. The assessee has earned this amount from Mother Dairy Food Process Ltd by nine bills, which are raised relevant to processing charges by the assessee. The bills showed that the amount of income involved in them is freezing Charges‟ and same are shown in profit and loss account as rent‟. Undisputedly the claim of the assessee is that processing of vegetables involves receipt of the material loading, unloadi .....

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ges as rent income in the profit and loss account for this year and in the last year too. This fact we could verify from the profit and loss account itself Wherein in the year ended 31.03.2008 also the assessee has credit an amount of ₹ 24,79,876/- as rental income which are of similar nature and indisputably deduction on this is granted by revenue in that year. This fact could not be controverted by the ld. Departmental Representative. For this year, AO considered this receipt as storage .....

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