TMI Blog2009 (10) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for 100% deduction under Section 80IB of the Act. Accordingly, return of income for the assessment year 2006-2007 was filed at nil income. The assessee had declared sales of ₹ 9,12,066/- and credited the same in the profit and loss account. When asked to explain, the assessee submitted that the scrap is generated while making boxes by cutting corrugated sheets, but the Assessing Officer took the view that generation of scrap cannot be said to be derived from the manufacturing activity, and therefore, is not eligible for deduction under Section 80IB. The Ld. Commissioner of Income Tax(Appeals) allowed the claim by holding that scrap cannot be seen differently from the production of corrugated boxes as essential element in scra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance being technical in nature and assessee is entitled to deduction of such disallowance in next year on payment basis. This would lead to double benefit to the assessee. 4. We have heard Learned DR and learned AR of the assessee. In our considered view, the first issue is covered in favour of the assessee. By the decision of the Hon'ble Supreme Court in Indian Cine Agencies Vs. CIT (2009) 308 ITR 98 (SC) and also by following other decisions. 1. In [2005] 273 ITR (A.T.) 0001- Assistant Commissioner of income-tax vs. Maxcare Laboratories Ltd. Income-tax Appellate Tribunal-Cuttack held that the income from sale of empty drums/containers, sale of useless materials was out of the business of industrial undertaking of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In [2000] 241 ITR 0803- Fenner (India) Ltd. vs. Commissioner of Income-tax (No. 2) Madras High Court Held that in the industrial undertaking in the manufacture of V-Belts, oil seals, O-rings and rubber moulded products, certain scrap materials resulted which had a saleable value. The scrap materials had direct link or'nexus with the industrial undertaking. Therefore, profit from the sale of the scrap materials was eligible for deduction under section 80HH. 6. In Nirma Industries Ltd. vs. Assistant Commissioner of Income-tax, Central Circle 2(1) Nirma Industries Ltd. V/s. , ACIT , 95 ITD 199 (And.) (SB) it was held : ' .........Regarding Sale of Bardana and Sale of Waste material: 22. At the time of hearing before us, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer by invoking a provision falling in chapter (iv) under the Head computation of business income, particularly between section 28 to 43D, would be made under the Head income from business and Profession and not under the head Income from other sources , unless specifically so provided. Accordingly, though proposed by the Assessing Officer on the ground that TDS has not been paid to the account of the Central Government within time is in order, but assessee is entitled to deduction under Section 80IB thereon as it would be only a part of business profit. The argument of the Learned DR that assessee may claim benefit again on payment basis is premature and academic as there are enough legal recourses open to prevent su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
