TMI Blog2015 (2) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... lly. To answer the questions in both the appeals, we need to consider, firstly, as to whether the scrap, generated at various stages of manufacturing process, was part of manufacturing activity of the industrial unit and thus represented profits and gains derived from the industrial undertaking on this account were entitled to deduction under section 80-IB.- There cannot be any two opinions that manufacturing activity of the type of material being undertaken by the would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80IB iii) The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2.-firm, engaged in the business of Galvanizing of steel tape and CR strips, filed its return of income on 28.11.2004 declaring total income of ₹ 2.52 Lakhs. It made a claim of ₹ 78 Lakhs u/s.80IB of the Act.assessment was completed u/s.143(3) of the Act on 29.03.2006 determining the income of the at ₹ 2,52,191/- allowing the deduction u/s. 80IB. Subsequently, case was reopened u/s.147 of the Act.the AO issued a notice u/s 148 of the Act dated 02.01.2009. In response to the said notice filed a letter on 06.11.2009 stating that the original return of income should be treated as return filed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to the total income of the for the year under consideration. 3.In the appellate proceedings, before the First Appellate Authority (FAA),the contended that scrap was generated during the course of manufacturing that involved various process, that it generated different type of scraps e.g. lead end of raw-material, slitted portion of HR and CR coil, Melting scrap. It was also argued that scrap of zinc was generated in galvanizing process, that scrap material would arise out of same raw-material having same identity and use, that it was generated from the manufacturing process and had to be considered as product having lesser value, that it was not by product having different uses or identity, that the scrap was not the nomenclature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the AO to include the income earned out of the sale of scrap while computing the deduction u/s 80IB of the Act. 4.Before us, Departmental Representative(DR)supported the order of the AO. Authorised Representative(AR) submitted that scrap was generated out of the manufacturing activity of the and was directly linked with such activities. He relied upon the cases of Donear Industries Ltd. (ITA No. 6715/Mum/2010 dt. 06.09.13),Grauer and Meil India Ltd. (ITA No. 782/Mum/2010 dt. 30.09.10),M/s. Taurus India Ltd. (ITA No. 3815/Del/2009 dt. 05.11.09),T.T.G. Industries Ltd. (TC (A) No. 677 of 2005 dt. 25.04.12),Jakar A. Saiyed (42 taxmann.com 403),Modi Zerox Ltd (365 ITR 200)and Metalman Auto P. Ltd. (336 ITR 434) 5.We have heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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