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TMI Blog2010 (9) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... following receipts from the profits derived by the eligible undertakings of the appellant company Particular of receipts Dadra undertaking (Rs). Barotiwala undertaking(Rs) Total (Rs) Plating and services charges 6,400/- 33,615 40,015 Scrap sales 11,90,405 4,40,822 16,31,227 Insurance claim 25,344 0/- 25,344 Interest from customers for delayed payments 10,06,470 13,95,882 24,02,352 Total 22,28,619 18,70,319 40,98,938 3. The assessee is having two units one at Dadra and another at Barotiwala. Both are eligible for deduction u/s 80IB. During the assessment proceeding, the AO noticed that the assessee has included the following receipt for the purpose of claiming deduction under section 80IB: Head of income/units D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t though it is not recorded by any authorities as for what purposes the insurance claim was received by the assessee, however, as per the instructions received by him this insurance claim was received for damage of sock- in- trade. Therefore, the same is eligible for deduction u/s 80IB. He has relied upon the decision of the jurisdictional High Court in the case of CIT V/s M/s Pfizer Ltd In Income Tax Appeal (Lodg) No.128 of 2009 wherein the honorable High Court has held that the insurance claim on account of stock-in-trade does not constitutes independent income or receipt of nature similarly brokerages commission, interest rent or charges. 7. As regards the issue of interest from customers for delayed payment, the learned AR has submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for doing the job work and service charges by utilizing the plant and machinery and infrastructure of the undertaking itself, therefore, the same is part of the profit and gain derived from the business undertaking the same is illegible for deduction u/s 80IB. The provisions of section 80IB requires that the profits and gains should be derived from any business of the industrial and not from the undertaking. This Tribunal has been decided the issue in assessee's own case for the assessment years 2003-04 in ITA No.1353/MUM/2007 vide order dated 31.7.2009 and held in paragraph 18 as under : "18. We have considered the rival submissions and perused the record of the case. As far as the decision in the case of Pandian Chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Liberty India V/s CIT (supra). Accordingly, we are of the view that when the income was earned by the assessee by using the industrial undertaking or plant and machinery of the industrial undertaking the same is eligible for deduction. 11. As regards, the scrap sale is concerned this issue is also covered by the order of this Tribunal in assessee's own case (supra) as well for the assessment year 2005-06, wherein this issue was considered in paragraph 10 and 11 in ITA No.6121/Mum/2008. We further note that when the scrap has been generated during the process of manufacturing activities of the industrial undertaking of the assessee then the income from the sale of scrap has direct nexus to the business of undertaking. It is not the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se circumstances, we are clearly of the view that the insurance claim on account of the stock in trade does not constitute an independent income or a receipt of a nature similar to brokerage, commission, interest rent or charges. Hence, such a receipt would not be subject to a deduction of ninety per cent under clause (1) of Explanation (baa). 11A Counsel appearing on behalf of the revenue submitted that the insurance claim has no element of export turnover and that consequently it must sustain a reduction of ninety percent under explanation(baa). Now it is necessary to note that explanation (baa) in terms does not refer to export turnover. Sub-section 91) of section 80HHC contemplates a deduction to the extent of profits derived by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses (iiia), (iiib) and (iiic) of section 28 and receipts by way of brokerage, commission, interest, rent charges or receipts of a similar nature included in such profits. Therefore, before a receipt is liable to be excluded to the extent of ninety percent, it must be a receipt of a nature similar to brokerage, commission interest, rent or charges. For the reasons which we have already indicated, we have come to the conclusion that the claim on account of insurance for the stock in trade did not constitute a receipt of a similar nature within the meaning of explanation (baa) and was therefore not liable to be reduced to the extent of ninety percent. The first question will therefore not raise any substantial question of law" 13. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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