TMI Blog2004 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence, we cannot include such type of earning (even assuming it to be genuine) within the meaning of the expression profits/gains derived from industrial undertaking – Appeal of revenue succeeds - The impugned order of the Tribunal is hereby set aside. - - - - - Dated:- 25-11-2004 - Judge(s) : A. M. SAPRE., ASHOK KUMAR TIWARI. JUDGMENT The judgment of the court was delivered by A.M. Sapre J.- This is an appeal filed by the Revenue (Commissioner of Income-tax) under section 260A of the Income-tax Act, 1961, against an order, dated February 26,1999, passed by the Tribunal (the ITAT) in I.T.A. No. 1026/Ind/97. It may be mentioned at the outset that on July 12, 2000, this court dismissed the appeal by passing the following order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me up for final hearing before this court consequent upon the remand order. This court is now required to decide the appeal on the following substantial question of law framed by the Supreme Court: "Whether, on the facts and in the circumstances of the case and in law the Income-tax Appellate Tribunal was justified in holding that the liquidated damages received by the assessee on account of breach of contract are nothing but a part of profit received from the industrial undertaking on which the assessee is entitled for deduction under sections 80HH and 80-IA?" The respondent-assessee is a limited company engaged at the relevant time in the business of manufacture and sale of what is known as "soya doc" and "soya oil". In the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-I ibid while allowing deductions. This view of the Assessing Officer was upheld by the Commissioner of Income-tax (Appeals) by order dated September 19, 1997. However, the assessee feeling aggrieved filed second appeal to the Tribunal. By the impugned order, the Tribunal allowed the appeal and set aside the orders of the Assessing Officer and the Commissioner of Income-tax (Appeals). It is against this order, the Revenue (Commissioner of Income-tax) filed appeal to this court. It was dismissed by this court. As observed supra, the order of dismissal was set aside by the Supreme Court in an appeal filed by the Revenue and the appeal was remanded again to this court for deciding the same on the merits on a substantial question of law fram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s equate such sum at par with actual profits which the assessee earned by sale of the finished goods. In our opinion, the assessee is entitled to claim deduction of that amount which they have derived as direct profit by sale of manufactured goods in their newly set up industrial undertaking. The object underlying these sections is to give incentive to the assessee who earns/derive income from their actual manufacturing activity, i.e., by sale of their products. Any indirect or incidental profit cannot be regarded as profit earned out of the main business activity. It has to be taxed as an income earned from other sources as defined under section 56(1) read with section 14F ibid. The submission of learned counsel for the assessee was th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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