TMI Blog2021 (7) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... der which the assessee received additional subsidy is required to be seen. It is only after perusal of the scheme under which subsidy was given to the assessee, the principles laid down in the case of Meghalaya Steels [ 2016 (3) TMI 375 - SUPREME COURT] can be applied to the facts of the case of the assessee. Since this exercise has not been carried out in the proceedings before the lower authorities, we are of the view that it would be just and appropriate to set aside the order of the CIT(A) and remand the issue to the AO for fresh consideration in the light of the decision cited by the learned DR before the Tribunal, after scrutiny of the scheme under which the assessee received the subsidy. Despite specific directions copies of the subsidy scheme has not been provided by the parties. In these circumstances, we have no other alternative but to remand the issue to the AO for consideration afresh in the light of the directions give above - Appeal of the Revenue is allowed for statistical purposes. - ITA No.570/Bang/2017 - - - Dated:- 30-6-2021 - Shri N. V. Vasudevan, Vice President And Shri B. R. Baskaran, Accountant Member For the Assessee : Smt. Prathibha, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidy which was offered as income by the assessee and on which the deduction was claimed by the assessee had accrued to the assessee during the previous year relevant to Assessment Year 2012-13. The only dispute which the AO raised was that the additional subsidy cannot be considered as profits derived from the eligible business . In this regard, the AO has made a reference to the provisions of section 80IA of the Act which reads as follows: [(1) where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in computing the total income of the assessee, a deduction of an amount equal to hundred percent of the profits and gains derived from such business for ten consecutive ass essment years.] 3. The AO thereafter made reference to several judicial pronouncements wherein the word derived from has been interpreted by the courts. The principal reliance placed by the AO was on the decision of the Hon ble Supreme Court in the case of Liberty India Ltd., Vs. CIT (2009) 183 taxmann 349 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cambay Electrical Supply Co. Ltd., 113 ITR 84. At the time of hearing, it was brought to our notice by the learned Counsel for the assessee that all these decisions were considered by the Hon ble Supreme Court in the case of CIT(A) Vs. Meghalaya Steels Ltd., 383 ITR 217 (SC). The decision was referred in the context of section 80 IC of the Act. The words of which are identical to the provisions of section 80IA(4)(iv)(c) of the Act, the Hon ble Supreme Court took the view that if the subsidy recoups, the expenditure which was incidental expenditure of assessee s business then that would be a subsidy which is inseparably connected with profitable business. The Court held that subsidies which went to reimbursement of cost in production of goods of particular business would also have to be included under head profits and gains of business. The Hon ble Court has considered the decision rendered by the Hon ble Supreme Court in the case of Liberty India (supra) in the following words: 16. The sheet anchor of Shri Rodhakrishnan's submissions is the judgment of this Court in Liberty India v. Commissioner of Income Tax, (2009) 9 SCC 328. This was a case referring directly to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply Industrial Company Limited v Commissioner of Income Tax, Gujarat II, this Court held that since an expression of wider import had been used, namely attributable to instead Of derived from , the legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity. In short, a step removed from the business of the industrial undertaking would also be subsumed within the meaning of the expression attributable to . Since we are directly concerned with the expression derived from , this judgment is relevant only insofar as it makes a distinction between the expression derived from , as being something directly from, as opposed to attributable to , which can be said to include something which is indirect as well. 18. The judgment in Sterling Foods lays down a very important test in order to determine whether profits and gains are derived from business or an industrial undertaking. This Court has stated that there should be a direct nexus between such profits and gains and the industrial undertaking or business. Such nexus cannot be only incidental. It therefore found, on the facts before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Drawback Scheme arose, when the undertaking decided to export after manufacturing or production and this incentive was restricted only to the export of goods of a specified class. Consequently, if there was no export, there was no incentive from DEPB or Duty Drawback. This apart, DEPB or Duty Drawback Scheme did not provide refund of exemption from Central Excise Duty actually paid. Thus, the relationship under the DEPB or Duty Drawback Scheme, on the one hand, and the manufacturing or production, on the other, was not proximate and direct. The entitlement was based on the artifice of average amount of duty paid . The Hon ble thereafter examined the scheme under which deduction u/s.80IC of the Act was claimed on Transport and power subsidy and came to the conclusion that in the case of transport subsidy, power subsidy and insurance subsidy, the relation between subsidy received, on the one hand, and the profits earned or the gains made, by an industrial undertaking, stand, well established. The Hon ble Supreme Court distinguished its own decision in the case of Liberty India (supra) by pointing out that DEPB and Duty draw back rules did not envisage a refund of an amount a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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