2016 (2) TMI 294 - AT - Income Tax

Entitlement to deduction under section 80IC - CIT (Appeals) deleted the disallowance - that - No infirmity in the finding given by the learned CIT (Appeals) as the kit for which registration fee is received by the assessee contains the products of the assessee in which the assessee deals together with the literature explaining the use of the product. By no stretch of imagination, this kit can be said to be not related to the business of the assessee. Since deduction under section 80IC of the Act is allowed on any income on sale of products of the company. The product sold through a kit cannot be said to be not of the business. Therefore, we confirm the action of the learned CIT (Appeals) in deleting the disallowance of deduction under section 80IC of the Act on registration charges to the extent of cost of products contained by the kit. Sale of scrap be held to be eligible for deduction under section 80IC

Summary

Issues Involved:
Deduction under section 80IC of the Income Tax Act on registration charges, interest received, miscellaneous income, and scrap sales.

Analysis:

1. Registration Charges:
The case involved a dispute regarding the allowability of deduction under section 80IC of the Act on registration charges received by the assessee. The Assessing Officer disallowed the deduction, but the CIT (Appeals) allowed it partially. The ITAT upheld the CIT (Appeals) decision, stating that the registration fee received by the assessee was related to the business activities as it involved the sale of products and literature. The ITAT confirmed that the portion of the fee representing the cost of products was eligible for deduction under section 80IC of the Act.

2. Interest Received and Miscellaneous Income:
The assessee claimed deduction under section 80IC of the Act on interest received and miscellaneous income, but the CIT (Appeals) did not allow it. The ITAT confirmed the decision of the CIT (Appeals), stating that these incomes did not qualify for deduction under section 80IC of the Act as they were not derived from eligible industrial undertakings.

3. Scrap Sales:
Regarding the deduction on income from scrap sales, the ITAT referred to a previous order by the Chandigarh Bench, holding that sale of scrap was eligible for deduction under section 80IC of the Act. Despite the Department's appeal to the High Court on this issue, the ITAT maintained that the previous order was binding until overturned by due process. Therefore, the ITAT partly allowed the Cross Objection filed by the assessee on this matter.

In conclusion, the ITAT dismissed the Revenue's appeal while partly allowing the Cross Objections filed by the assessee, emphasizing the eligibility of certain incomes for deduction under section 80IC of the Income Tax Act based on the specific circumstances and nature of the receipts.