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2015 (7) TMI 1334 - AT - Income TaxDeduction u/s 80IC - reducing the profit eligible for deduction for Duty Draw Back and Misc. Receipts - HELD THAT - We are of the view that no interference is called for in the matter. Under Section 80IC deduction is allowable to the assessee where the gross total income of the assessee includes any profits and gains derived by an undertaking or an enterprise from any eligible business referred to in the said Section. The Duty Draw Back is paid by the government under various incentive schemes and thus are not derived from eligible business. Hon ble Supreme Court in the case of Liberty India Vs CIT 2009 (8) TMI 63 - SUPREME COURT held that The connotation of the words derived from is narrower as compared to that of the words attributable to . By using the expression derived from Parliament intended to cover sources not beyond the first degree. The issue is therefore covered against the assessee by judgement of Hon ble Supreme Court in the case of Liberty India (supra). This ground of appeal of the assessee is accordingly dismissed. Brokerage on account of ocean freight is business income as was already held by the Tribunal in the case of the same assessee vide order dated 10.02.2015. Therefore assessee would be entitled for deduction under section 80IC of the Act on said amount. The orders of authorities below are accordingly set aside and Assessing Officer is directed to grant deduction under section 80IC to the assessee. Reducing the profits eligible for deduction u/s 80IC being 70% of excess provisions written back - HELD THAT - CIT(Appeals) noted that Assessing Officer has not held that the provisions written back are not eligible for deduction under section 80IC of the Act because Assessing Officer has merely disallowed 70% claim of the assessee. The submissions of the assessee show that when provision was created in the previous year it would result net profit of the assessee reduced in preceding assessment year 2006-07. Therefore assessee would have also got lesser deduction under section 80IB of the Act as such the income of the assessee was reduced in preceding assessment year. Therefore assessee correctly claimed that when provision was taken care in the year under appeal it would enhance the income of the assessee. Since the income earned by the assessee was not disputed by the Assessing Officer and Assessing Officer allowed part claim of the assessee to the extent of 30% would clearly show that assessee was entitled for deduction under section 80IC of the Act on the entire amount of provisions written back in the year under consideration. We therefore set aside the orders of authorities below and direct the Assessing Officer to allow claim of assessee under section 80IC of the Act on the entire claim made by the assessee. Not calculating minimum alternate tax to be carried forward to subsequent year in the correct manner - admission of additional ground of appeal - HELD THAT - Since this issue is not arising out of the order of ld. CIT(Appeals) and assessee has not shown any justification for admission of the additional ground of appeal therefore the oral request of ld. counsel for the assessee cannot be accepted at this stage. In the absence of any request in writing for admission of the additional ground of appeal ld. DR was justified in contending that department would be seriously prejudiced in their contention because no opportunity had been given to the revenue to counter the request of the assessee. This issue is also not arising from the order of the ld. CIT(Appeals) and that no reason or justification had been explained why such request should be admitted. Therefore considering the totality of the facts and circumstances of the case we do not find any justification to accept the oral request by ld. counsel for the assessee in admitting additional ground of appeal so raised in ground No. 4 of the appeal of the assessee.
Issues Involved:
1. Deduction under Section 80IC for Duty Draw Back and Miscellaneous Receipts. 2. Deduction under Section 80IC for excess provisions written back. 3. Calculation of Minimum Alternate Tax (MAT) to be carried forward. 4. Deduction under Section 80IC for interest from customers and suppliers. 5. Deduction under Section 80IC for insurance claim received. Issue-wise Detailed Analysis: 1. Deduction under Section 80IC for Duty Draw Back and Miscellaneous Receipts: - Duty Draw Back: The assessee challenged the reduction of profit eligible for deduction under Section 80IC by Rs. 69,26,088 on account of Duty Draw Back. The Assessing Officer and CIT(A) referred to the Supreme Court decision in Liberty India Vs CIT, holding that such income is not derived from business and is not eligible for deduction under Section 80IC. The Tribunal upheld this view, stating that Duty Draw Back is paid under government incentive schemes and does not qualify as income derived from eligible business. - Miscellaneous Receipts: The assessee also contested the reduction of Rs. 1,11,988, received as brokerage on ocean freight, from profits eligible for deduction under Section 80IC. The Tribunal, referencing its earlier decision for the same assessee, concluded that brokerage on ocean freight is business income and directed the Assessing Officer to grant deduction under Section 80IC on this amount. 2. Deduction under Section 80IC for Excess Provisions Written Back: - The assessee challenged the reduction of profits by Rs. 5,06,634, representing 70% of excess provisions written back. The Assessing Officer argued that by creating provisions in the previous year and writing them back in the current year, the assessee evaded tax. The Tribunal found that the assessee was eligible for 100% deduction under Section 80IC in the first year of substantial expansion and directed the Assessing Officer to allow the entire claim made by the assessee. 3. Calculation of Minimum Alternate Tax (MAT) to be Carried Forward: - The assessee raised an issue regarding the computation of MAT to be carried forward, which was not challenged before the CIT(A). The Tribunal, referencing various High Court decisions, held that since the issue was not raised earlier and no formal request for additional grounds was made, it could not be entertained at this stage. Consequently, this ground was rejected. 4. Deduction under Section 80IC for Interest from Customers and Suppliers: - The revenue challenged the CIT(A)'s decision to allow deduction under Section 80IC for Rs. 14,68,930 received as interest from customers and suppliers. The Tribunal upheld the CIT(A)'s decision, referencing its earlier order and the Punjab & Haryana High Court's decision in Phatela Cotgin Industries Pvt. Ltd., confirming that such interest is taxable as business income and eligible for deduction under Section 80IC. 5. Deduction under Section 80IC for Insurance Claim Received: - The revenue also contested the CIT(A)'s decision regarding the insurance claim of Rs. 2,50,125. The CIT(A) directed the Assessing Officer to verify if the assessee received any real income from the insurance claim and to restrict disallowance accordingly. The Tribunal found no infirmity in this directive, affirming the CIT(A)'s order. Conclusion: - The assessee's appeal was partly allowed, granting deduction under Section 80IC for brokerage on ocean freight and excess provisions written back. - The revenue's appeal was dismissed, upholding the CIT(A)'s decisions on interest from customers and suppliers and the insurance claim. - The issue regarding the calculation of MAT to be carried forward was rejected as it was not raised earlier.
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