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TMI Blog2011 (11) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have no direct nexus with the industrial undertaking as such. While such being the factual finding arrived at by the fact finding authority and confirmed by the CIT(A) and also the ITAT, no material has been placed before us by the assessee to take a contra view - As in the whole process of orders passed by the CIT(A) and the ITAT, no perversity of approach has been found thus re-iterating the well established principle of law that while sitting on appeal under Section 260A this Court cannot set aside the factual findings recorded by the fact finding authorities, particularly in the absence of any adverse approach by them - Deduction rightly dis-allowed - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal before the Commissioner of Income-tax (Appeals) (CIT(A) in short), who, by his order dated 23.11.2004, has concurred with the findings of the Assessing Officer, and has held that 'the appellant (assessee) is not eligible for benefit under Section 80IB on the surplus money kept in fixed deposits for the purpose of bank guarantee or letters of credit, on service income received for training, on interest received on loans given to the employees, on commission receipts, and on interest collected from sundry debtors for delay in payments and other receipts.' 7. But, however, the CIT(A) has observed that 'only with regard to cash discounts that are received on purchases, the plea of the appellant that it goes to reduce the purchases is to be considered. These are directly relatable to the purchases and hence, they go to reduce the purchases. Due to the accounting procedure it is disclosed as a separate receipt. However, it is to be noticed since value of purchases is reduced, the quantum of profit from the industrial undertaking increases. The A.O. is to verify and confirm that such cash discount is received only with respect to its purchases relating to manufacturing activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint venture partner (Chevron) of the assessee had assigned a team of employees to work in the manufacturing plant of the assessee at Chennai for training prior to their placement in the Singapore manufacturing plant and the technical operations in both plants are identical and the products manufactured are the same and thus the appellant had received consideration from Chevron for the training of the employees and hence this income is directly derived from the operations of the industrial undertaking and thus eligible for the grant of deduction under Section 80IB. The learned counsel would further argue that the term 'business' has been defined under Section 2(13) of the Act as 'includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and taking into consideration the wide definition given to the term 'business' in the Act, the deductions claimed by the assessee should have been allowed in favour of the assessee by the authorities below. 13. The learned counsel for the assessee, would further argue that when interest is paid on delayed payment, it can be treated as higher sale price which is converse situation to offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the date of establishment of the National Tax Tribunal], if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub section shall be-- (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief Commissioner or Commissioner; (b) *** (Omitted by the Finance Act, 1999, w.e.f. 1-6-1999) (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (2A) The High Court may admit an appeal after the expiry of the period of one hundred and twenty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we take up other aspects urged by the assessee also, in due compliance of the avowed principles of natural justice and by exercising the power under proviso to sub-section (4) of Section 260A of the Act. 19. By answering this preliminary question accordingly, now we shall proceed to deal with the other aspects of the case. 20. Since the subject relates to Section 80IB of the Act, the same is extracted hereunder for better understanding and ready reference: "Section 80-IB - Deduction in respect of Profits and Gains from certain Industrial Undertakings other than Infrastructure Development Undertaking. - (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. (2) This section applies to any industrial undertaking which fulfils all the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. (3) The amount of deduction in the case of an industrial undertaking shall be twenty-five per cent (or thirty per cent. where the assessee is a company), of the profits and gains derived from such industrial undertaking for a period of ten consecutive assessment years (or twelve consecutive assessment years where the assessee is a co- operative society) beginning with the initial assessment year subject to the fulfilment of the following conditions, namely :- (i) It begins to manufacture or produce, articles or things or to operate such plant or plants at any time during the period beginning from the 1st day of April, 1991 and ending on the 31st day of March, 1995 or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular undertaking; (ii) Where it is an industrial undertaking being a small scale industrial undertaking, it begins to manufacture or produce articles or things or to operate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to operate its cold storage plant or plants at any time during the period beginning on the 1st day of October, 1994 and ending on the 31st day of March, 2000; (ii) Hundred per cent of the profits and gains derived from an industrial undertaking located in a backward district of category 'B' for three assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent. where the assessee is a company) of the profits and gains of an industrial undertaking : Provided that the total period of deduction does not exceed eight consecutive assessment years (or where the assessee is a co-operative society, twelve consecutive assessment years): Provided further that the industrial undertaking begins to manufacture or produce articles or things or to operate its cold storage plant or plants at any time during the period beginning on the 1st day of October, 1994 and ending on the 31st day of March, 2000. (6) The amount of deduction in the case of the business of a ship shall be thirty per cent of the profits and gains derived from such ship for a period of ten consecutive assessment years including the initial assessment year provided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the 31st day of March, 1995 or beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2001 : Provided that nothing contained in this clause shall apply to a hotel located at a place within the municipal jurisdiction (whether known as a municipality, municipal corporation, notified area committee, town area committee or a cantonment board or by any other name) of Calcutta, Chennai, Delhi or Mumbai, which has started or starts functioning on or after the 1st day of April, 1997 and before the 31st day of March, 2001; (c) The deduction under clause (a) or clause (b) shall be available only if- (i) The business of the hotel is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose; (ii) The business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees; (iii) The hotel is for the time being approved by the prescribed authority : Provided that any hotel approved by the prescribed authority before the 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from the operation of such facility in a manner that the total period of deduction does not exceed ten consecutive assessment years (or twelve consecutive assessment years where the assessee is a co-operative society) and subject to fulfilment of the condition that it begins to operate such facility on or after the 1st day of April, 1999 but before the 31st day of March, 2003. (12) Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger - (a) No deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place; and (b) The provisions of this section shall, as far as may be, apply to the amalgamated or the resulting company as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the previous year; or (ii) An area within such distance not being more than fifteen kilometres from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the stage of development of such area including the extent of, and scope for, urbanisation of such area and other relevant considerations specify in this behalf by notification in the Official Gazette; (g) "Small-scale industrial undertaking" means an industrial undertaking which is, as on the last day of the previous year, regarded as a small-scale industrial undertaking under section 11B of the Industries (Development and Regulation) Act, 1951 (65 of 1951)" 21. A reading of Chapter VI-A of the Act makes it clear that it deals with 'Deductions to be made in computing total income', which contains Sections 80 to 80U with omission of certain Sections in between. On analysing this Chapter VI-A, as has been observed by the Honourable Apex Court in Liberty India v. CIT [2009] 183 Taxman 349, it is clear that 'Sections 80-IB/80-IA are the code by themselves as they contain both substantive as well as procedural provisions.' 22. While examining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, since they have not considered the issues involved in the matter in their proper perspective. In support of such arguments, the learned counsel for the assessee has placed reliance on another unreported judgment of a Division Bench of this Court in Tax Case (Appeal) No.524 of 2010, dated 16.8.2010 [Cotton Base v. ITO], wherein considering the fact that the authorities below have not properly assessed the matter with regard to the claim of the assessee therein that the interest income attributable to the deposits comprising export realisation is eligible for deduction under Section 80-HHC of the Act, a Division Bench of this Court has remitted the matter back to the Tribunal for consideration. 28. But, the same is not the situation in the case on hand. In the case on hand, as has already been stated supra, the assessee's claim has been tested on touchstone not only by the fact finding authority (the Assessing Officer), but also by the CIT(A) and ITAT, being the last fact finding authority and have filtered the claim of the assessee, making him eligible to the extent the law permits. In the whole process of orders passed by the CIT(A) and the ITAT, no perversity of approach has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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