2012 (6) TMI 105

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..... l was right in holding that, service charges for maintenance, charges for transportation, erection and commission charges, labour charges, sale of scraps during manufacturing to be included as profits and gains of the industrial undertaking for the purpose of computation of deduction under Section 80IA of the Income Tax Act?   2. The assessee herein is engaged in the manufacture of coke-oven and goose neck cleaning system for steel and other industries. The Assessing Officer while computing the deduction under Section 80IA of the Income Tax Act, excluded the receipts of service charges, charges for transportation, erection and commission charges, labour charges and sale scrap to the tune of Rs.77,27,918/- as not constituting the profi .....

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..... v. CIT, the Apex Court considered the scope of Section 80IA and 80IB of the Act. The Apex Court pointed out that, "............. It is evident that section 80-IB provides for allowing of deduction in respect of profits and gains derived from the eligible business. The words "derived from" are narrower in connotation as compared to the words "attributable to". In other words, by using the expressing "derived from", Parliament intended to cover sources not beyond the first degree. ............ " 4. Pointing out that Sections 80-IA/80-IB have a common scheme, it held that, "............. We may reiterate that sections 80-I, 80-IA and 80-IB have a common scheme and if so read it is clear that the said sections provide for incentives in the .....

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..... the cost of purchase or manufacture of goods. They should be treated as separate items of Revenue or income and accounted for accordingly. Thus the profits derived from such incentive scheme do not fall within the expression of profits derived from industrial undertaking under Section 80IB.   6. Guided by the above decision, when we look at Section 80IA of the Act, it is clear that the only requirement for the applicability is deriving of income by an undertaking or an enterprise from any business referred to in sub section (4). Thus, any profits and gains derived by an undertaking from any business would qualify for deduction under Section 80IA of the Act. 7. As the Apex Court pointed out in [2009] 317 ITR 218 LIBERTY INDIA v. CIT, .....

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