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TMI Blog2012 (7) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the claim under section 80IB of the Act." 2. The Assessing Officer called for the explanation of the assessee and for various reasons given in his order, held that the assessee is not entitled to any deduction under section 80IB of the Income Tax Act, 1961 (for short "the Act"), for deemed income assessed under section 69A and 69C of the Act. 3. Aggrieved, the assessee carried the matter before the first appellate authority, wherein the Commissioner (Appeals), vide Para-2.3 of his order, granted relief to the assessee by observing as follows:- "2.3 I have considered the submissions of the learned Counsel and the case laws cited and relied upon by him and I am of the opinion that the appellant's claim for deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading, etc. which has no nexus with the industrial undertaking. He relied on the judgment of Hon'ble Gujarat High Court in Fakir Mohmed Haji Hasan vs CIT, [2001] 247 ITR 290 (Guj.). He referred to the impugned order passed by the Commissioner (Appeals) and submitted that the conclusions are contrary to the facts recorded by the first appellate authority. He pointed out that the assessee had admitted trading activity and of undertaking job work apart from manufacturing activity. He emphasised that the burden to prove when income is sought to be assessed is on the Revenue and whereas the burden of proof when it is claimed that certain income is exempt is on the assessee. He submitted that the assessee failed to prove that it is entitled to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d materials the assessee has admitted that it had income from - (i) receipt on account of sale of scrap; (ii) receipt from job works done for other concerns which is admittedly undertaken apart from manufacturing activities; (iii) receipts from trading activities for some outstation clients; (iv) cash advances given to three persons for purchase of plots; (iv) additions to fixed assets. A perusal of the above clearly demonstrates that the profits and gains in question cannot be said to have been derived by an undertaking. When admittedly the assessee has income from trading and from job work, it cannot be understood as to how the Commissioner (Appeals) grants relief by ignoring the settled propositions of law. The Hon'ble Supreme Court in L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rliament intended to cover sources not beyond the first degree. Sections 80-I, 80-IA and 80-IB are to be read as having a common scheme. Subsection (5) of section 80-IA (which is required to be read into section 80-IB) provides for the manner of computation of the profits of an eligible business. Such profits are computed as if such eligible business is the only source of income of the assessee. Therefore, devices adopted to reduce or inflate the profits of the eligible business have to be rejected in view of the overriding provisions of section 80-IA(5). Sections 80-I,80-IA and 80-IB provide for incentives in the form of deductions which are linked to profits and not investment. On analysis of sections 80-IA and 80-IB it becomes clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said to have been derived from the industrial undertaking and, hence, the assessee would not be eligible for relief under section 80IB of the Act. 10. Coming to the case laws relied upon by the learned Counsel, we find that in S.A. Builders v/s ITO, 50 DTR 299, the Tribunal was considering disallowance made under section 40A(ia) which falls between sections 30 and 43B of the Act. The case on hand is different. 11. Coming to the decision of Jodhpur Bench of the Tribunal in Swastic Textiles, 57 SOT 327, the Bench was considering a case where the fact that the assessee had no other sources of income was not in dispute. In the case in hand, the assessee has income from job work and income from trading. 12. In CIT v/s Allied Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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