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TMI Blog2013 (11) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... was the combination of both scrap generated as a part of the manufacturing activities as well as scrap of the packing material attached to the imported consignments The issue go to the files of the Commissioner of Income-tax (Appeals) for redeciding the issue afresh. Technology transfer Receipts – Held that:- Following case of Motor Industries Co. Ltd [2010 (8) TMI 333 - Karnataka High Court] - The developmental work is intimately connected with the business of manufacture and sale of goods by the assessee. There is immediate nexus between the activity of export and the developmental work. Admittedly, for the services rendered by way of these developmental work, the assessee has been given the benefit of deductions under section 80-O – ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the reduction of deduction claimed by the assessee. In the first round, the Tribunal remanded the issue to the files of the Assessing Officer vide I. T. A. No. 4008/Mum/2006 dated December 22, 2009. Ground No. 6 of the appeal was adjudicated vide paragraph 15 and the Tribunal restored the matter for deciding the issue afresh in the light of the jurisdictional High Court judgment in the case of CIT v. Bangalore Clothing Co. [2003] 260 ITR 371 (Bom). In remand proceedings, the Assessing Officer examined the above disputed issues, i.e., insurance claims, sale of scrap, technology transfer fees and miscellaneous receipts and held that the said receipts would not constitute operational income as held by the said jurisdictional High Court j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly appreciating the ratio of the same. In this regard, he mentioned that Pfizer Ltd. judgment has distinguished the judgment in the case of Dresser Rand India P. Ltd. [2011] 330 ITR 453 (Bom). He read out relevant portions and mentioned that the judgment in the case of Dresser Rand India was decided in the factual matrix where learned counsel in that case granted certain concessions which were deleted in the judgment of Pfizer Ltd. Otherwise, the insurance receipts realised by the assessee on loss of stock-in-trade do not constitute a receipt of similar nature within the meaning of Explanation (baa) and therefore, was not allowable to the extent of 90 per cent. In other words, such receipts constitute "operational income" eligible for ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the citations and the paper book filed before us. In connection with the insurance receipts, we find that the order of the Commissioner of Income-tax (Appeals) is erroneous on the very face of it as the judgment in the case of Pfizer Ltd. [2011] 330 ITR 62 (Bom) clearly held that insurance receipts constitute operational income and there is no need for reducing 90 per cent. of the insurance claim while computing the eligible profits under section 80HHC of the Act. Relevant portion is extracted as under (page 70) : "For the reasons which we have already indicated, we have come to the conclusion that the claim on account of insurance for the stockin-trade did not constitute a receipt of a similar nature within the meaning of Explanation (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng order in the spirit of the provisions of section 250(6) of the Act. Regarding, the issue of technology transfer fee receipts, whether it constitutes "operational income or not", learned counsel brought the analogy of these receipts to the developmental works receipts, which is adjudicated by the hon'ble Karnataka High Court in the case of Motor Industries Co. Ltd. [2011] 331 ITR 79 (Karn). In our opinion, there is a need for finding the fact on the comparability of these receipts on account of developmental work vis-a-vis technology transfer fees raised before us. In case, these receipts are comparable, in our opinion, the assessee is entitled for claiming deduction under section 80HHC as an operational income in view of the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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