9911796707
TMI Blog2015 (3) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order; the objection filed by the asses see before the Assessing Officer and the decision of the Dispute Resolution Panel clearly shows that the assessee claimed that additional capital was raised for augmentation of the working capital ; therefore, it was in the revenue field. It was also not claimed before the lower authority that the expenditure was incurred in respect of issue of shares and fees paid to the Registrar of Companies. Therefore, the lower authorities had no occasion to examine whether the expenditure was in fact incurred for issue of shares and fees paid to the Registrar of Companies. Since now the assessee claims that the expenditure was incurred for issue of shares to the Qualified Insti tutional Buyers and on fees paid to the Registrar of Companies, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. The decision rendered for the assessment year 2007-08 equally holds good for the assessment year under consideration also. As such, consistent with the decision taken earlier for the assessment year 2007-08 we remit the matter back to the file of the Assessing Officer with similar directions. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation - Rental income received by the assessee from its sister concern in respect of let out portion at the corporate office at Gurgaon - Held that:- The very same issue came up before this Tribunal for the assessment year 2007-08 [2014 (1) TMI 33 - ITAT COCHIN] wherein by following the earlier orders of this Bench of this Tribunal for the assessment years 2001-02 to 2006-07 we found that the assessee was not entitled for depreciation on the let out portion of the property. - Decided against assessee. Transfer pricing adjustment on reimbursement received by the assessee from Dunlop Tyres International Pty. Ltd. - Held that:- In the case before us, the Transfer Pricing Officer found that the reimbursement received by the assessee from its associate enterprises and he adjusted 5 per cent. of marking on the ground that the reimbursement of expenditure does not consistent with the arm's length price. The Transfer Pricing Officer has not discussed any comparable cases as per the method provided in the Income-tax Act. If the Assessing Officer found that the reimbursement received by the assessee is not consistent with the arm's length price, then, he ought to have compared t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emission reduction/carbon credit cannot be treated as capital receipt, therefore, it is to be treated as profits and gains of business or profession ; hence liable for taxation. - Decided against assessee. Entitlement for deduction under section 80-IA - Held that:- Deduction of an amount equal to 100 per cent. of the profit derived from business undertaking is alone eligible for deduction under section 80-IA of the Act. While interpreting the words "derived from", the apex court, in the case of Sterling Foods [1999 (4) TMI 1 - SUPREME Court] found that the expression "attributable to" is wider in import than the expression "derived from". In this case also, the income on sale of certified emission reduction/ carbon credit was attributable to the business of the assessee since the same was conferred on the assessee under the scheme promoted by the United Nations Framework Convention on Climate Change under Kyoto Protocol. But it is not the direct source of income from the industrial undertaking of the assessee. At the best, we may say that it has nexus with the business of the assessee or attributable to the business of the assessee. Therefore, the income on sale of certified em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows in the order dated December 20, 2013, in I. T. A. No. 616/Coch/2011 : 9. We have considered the rival submissions on either side and also perused the material available on record. Section 32(1)(iia) reads as follows : '32(1)(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production, of any article or thing, a further sum equal to twenty per cent. of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) : Provided that no deduction shall be allowed in respect of- (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house ; or (C) any office appliances or road transport vehicles ; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery is put to use in any particular year, the assessee is entitled for 50 per cent. of the pre scribed rate of additional depreciation. The Income-tax Act is silent about the allowance of the balance 10 per cent. additional depreci ation in the subsequent year. Taking advantage of this position, the assessee now claims that the year in which the machinery was put to use the assessee is entitled for 50 per cent. additional depreciation since the machinery was put to use for less than 180 days and the bal ance 50 per cent. shall be allowed in the next year since the eligibility of the assessee for claiming 20 per cent. of the additional depreciation cannot be denied by invoking second proviso to section 32(1)(ii) of the Act. 12. This issue was considered by the Delhi Bench of this Tribunal in the case of CIT (Deputy) v. Cosmo Films Ltd. [2012] 13 ITR (Trib) 340 (Delhi). The Revenue has taken a similar ground as taken before this Tribunal that the assessee cannot carry forward the additional depreciation to be allowed in the subsequent assessment year. The Delhi Bench of this Tribunal after considering the provisions of section 32(1)(iia) and proviso to section 32(1)(ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucceeding year. The extra depreciation allowable under section 32(1)(iia) in an extra incen tive which has been earned and calculated in the year of acquisition but restricted for that year to 50 per cent. on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation under section 32 shall definitely not exceed the total cost of plant and machinery. In view of this matter, we set aside the orders of the authorities below and direct to extend the benefit. We allow ground No. 2 of the assessee's appeal. Since we have decided ground No. 2 in favour of the assessee, there is no need to decide the alternate claim raised in ground No. 3. The same is dismissed.' 13. This issue was also considered by another Bench of this Tribunal at Delhi in Asst. CIT v. SIL Investment Ltd. [2012] 148 TTJ (Delhi) 213. At page 233 of the TTJ, the Tribunal has observed as follows : '40. There is nothing on record to show that the directions given by the learned Commissioner of Income-tax (Appeals) are not proper. The eligibility for deduction of additional depreciation stands admit ted, since 50 per cent. there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther side and also perused the material available on record. The assessee now claims that expenditure was incurred for issue of shares to Qualified Institutional Buyers and fees paid to the Registrar of Companies. Therefore, it has to be amortised for five years and one-fifth of the amount shall be allowed during the year under consideration. A bare reading of the draft assessment order; the objection filed by the asses see before the Assessing Officer and the decision of the Dispute Resolution Panel clearly shows that the assessee claimed that additional capital was raised for augmentation of the working capital ; therefore, it was in the revenue field. It was also not claimed before the lower authority that the expenditure was incurred in respect of issue of shares and fees paid to the Registrar of Companies. Therefore, the lower authorities had no occasion to examine whether the expenditure was in fact incurred for issue of shares and fees paid to the Registrar of Companies. Since now the assessee claims that the expenditure was incurred for issue of shares to the Qualified Insti tutional Buyers and on fees paid to the Registrar of Companies, this Tribunal is of the considered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the issue for the assessment year 2007-08 in I. T. A. No. 616/Coch/2011 has restored the issue to the file of the Assessing Officer with the following observations : 51. As rightly submitted by learned senior counsel for the asses see, deduction under section 35(2AB) of the Act the issue was remanded back to the file of the Assessing Officer as the assessee failed to claim the same before the Assessing Officer. For the sake of consistency, the orders of the lower authorities are set aside and the issue under section 35(2AB) of the Act is remanded back to the file of the Assessing Officer for reconsideration. The Assessing Officer shall reconsider the issue and decide the same afresh in accordance with law after giving reasonable opportunity of hearing to the assessee. 12. Here also, the facts and circumstances are identical to that of assessment year 2007-08. Therefore, we do not see a reason to come to a different conclusion than the one taken for the assessment year 2007-08. Hence, consistent with the earlier decision taken for the assessment year 2007-08 the orders of the lower authorities are set aside and the issue under section 35(2AB) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ghanashyam Steel Work Ltd. [2010] 195 Taxman 180 (Guj) ; the Delhi High Court in Indo Rama Synthetics India Ltd. v. CIT [2011] 333 ITR 18 (Delhi) and CIT v. Priya Village Roadshows Ltd. [2011] 332 ITR 594 (Delhi) submitted that no plant and machinery was acquired during the year under consideration, therefore, the expenditure has to be allowed as revenue expenditure. 16. On the contrary Shri M. Anil Kumar, the learned Departmental representative submitted that the assessee incurred the expenditure to expand the manufacturing base of the tyre manufacturing unit. According to the learned Departmental representative, the expenses incurred by the assessee were to construct and erect a plant and machinery at Chennai. The assessee capitalised the expenditure as work-in-progress in the books of account. According to the learned Departmental representative, the expenditure for construction and erection of a new plant and machinery in order to expand the manufacturing base will result in expansion of the profit making apparatus, therefore, the expenditure is in the capital field ; hence it cannot be allowed as revenue expenditure. At the best, the assessee may claim depreciation after co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration and thereafter decide the issue afresh in accordance with law after considering all the case laws quoted by the assessee. It is needless to say that an opportunity shall be given to the assessee before deciding the issue afresh. 18. The next ground of the appeal is with regard to disallowance of ₹ 33,820 under section 14A Act read with rule 8D of Income-tax Rules. During the course of hearing, learned counsel for the assessee submitted that the assessee did not want to press this ground of appeal. An endorsement was also made on the appeal folders to this effect. The learned Departmental representative has no objection to dismiss this ground as not pressed. Accordingly, the disallowance of ₹ 33,820 is confirmed and the ground raised by the assessee is dismissed as not pressed. 19. The next ground of appeal is with regard to rental income received by the assessee from its sister concern in respect of let out portion at the corporate office at Gurgaon. 20. We heard learned counsel for the assessee and the learned Departmental representative. The very same issue came up before this Tribunal for the assessment year 2007-08 in I. T. A. No. 616/Coch/2011. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yres KFT. According to learned counsel the observations made by the Dispute Resolution Panel is not based upon any record. According to learned counsel, no service was rendered by the assessee by deputing its employees to the abovesaid associate enterprises. The purpose and object of deputing these employees to the associate enterprises was to enable them to acquire by way of on-job training, skill and expertise possessed by the above said associate enterprises. According to learned counsel, the employees were deputed in order to get on job training in the field of production, marketing and management, etc. from the associate enterprises which have extensive experience of tyre manufacturing business. Learned counsel further submitted that the employees were working in the supervision and control of the associate enterprises. Learned counsel further submitted that the employees deputed were continued to remain in the payroll of the assessee. No employees were deputed for rendering any service to set up any project to the associate enterprise. The learned representative placed his reliance on the decision of the Delhi Bench of this Tribunal in IDS Software Solutions India P. Ltd v. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee from its associate enterprises were for the expenses incurred on the employees' travel, senior management, time cost which were utilised for the purpose of commercial benefit of the associate enterprises. According to the learned Departmental representative, the Dispute Resolution Panel found that the assessee has rendered services to the associate enterprises in the form of utilising the employees and senior management personnel. According to the learned Departmental representative, no commercial entity would survive without any profit. The learned Departmental representative further submitted that if the intention was only to learn the manufacturing technique of the associate enterprises, then where was the necessity for the associate enterprises to reimburse the expenditure incurred by the assessee. The very fact that the associate enterprises reimbursed the expenditure incurred by the assessee in deputing the employees to the associate enterprises indicates that the assessee rendered services to its associate enterprises by deputing its employees. According to the learned Departmental representative, for the purpose of learning the technique of the associate enterpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the U. S. A. company was to act in accordance with reasonable request, instructions and direction of the assessee-company in India. The seconded employee was reportable and responsible to the assessee-company. The agreement further provided that the assessee had the right either to approve or reject the employee chosen for secondment and if necessary to request the parent company in the U. S. A. to replace the employee. In those facts and circumstances, the Assessing Officer found that the payment made by the assessee-company to the U. S. A. parent company cannot be considered to be a mere reimbursement. The Assessing Officer treated the payment made by the assessee-company as fees for technical service. On appeal before the Commissioner of Income-tax (Appeals) it was found that the payment was only reimbursement of expenses and not of income in nature, therefore, there was no liability to deduct tax. The Commissioner of Income-tax (Appeals) further found that there was an employee employer relationship between the assessee and the employee seconded by the U. S. A. company, therefore, the remittance was in the nature of salary for the services rendered by him to the assessee. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be of any assistance to the assessee. 29. We have also carefully gone through the Delhi Bench of this Tribunal in Dolphin Drilling Ltd. [2009] 121 TTJ (Delhi) 433. In the case before the Delhi Bench of this Tribunal, the assessee-company incorporated in the U.K. entered into an agreement with ONGC to conduct drilling operations for ONGC in offshore waters of India. The agreement was for charter hire of deep water drilling rig DP drillship Belford Dolphin of offshore drilling. The assessee-company was not the owner of the drilling ship. The assessee entered into agreement with another group company, viz., Dolphin Drilling P. Ltd incorporated in Singapore for charter hire of drillship. The assessee has also entered into another contract with another non-resident group company, M/s. Alfa Crew A.S incorporated in Norway for procuring, drilling and marine crew for the operation of the rig known as Belford Dolphin . During the course of assessment proceedings, the Assessing Officer found that the assessee failed to deduct tax as required under section 40(a)(ia) in respect of payment made, to Alfa Crew for supply of crew members. The Commissioner of Income-tax (Appeals) also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those factual situation, the Tribunal, by placing reliance on the decision of the Pune Bench of this Tribunal in Skoda Auto India P. Ltd. v. Asst. CIT [2009] 30 SOT 319 (Pune) found that the adjustment of 5 per cent. was directed to be granted. The Assessing Officer also directed to modify the assessment by making adjustment only in respect of difference in the arm's length price operating profit with adjusted profit with reference to 9.71 per cent. of the turnover and not to the total turnover of the assessee. The reimbursement of expenditure incurred on the employees deputed to the associated enterprises was not the subject-matter before the Delhi Bench of this Tribunal. Therefore, the decision of the Delhi Bench of this Tribunal in the case of SMCC Construction India Ltd. may not be of any assistance to the assessee. 31. We have carefully gone through the provisions of section 92C(2) of the Act which reads as follows : 92C.(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of the arm's length price, in the manner as may be prescribed : Provided that where more than one price is determined by the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the most appropriate method and thereafter decide the issue in accordance with law after giving reasonable opportunity to the assessee. 34. The next issue arises for consideration is income from sale of certified emission reduction (carbon credit) to the extent of ₹ 3,11,99,138. 35. Shri Ajay Vora, learned counsel for the assessee submitted that during the year under consideration the assessee has received ₹ 3,11,99,138 from sale of carbon emission reduction certificate commonly known as carbon credit issued by United Nations Framework Convention on Climate Change under Kyoto Protocol generated in the gas turbine unit. According to learned counsel, the income earned on sale of carbon credit was directly and inextricably linked to generation of power, therefore, the assessee is entitled for reduction under section 80-IA of the Act. However, the Assessing Officer and the Dispute Resolution Panel found that the income was not derived from eligible business, consequently, they have found that the assessee is not eligible for deduction under section 80-IA of the Act. Learned counsel further submitted that the assessee has raised an additional ground before this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to learned counsel, the carbon credit is an incentive provided to a project which employed a methodology to effect demonstrable and measurable reduction of emission of carbon dioxide in the atmosphere. The mechanism provided for trading certified emission reduction provides an opportunity to the holder of such certificate to dispose of the same to an actual user to acquire such credit to be accounted towards fulfilment of its committed target reduction. Therefore, according to learned counsel, the mechanism provided by the United Nations provides an incentive for employment of new technology which help in emission reduction and therefore contribute to the desired objective of protecting the world environment. According to learned counsel, the purpose of Kyoto Protocol is to protect the public interest by protecting the global environment and incorporating green initiative by adopting new technologies, therefore, according to learned counsel, the underlying object of certified emission reduction by United Nations Framework Convention on Climate Change is focused on climate change mitigation by reducing the harmful effect on green house gas emission and not to ensure that rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm part of the taxable income. Learned counsel has also placed his reliance on the judgment of the apex court in Sahney Steel and Press Works Ltd. v. CIT [1997] 228 ITR 253 (SC) and the Full Bench decision of the Kerala High Court in CIT v. Ruby Rubber Works Ltd. [1989] 178 ITR 181 (Ker) [FB] and the judgment of the Kerala High Court in Kalpetta Estates Ltd. v. CIT [1996] 221 ITR 601 (SC). Learned counsel has also placed reliance on the judgment of the apex court in CIT v. Ponni Sugars and Chemicals Ltd. [2008] 306 ITR 392 (SC). Finally, learned counsel placed his reliance on the decision of the Hyderabad Bench of this Tribunal in the case of My Home Power Ltd. v. Deputy CIT [2013] 21 ITR (Trib) 186 (Hyd) and submitted that the amount received on transfer of carbon credit was considered to be a capital receipt, therefore, it is not liable for taxation. 38. Referring to the decision of the Hyderabad Bench of this Tribunal in the case of My Home Power Ltd. [2013] 21 ITR (Trib) 186 (Hyd), learned counsel submitted that carbon is in the nature of an entitlement received to improve the world atmosphere and environment reducing carbon heat and gas emission. Therefore, the Hyderabad Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee may not be entitled for carbon credit. Therefore, this income on sale of carbon credit is generated due to scheme/incentive given by the United Nations Framework Convention on Climate Change under Kyoto Protocol and not from the industrial undertaking. Therefore, the assessee is not entitled for deduction under section 80-IA of the Act. The learned Departmental representative placed his reliance on the judgment of the apex court in the case of CIT v. Sterling Foods [1999] 237 ITR 579 (SC). 41. We have considered the rival submissions on either side and also perused the material available on record. For the purpose of deciding this issue we have to understand what is meant by carbon credit. Due to industrialisation, the environment was polluted by green house gas emission. Green house gases are carbon dioxide, methane, nitrous oxide, sulphur hexafluouride, hydroflourocarbons and perfluorocarbons. Out of these green house gases, carbon dioxide is most dangerous in polluting environment. Therefore, the developed countries thought that if the pollution is allowed to continue in the globe it will result in endangering not only the human life but also all creatures in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated by the projects voluntarily that are agreed to independent international standards. Both certificates, viz., certified emission reduction and verified emission reduction are to indicate the amount of reduction of green gas emission in the environment. In view of this, it is obvious that the carbon credit is nothing but a measurement given to the amount of green gas emission rates in the atmosphere in the process of industrialisation, manufacturing activity, etc. Therefore, carbon credit is a privilege/entitlement given to the industries for reducing the emission of green gas emission in the course of its industrial activity. 43. The next question arises for consideration is whether the amount received by the assessee on sale of these credits is in the revenue field or in the capital field. As submitted by the learned Departmental representative any amount received due to sterilisation of a capital asset has to be treated as capital receipt. If it is received in the course of business activity by sale of product or otherwise has to be treated as revenue income. There is no rule laid down by the Legislature to test the nature of receipt. However, there are judicial precede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement imposed restrictions upon the hours of work of its members. The working hours were allotted as per the number of looms installed in the factory of each member. No member of the association shall work for more than the loom hour which was allotted to them. The agreement also provided for transfer of surplus loom hours to another mill. Under the agreement, the assessee before the Supreme Court was allotted 220 x 72 hours per week. During the assessment year 1949-50, the assessee factory was unable to work the loom for 48 hours a week. Therefore, with the sanction of the association, the assessee sold 220 x 24 loom hours to Naskarpara Jute Mills for a sale consideration of ₹ 53,460. Similarly, for the assessment year 1950-51, the assessee has received ₹ 1,85,230 on sale of surplus loom-hours. The assessee claimed the income on sale of loom-hours is capital receipt. However, the Assessing Officer found that the income on sale of loom- hours is a revenue receipt. On these facts, the apex court found that in the proceedings before the Income-tax authorities, the Tribunal and the High Court, the loom hours have been recorded as an asset belonging to each member. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circulating capital or rendering service in the course of trading results in a trading receipt : sale of assets which the assessee uses as fixed capital to enable him to carry on his business results in capital receipt. 47. Since the loom hours were considered to be a capital asset, the sale consideration received on sale of such asset was treated as capital receipt. The distinction made by the apex court and the fact that the loom hours were treated as an asset throughout the proceedings up to the High Court level was not brought to the notice of the Hyderabad Bench of this Tribunal. Since the Revenue accepted that the loom hours as an asset up to the proceedings before the High Court, they were not allowed to change the stand before the Supreme Court. Therefore, this Tribunal is of the considered opinion that the judgment of the apex court in Maheshwari Devi Jute Mills Ltd. [1965] 57 ITR 36 (SC) may not be applicable to the facts of this case. Therefore, we have to examine whether the certified emission reduction conferred on the assessee by the United Nations Framework Convention on Climate Change under Kyoto Protocol is an asset or not ? 48. It is pertinent to note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of its manufacturing activity. Therefore, the income on sale of carbon credit is a trading/revenue receipt. This view of ours is fortified by the judgment of the Bombay High Court in Metal Rolling Works P. Ltd. v. CIT [1983] 142 ITR 170 (Bom). This judgment of the Bombay High Court was subsequently followed by the jurisdictional High Court in O. K. Industries v. CIT [1987] 163 ITR 51 (Ker). The judgment of the jurisdictional High Court in the case of O. K. Industries v. CIT [1987] 163 ITR 51 (Ker) is binding on this Tribunal. 49. We have carefully gone through the judgment of the Bombay High Court in the case of Metal Rolling Works P. Ltd. [1983] 142 ITR 170 (Bom) and the judgment of the Kerala High Court in the case of O. K. Industries v. CIT [1987] 163 ITR 51 (Ker). In the case before the Bombay High Court and the Kerala High Court, the issue arose for consideration was whether import entitlement is a capital asset or not ? Both, the Bombay High Court and the Kerala High Court found that import entitlement was generated in the course of business activity, therefore, it cannot be treated as an asset within the meaning of section 2(14) of the Act. In the case on hand also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax under the head 'Profit and gains of business or profession',- (i) to (iiie) . . . (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profes sion ; 54. The provisions of section 2(24)(vd) reads as follows : 2(24) 'income' includes- (i) to (vc) . . . (vd) the value of any benefit or perquisite taxable under clause (iv) of section 28 ; 55. In view of the above specific provisions in the Income-tax Act, viz., section 28(iv) read with section 2(24)(vd) it is obvious that the value of any benefit or perquisite arising from business or profession forms part of the profit and gains of the business. Therefore, the income on sale of the certified emission reduction/carbon credit which is admittedly a benefit arising out of the business of the assessee, would fall within the definition of income under section 2(24)(vd) of the Act. This provisions of the Income-tax Act, viz., section 2(24)(fd) and section 28(iv) were not brought to the notice of the Hyderabad Bench of this Tribunal in the case of My Home Power Ltd. [2013] 21 ITR (Trib) 186 (Hyd) ; hence it is not applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of the assessee, a deduction of an amount equal to hundred per cent. of the profits and gains derived from such business for ten consecutive assessment years. 59. In view of the above it is obvious that deduction of an amount equal to 100 per cent. of the profit derived from business undertaking is alone eligible for deduction under section 80-IA of the Act. While interpreting the words derived from , the apex court, in the case of Sterling Foods [1999] 237 ITR 579 (SC) found that the expression attributable to is wider in import than the expression derived from . The apex court found that the expression of wider import, viz., attributable to was used when the Legislature intended to cover receipts from source other than actual conduct of business. When the Legislature used the term derived from the industrial undertaking , it should be the source of profit. In other words, the industrial undertaking shall directly yield the profit. The industrial undertaking shall be the direct source for earning the profit and not a means to earn any other profit. Therefore, when the import entitlement was awarded by the Government of India under a scheme to encourage export i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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