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TMI Blog2015 (6) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... Allowing entire deduction under section 80I(C) which includes the income from Job Work and Other Income - Held that:- In view of the claim of the assessee being allowed from year to year we find no merit in the stand of the Assessing Officer in the present year in the absence of any change in the fact situation. We are in agreement with the order of the CIT (Appeals) in this regard. - Decided against revenue. Allowing the deduction u/s 80IC in respect of 'Job Work Income" - Held that:- Following the order of the Tribunal in the case of assessee itself in the earlier years relating to assessment years 2005-06 to 2008-09, we find no infirmity in the order of the CIT (Appeals)- Decided against revenue. Allowing the deduction u/s 80IC in respect of 'Other Income' accrued to the assessee on account of income like interest received from Housing Board, Interest income from IT Refund, miscellaneous income, insurance claim and income from sale of scrap etc. - Held that:- similar issue arose before the Tribunal in assessment years 2006-07 and 2008-09 and the claim of the assessee vis-à-vis deduction under section 80IC of the Act on the aforesaid income has been allowed to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the Commissioner of Income Tax(Appeals), Chandigarh dated 14.06.2012 14.07.2013 respectively against the order passed under section 143 (3) of the Income-tax Act 1961 ( 'the Act' for short). 2. Both the cross appeals on similar facts and issues were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The assessee in ITA No. 895/CHD/2012 (A.Y. 2009-10) has raised the following grounds of appeal: 1. On the facts and in law, the learned CIT(A) erred in confirming the denial of deduction u/s 80IC in respect of 'Other Income of ₹ 5,36,385/-consisting of (i) Interest of ₹ 4,66,888/- received on refund of excess recovery by HIMUDA, (ii) Award reed from Government ₹ 20,000/-, Interest on IT Refunds ₹ 14,065/- and Foreign Exchange Fluctuation gain ₹ 35,432/-. Ld. CIT(A) erred in agreeing with the AO that the said income was not derived from the business of the eligible Undertaking. He ought to have appreciated the fact that the said income was not an 'independent source of income' of the Undertaking and hence could not have been excluded for determining the deduction c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IC without appreciating the fact that. 2.1 The assessee was simply undertaking packaging of DGX Compound, Standardization of coolant and formulation of PVC. 2.2 In the process undertaken by it, there is no change in the product and the activity of the assessee does not fall within the parameter of the definition of word 'manufacture'. 3. In view of the facts and the circumstances of the case, whether CIT (A) was correct in allowing deduction u/s 80IC on income from job work more so when the activity being carried out by the assessee was nothing but packaging. 4. In view of the facts and the circumstances of the case, whether CIT (A) was correct in allowing deduction u/s 80IC on other income such as scrap sale, and insurance claim, when these income were not derived, in true sense, from the business of the eligible undertaking. 5. In view of the facts and the circumstances of the case, whether CIT (A) was correct in deleting the disallowance of ₹ 6,36,300/- made by the A.O. u/s 24 (A) and directing to treat receipts of ₹ 21,21,000/- from M/s Hankel Teroson India Ltd., as rental income ignoring that. 5.1 The assessee company and M/s Hankel Tero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act in respect of manufacturing activities carried on by the assessee. The claim of the assessee of deduction under section 80IC of the Act in relation to income earned from undertaking job work for supplying DGX cartridge was held to be allowable. Further the Tribunal in ITA No.120/Chd/2011 and ITA No.255/Chd/2011 relating to assessment year 2007-08 in cross filed by the assessee and Revenue, vide order dated 21.6.2011 had allowed the claim of deduction under section 80IC of the Act both on job work charges and part of other income. The Tribunal in ITA No. 532/Chd/2012 relating to assessment year 200809 vide order dated 30.07.2012 in the appeal filed by the revenue had further allowed the claim of deduction under section 80IC of the Act both on manufacturing, job work charges and part of other income. 10. We find that in the present appeal before us the first issue raised by the Assessing Officer was in respect of deduction under section 80IC of the Act on the profits earned by the assessee from carrying on its manufacturing activities. In view of the claim of the assessee being allowed from year to year we find no merit in the stand of the Assessing Officer in the present y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . as rental income and in not allowing the statutory deduction thereon. 15. The brief facts of the issue are that the assessee had leased out part of the factory building to M/s Hankel Teroson India Ltd. and had declared rental income of ₹ 21,21,000/-. As per the Assessing Officer, since the assessee in the said return was sharing certain expenses and both the concerns were located in the same premises, so letting of the premises was nothing but business arrangement. Hence, the Assessing Officer treated the said receipts received from M/s Hankel Teroson India Ltd. as business receipts and disallowed the claim of deduction under section 24 (a) of the Act at ₹ 6,36,300/-. 16. Before the Commissioner of Income Tax (Appeals), the assessee pointed out that rental income had been declared by the assessee right from assessment year 2003-04 and the sharing of common expenses was the mutual understanding between the parties that does not change the nature of income/profit. The Commissioner of Income Tax (Appeals) vide para 4.3 observed as under : 4.3 I have considered the submission of the Ld. Counsel. The income from letting out of premises in the case of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Corning to the nature of other income earned by the assessee for the year under consideration the learned A.R. pointed out that the insurance claim of R.s.33,310/- represented recovery of material cost and other repairs and claimed for damage to machinery. The income from scrap sale was attributable to the scrap of packing material in which the raw material was received, Further the income from supplier balance written back at ₹ 1 1,51,537/- was on account of liability incurred for material purchased. Misc. income of ₹ 5000/- was recovery of security deposit for tender of MSRTC written off in earlier years. The interest amount was on account of interest earned on FDRs and employees loans. As per the ratio laid down by the Hon'ble Supreme Court in Liberty India Vs. CIT (supra), before holding the assessee to be eligible for deduction under section 80IC of the Act, it is to be determined whether the income earned by the assessee is derived from manufacturing business carried on by the assessee. . 12. The Ahmedabad Bench of Tribunal in Arvind Fashions Ltd. Vs. ACIT (supra) has considered the eligibility of various items of other income being derived from the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80IC of the Act and further, the miscellaneous income received on account of refund of security of deposit and insurance claim of machinery repairs was also not eligible for deduction under section 80IC of the Act. However, the claim of the assessee was allowed on the amount received on scrap sales, credit balances written-off of the parties and insurance claim received towards material damage. We have already in the paras herein above, while deciding appeal of the revenue upheld the order of Commissioner of Income Tax (Appeals) in allowing deduction under section 80IC of the Act on Miscellaneous Income, Insurance claim and income from sale of scrap. However, following the parity of reasoning as in the earlier year, we find no merit in the claim of the assessee vis- -vis deduction under section 80IC of the Act in respect of the interest received from HIMUDA, interest on IT refunds and award received from Government. However, in respect of Foreign Exchange Fluctuation Gain of ₹ 35,432/-, we hold that the is directly linked to the business activity and consequently, the assessee is entitled to the claim of deduction under section 80IC of the Act. The ground of app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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