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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 ..... of Rs. 5,36,385/-consisting of (i) Interest of Rs. 4,66,888/- received on refund of excess recovery by HIMUDA, (ii) Award reed from Government Rs. 20,000/-, Interest on IT Refunds Rs. 14,065/- and Foreign Exchange Fluctuation gain Rs. 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 claimed and allowable u/s 80IC. 4. The revenue In ITA No. 910/CHD/2012 (A.Y. 2009-10), has raised the following grounds of appeal : 1. The Ld. CIT(A) has erred on the facts and in law in allowing the entire deduction under section 80I(C) of Rs. 63,99,693- which includes the income from Job Work of Rs. 28,64,536/- and Other Income of Rs. 60,51,682/ 2. Without prejudice to relief allowed in respect of entire deduction u/s 80IC, the Ld. CIT(A) has erred on the facts and in law in allowing the deduction u/s 80IC in respect of 'Job Work Income" of Rs. 28,64,536/-. 3 Without prejudice to relief allowed in respect of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect 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 Rs. 6,36,300/- made by the A.O. u/s 24 (A) and directing to treat receipts of Rs. 21,21,000/- from M/s Hankel Teroson India Ltd., as rental income ignoring that. 5.1 The assessee company and M/s Hankel Teroson India Ltd., are having business relations and doing same business, using same services and premise and sharing expenses. 5.2 The business receipts has been camouflaged as rental income for claiming deduction u/s 24(a) of the I.T. Act. ITA 910/CHD/2012 :: A.Y. 2009-10 :: Revenue's Appeal 7. The ld. AR for the assessee pointed out that the issue raised in the present appeal is squarely covered by the order of the Tribunal in assessee's own case in earlier years starting from assessment year 2006-07 to 2008-09. The claim of the assessee that the deduction under section 80IC was allowed to the assessee in the earlier year and is duly allowable in the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 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. 11. The second aspect of the issue under section 80IC of the Act is deduction allowable on the profits earned from the manufacturing activities carried on job work basis. 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). 12. The third aspect of deduction claimed under section 80IC of the Act is in respect of other income totaling Rs. 5,36,385/-. The CIT (Appeals) vide para 5.1 following the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 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 has been assessed under the head 'income from house property' right from A.Y. 2003-04. I am entirely in agreement with the Ld. Counsel for the appellant that sharing of common expenses has nothing to do with the letting out of the premises, since these two are different areas. The appellant has not been claiming depreciation on the said premises over the past so many years and for this reason also it would not be appropriate to disturb the head under which the impugned income should be assessed. The disallowance made by the Assessing Officer is accordingly deleted. Ground of appeal No. 4 is allowed. 17. The ld. DR for the revenue failed to controvert the finding of the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 ' business of the eligible industrial undertaking on which deduction under section 80IB of the Act was claimed by the assessee and held as under : i) Interest income on bank deposit is not to be treated as derived from Industrial Unit. ii) Duty drawback was also held to be not derived from the Industrial Unit in view of the ratio laid down in Liberty India (supra). (iii) Income from sale of scrap was held to be generated out of the manufacturing activities of Industrial Unit. Reliance was placed on the decision of Hon'ble Gujrat High Court in DC IT Vs. Harjivandas Jvthahhai Zavert, 258 ITR 785 (Guj) wherein it was held that the amount received by the assessee for job work, empty soda ash, bardana, empty barrels, plastic waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit in the claim of the assessee vis-à-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 Rs. 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 appeal raised by the assessee is, thus partly allowed. ITA No. 976/CHD/2013 :: A.Y. 2010-11 :: Assessee's Appeal 21. The issue in Ground No. 1 raised by the assessee is in relation to treatment of expenditure being capital or revenue in nature. 22. The brief facts of the case are that the assessee had claimed an expenditure of Rs. 8,10,242/- under the head 'repair and maintenance expenses'. The amount was spent towards PU coating on floor. The Assessing Officer treated this expenditure as capital expenditure on the ground that it was spent to increase the value and life of the building, which was of enduring benefit. The Assessing Officer disallowed an amount of Rs. 7,49,474/- after allowing depreciation of Rs. 60,768/-. The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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