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TMI Blog2013 (7) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... slative intent that only such receipts would fall within the meaning of sub-clause (1) of the explanation as would partake the nature of the words preceding the expression “receipts of a similar nature”. A claim for insurance arises on account of a special loss to an assessee and, therefore, does not require any degree of legal acumen or scholarship to infer that such receipt cannot be included within sub-clause (1) of the aforementioned explanation. We draw support for a conclusion from a judgment of this Court in CIT Vs. Khemka Containers Private Ltd. (2004 (8) TMI 68 - PUNJAB AND HARYANA High Court). In view of what we have discussed above, we answer the first question accordingly and hold that Commissioner of Income Tax (Appeal) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was justified in treating the premium on export quota sales as export incentive entitled to deduction under 1st proviso to Section 80 HHC(3) of I.T. Act? Counsel for the parties are ad idem that question No.3 has been answered against the revenue vide order of even date passed in ITA No.172 of 2006, Commissioner of Income Tax, Ludhiana v. M/s Dee Kay Knitwears. In view of agreement between counsel for the parties, question No.3 is answered against the revenue in terms of the aforementioned order. Question No.2 Counsel for the parties agree that question No.2 is covered against the revenue by a judgment of the Hon'ble Supreme Court of India in [2007] 290 ITR 667 (SC), Commissioner of Income Tax v. Lakshmi Machine Works. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. Therefore, we consider the issue on the basis of netting concept as decided by the Special Bench New Delhi, the net resultant figure is that the expenditure is much more than the Insurance Claim received and the insurance claim can never be more than the loss suffered by the concern. Therefore, the reduction of 90% of insurance claim is totally unjustified and unwarranted and against all principles of accountancy. The detail of insurance claim received and expenditure incurred is enclosed herewith for your honour's reference as Annexure-4. We have also relied upon the judgment of ITAT Delhi 'A' Bench in the case of DCIT vs. Metro Tyres 79 ITD 557 wherein it was held that there was a direct nexus between the amount rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision pronounced in 275 ITR 559. In the case of CIT Vs. Khemka Containers Private Ltd. (275 ITR 559) on the issue of special deduction under section 80-1 there were insurance receipts in respect of raw material destroyed by fire, the Hon'ble Court held that amount is not derived from industrial undertaking, thus not eligible for special deduction. We are of the view that insurance claim is nothing but recovery of losses suffered by the assessee on repair of machines, vehicles, stock etc. which are insured as part of business activities to avoid losses on account of machinery and vehicle breakdown. The total expenditure on vehicle maintenance was ₹ 3,55,846, ₹ 12,68,005/- on machinery repair and maintenance and ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced from profit eligible for deduction. In support of his argument, counsel for the appellant relies upon CIT Vs. Khemka Containers Private Ltd., (275 ITR 559) . We have heard counsel for the parties, perused the impugned order as well as the relevant statutory provisions. Before we answer the question, it would be appropriate to reproduce explanation (baa) appended to Section 80 HHC of the 1961 Act, as follows:- (baa) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by- (1) ninety per cent of any sum referred to in clauses (iiia), (iiib), (iiic), (iiid) and (iiie)] of section 28 or of any receipts by way of brokerage, commission, interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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