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TMI Blog2007 (7) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... rh Bench-A (for brevity, 'the Tribunal'), in ITA No. 565/Chandi/2001, in respect of the assessment year 1998-99 and ITA No. 639/Chandi/2004, in respect of the assessment year 2000-01. The assessee is a Limited Company incorporated under the Companies Act, 1956 and is engaged in the business of manufacture of knitted cloth from raw wool and trading of the goods produced. It had filed its return for the assessment year 1998-99 at ₹ 36,27,866/-. The case was selected for scrutiny and notices under the Act were issued. The Assessing Officer observed that besides the activity of manufacturing of yarn, the assessee was also engaged in the trading of raw wool and knitted cloth, which in addition were being manufactured by the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the matter has been decided in favour of the appellant. The AO, while concluding his finding has stated that the facts and circumstances of case regarding claim of deduction u/s 80(IA) are similar to the facts of assessment year 1997-98 but as the appellate decision in the preceding year has not been accepted, deduction was not allowed. In view of detailed discussion in the appellate order for the preceding assessment year, the AO is directed to allow the said deduction u/s 80(IA) and accordingly this ground of appeal is allowed. In ground No. 3, the appellant has contested the disallowance of ₹ 16,912/- made under the head "telephone expenses". On consideration of the matter it is held that various Benches of ITAT have taken a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us is liable to be decided against the assessee and in favour of the revenue. The controversy before us revolves around as to whether or not the profits derived by the assessee from trading activity would constitute profits and gains derived from the industrial undertaking for the purposes of section 80IA of the Act. The industrial undertaking of the assessee business of sale and manufacture of yarn. The stand of the assessee is that in view of the presence of the expression 'any business' the profits from all kind of activity, even other than the activity of manufacturing carried out by an industrial undertaking, would fall within the ambit of section 80IA of the Act. In our view, the presence of expression 'derived from' in section 80IA i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... biguity that it is only the profits and gains derived from the actual conduct of business of an undertaking i.e. carrying on of manufacture of production of articles or things which alone are eligible for claim of deduction under section 80IA of the Act. Moreover, in view of the authoritative pronouncement of the Hon'ble Jurisdictional High Court in the case of Liberty Shoes Ltd (supra) it is to be held that deduction under section 80IA of the Act will not be eligible in respect of profits derived from the business of trading of products of other concerns as the same does not qualify to constitute the profits and gains derived from industrial undertaking. Therefore, having regard to the legal position as enunciated by the Hon'ble Jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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