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TMI Blog2016 (8) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... re should be a direct nexus between such profits and gains and the industrial undertaking or business. Such nexus cannot be only incidental. Therefore the Tribunal has rightly held that the assessee is entitled for deduction under Section 801A of the Income Tax Act, 1961 without deducting the amount of subsidy given by the Government to the farmers and accordingly allowed the claim of the asseessee. We therefore answer the question in favour of the assessee and against the revenue. - TAX APPEAL NO. 941 of 2007 - - - Dated:- 15-7-2016 - MR. KS JHAVERI AND MR.G.R.UDHWANI, JJ. FOR THE APPELLANT : MRS MAUNA M BHATT, ADVOCATE FOR THE OPPONENT : MRS SWATI SOPARKAR, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and the appeal filed by the assessee came to be dismissed. 3.1 On appeal before the Tribunal by the assessee, by impugned order, Tribunal reversed the findings of the CIT(A) and allowed the appeal filed by the assessee by directing the Assessing Officer not to deduct the amount of subsidy given by the government to the farmers, for the purpose of allowing deduction u/s 801A of the Act and held that the assesseetrust is entitled for deduction u/s 801A of the Income Tax Act, 1961. Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 4. Learned advocate appearing for the revenue submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of fertilizers to the farmer and for the same a part of the sale consideration is paid by it by way of subsidy by the Government. Therefore, it cannot be said that the subsidy amount is not part of the profits derived from industrial undertaking. The issue is squarely covered by the decision of the Hon ble Supreme Court in case of Commissioner of Income Tax versus Meghalaya Steels Ltd. [ 2016] 67 taxmn.com 158 (SC) wherein the Hon ble Supreme Court by placing reliance on the decision in case of CIT versus Sterling Foods [1999] 237 ITR 579/104 Taxman 204 (SC) lays down a very important test in order to determine whether profits and gains are derived from business of an industrial undertaking. There should be a direct nexus between such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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