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TMI Blog2010 (9) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... profits derived by the eligible undertakings of the appellant company Particular of receipts Dadra undertaking (Rs). Barotiwala undertaking(Rs) Total (Rs) Plating and services charges 6,400/- 33,615 40,015 Scrap sales 11,90,405 4,40,822 16,31,227 Insurance claim 25,344 0/- 25,344 Interest from customers for delayed payments 10,06,470 13,95,882 24,02,352 Total 22,28,619 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is manufacturing Electro Plate Chemicals and equipment. The plating and service charges are regarding the job wok and services provided by the assessee by using infrastructure of the undertaking therefore the said charges are directly related to the working of the undertaking and part and parcel of the profit derived by the industrial undertaking. As regards the scrap sale , the ld. AR has submitted that the scrap has been generated in the process of manufacturing, therefore the scrap is also a part and parcel of the industrial undertaking and eligible for deduction. As regards insurance claim is concerned, the ld. AR has submitted that though it is not recorded by any authorities as for what purposes the insurance claim was receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Nirma Industries ltd V/s DCIT reported in 283 ITR 402 (Guj). 8.. On the other hand, the learned DR has submitted that since the said receipt did not have direct nexus to the profit, of the undertaking. Therefore, these are only incidental to the business carried out by the assessee and hence not eligible for deduction u/s 80IB. He has relied upon the decision of the Honourable Supreme Court in the case of Liberty India V/s CIT reported in 317 ITR 218(SC) as well as the orders of the lower authorities. 9.. We have considered the rival contentions and relevant record. Since the plating and service charges were the income earned by the assessee for doing the job work and service charges by utilizing the plant and machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to special deduction under section 80 IB in respect of customs duty draw back. There cannot be any dispute that sale of scrap and insurance claim had direct nexus with assessee s business though it may not have direct nexus with industrial undertaking. Therefore, respectfully following the decision in the case of ELTEC SGS P ltd (supra), we dismiss this ground 10. Further, the Hon. Delhi High Court in the case of CIT V/s Advance Detergents Ltd (supra) have also considered this issue regarding the profit and gain derived from the business of the industrial undertaking after considering the decision of the Hon. Supreme Court in the case of Liberty India V/s CIT (supra). Accordingly, we are of the view that when the income was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute the profits of the business as computed under the head of profits and gains of business or profession. The income emanating from the sale would not be sustainable to a reduction of ninety percent for the simple reason that it would not constitute a receipt of a nature similar to brokerage, commission, interest, rent or charges. A contract of insurance is a contract of indemnity. The insurance claim in essence indemnifies the assessee for the loss of the stock- in- trade. The indemnification that is made to the assessee must stand on the same footing as the income that would have been realized by the assessee on the sale of the stock in trade. In these circumstances, we are clearly of the view that the insurance claim on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erchandise the proportion of the export turnover to the total turnover of the business is applied to the profits of the business. The profits of the business in turn are defined in explanation (baa) to section 80HHC. Hence, the element of export turnover is a facet which has been taken care of by the legislature in the application of the formula which is referred to in sub-section (3) of section 80HHC. In determining the profits of the business for the purposes of explanation (baa), the incomes which are susceptible to a reduction of ninety percent are those which are specifically prescribed by the legislature. These are inter alia the incomes referred to in clauses (iiia), (iiib) and (iiic) of section 28 and receipts by way of brokerage, c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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