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TMI Blog2019 (1) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee? ii. Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in directing not to exclude the exchange rate difference of Rs. 21,81,641/ from the profits eligible for deducting u/s 80IB? iii. Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in directing not to exclude the scrap income of Rs. 13,25,620/ from the profits eligible for deduction u/s 80IB, even though the said income is not directly 'derived from' the manufacturing activity of the assessee? iv. Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in setting aside the settled issue to the file of the A.O. in respect of exclusion of export benefits such as DEPB & duty drawback etc from the profits eligible for deduction u/s 80IB in contravention of the ratio laid down by the Hon'ble Apex Court Liberty India Vs. CIT (2009) 317 ITR 6218 (SC)?" 2. The respondent-assessee is a manufacturer-exporter and claims deduction of income derived from such business in terms of Section 80IB of the Income Tax Act, 1961 ("the Act" for short). In this context, the revenue has raised objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 80HHC of the Act, noted that such exchange fluctuation was not on account of delayed realization of export proceeds. It was the case in which the interest rate fluctuation arose after completion of the export activities and the receipts which were kept in EEFC account. The facts of the present case are therefore, distinguishable. 6. The question No.3 arises out of the revenue's objection to the assessee's claim of deduction of income arising out of sale of scrap. The revenue argues that such income cannot be stated to have been derived from the assessee's export business. In this respect, we notice that the Commissioner appeals while granting the relief to the assessee had come to factual finding that the assessee was engaged in manufacturing activity. During the course of such manufacturing activity scrap was generated out of use of various raw materials till the finished goods are produced. Such scrap was sold which generated receipts which in turn reduced the costs of manufacturing. It can thus be seen that scrap was generated in the course of assessee's manufacturing activity and the income generated out of sale of such scrap was adjusted to the cost of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the assessee's export business, the costs incurred for receiving such benefits must be accounted for. 8. In Income Tax Appeal No.1139 of 2016 the revenue has suggested one more question which reads as under: "Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in deleting the addition made by AO on account of setting off the loss amounting to Rs. 1,10,79,284?" 9. This question rises out of the revenue's objection to the assessee's claim of deduction under Section 80IC of the Act in respect of its one of the units. The assessee had claim a deduction of 1.70 crores (rounded off). The Assessing Officer noticed that the assessee had incurred loss of Rs. 1.10 crores (rounded off) in relation to the said unit in the earlier assessment year which was absorbed against other incomes. The Assessing Officer was of the opinion that the assessee should have brought forwarded the national loss to the current year which had to be set off against its claim of deduction for the present year. This view was also accepted by the CIT appeals. The Tribunal however reversed the decision relying on the decision of the Madras High Court in case of Velayudha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the initial assessment year. 8. Heard the counsel appearing for the parties and perused the materials available on record. 9. On a perusal of the order of the assessing officer, it is seen that the eligible income for deduction under Section 80IA is worked out in all the cases as follows: Tax Case No. 909 of 2009 Net income from Windmill Division 1 1,70,76,945 (200203) Less: (a) Unabsorbed depreciation 8,26,84,110 allowance assessment year 200304 (b) Income from Windmill Division 1 71,16,270 (2002-03) assessment year 200405 Balance of unabsorbed depreciation 7,55,67,840 allowance Unabsorbed depreciation allowance () 5,84,90,895 balance Tax Case No. 940 of 2009 Net income from Windmill Division 2,82,67,370 Less: Unabsorbed depreciation allowance (initial assessment year) Asst. yr. 2003-04 12,11,01,360 &s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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