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TMI Blog2023 (6) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, is therefore, dismissed. Allowance of claim of deduction u/s 80HHC - Misc. income such as sale of scrap, stores etc; and Income in the nature of contract compensation - HELD THAT:- With regard to allowance of deduction u/s 80HHC on the sale of scrap and parts, Revenue cannot be in any grievance since as per the AO itself, it is allowable to the assessee. Contract compensation received, considering the uncontroverted facts relating to the nature of the receipt, we agree with theCIT(A) that it has arisen from the business of the assessee, and therefore, the CIT(A) has rightly held that the assessee is entitled to claim deduction u/s 80HHC. Grounds raised by the Revenue are accordingly dismissed. - ITA No.638/Ahd/2012 And IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maining after the claim of deduction under section 80IA of the Act. 3. He pointed out that this issue had been referred to a Larger Bench of the Supreme Court in view of divergent views of the Hon ble Judges in the case of ACIT Vs. M/s.Micro Labs Ltd. reported in 380 ITR 1 (SC).That pending disposal of this reference the present appeals were being adjourned time and again; that now this reference to the Larger Bench had been disposed of as dismissed. The ld.counsel for the assessee stated, therefore, that the issue had to be adjudicated in the light of the prevailing judgments of Hon ble High Courts. He pointed out that the jurisdictional High Court had decided the issue against the case in the case of CIT Vs. Atul Intermediates, 45 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed u/s 80IA of the Act should be reduced while calculation deduction allowable u/s 80HHC of the Act. While on the second issue, out of various incomes included in Misc. Income, held to be not eligible to claim of deduction u/s 80HHC of the Act, the Ld.CIT(A) allowed this claim vis a vis income from scrap sales and contract compensation received by the assessee. Aggrieved by this order of the Ld.CIT(A) both the assessee and the Revenue have come up in appeal before us. 5. Taking up first the assessee s appeal in ITA No. 697/Ahd/2012, the grounds raised are as under: 1. That the order passed by the Ld. CIT (Appeals)-VIII, Ahmedabad is against law, facts and evidence on record. 2. The Ld. CIT (Appeals)-VIII has erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal of the assessee, is therefore, dismissed. 7. Taking up now, the Revenue s appeal in ITA No.638/Ahd/2012, the ground raised are as under: a) The Ld.CIT(A) has erred in law and on facts in directing the A.O. to include misc. income on sale of scrape, stores etc. from business profit while computing deduction u/s 80HHC without appreciating fact that the misc. income such as sale of scrap, stores etc. cannot be treated as part of business profit and is not generated from the business activity eligible for deduction u/s 80HHC. b) The Ld.CIT(A) has erred in law and the facts in directing the A.O. to include contract compensation from business profit while computing deduction u/s 80HHC without appreciating fact that the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be excluded from the business profits. In the decision of Delhi High Court in the case of Sony India (P) Ltd. Vs. Dy.CIT (2008) 114 ITD 448, this matter has been allowed as eligible business profit for computing deduction U/S.80HHC of the Act following the decision in the case of CIT vs. Bangalore Clothing Co. reported at [2003] 180 CTR (Bom.) page 127. Following these decisions, I hereby direct to include Misc. Income as business profits. (e) Contract Compensation - Rs. 48,334/- of Sanitaryware Division excluded from business profits. The contract compensation - Rs. 48,334/- of Sanitaryware Division is on account of claims made for breakages and losses in transit as well as compensation received under contract. The compensati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Hence, it is considered while working of business profits. Therefore, with regard to allowance of deduction under section 80HHC on the sale of scrap and parts, Revenue cannot be in any grievance since as per the AO itself, it is allowable to the assessee. 12. As far as the contract compensation received , considering the uncontroverted facts relating to the nature of the receipt, we agree with the Ld.CIT(A) that it has arisen from the business of the assessee, and therefore, the ld.CIT(A) has rightly held that the assessee is entitled to claim deduction under section 80HHC of the Act on the same. In view of the above, the grounds raised by the Revenue are accordingly dismissed. 13. In the result, both the appeals Revenue an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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