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TMI Blog2024 (7) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(A) although directed the AO to adopt average of growth figure available for three years which came to 25% but ignored the growth rate based on actual figures for the future years. In the instant case, it is not pointed out as to how and in what manner the average growth figure taken by the assessee at 19% for succeeding years, on the basis of valuation report of an independent valuer was wrong. Therefore, we are of the view that the Ld. CIT(A) was not justified in adopting the figure of average growth at 25% instead of 19% adopted by the assessee. Accordingly, we modify the order of the ld. CIT(A) to this extent that the AO for the valuation of shares of M/s Dabur Overseas Ltd., shall adopt the figure of projected growth by taking average of growth figure at 19% instead of 25% directed by the ld. CIT(A). Accordingly, this issue is decided in favour of the assessee and against the department. Deduction u/s 80-IB and 80-IC - receipts of sale of scrap - whether the said claim was legally justified and correct? - Revenue could not question or doubt the legal position as enunciated in CIT v. Sadhu Forging Ltd. [ 2011 (6) TMI 9 - DELHI HIGH COURT ] in view the activities of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e upward adjustment of Rs. 11.64 crores in respect of sale of equity shares of M/s Dabur Nepal Pvt. Ltd. by the respondent? 4. Whether the ITAT under the facts and circumstances of the case and in law was justified in directing that for the valuation of shares of M/s Dabur Overseas Ltd., the AO be required to adopt the figure of projected growth as taken by the respondent i.e. average of growth figure at 19% instead of 25% as previously directed by the Commissioner of Income Tax (Appeals) [ CIT(A) ] 89% adopted by the AO? 5. Whether the Ld. ITAT s was justified in allowing deduction u/s 80-IB and 80-IC in respect of additions on account of Sale of Scrap, Rental income, Miscellaneous Incomes besides statutory disallowances u/s 40(a)(ia) etc. of the IT Act, more so when income from these activities have no direct nexus with the eligible activities of the industrial undertakings? 6. Whether the Ld. ITAT s impugned order suffers from perversity and material error due to non-application of judicial mind on the claim for deduction u/s 80-IB and 80-IC by the assessee and from unlawful abdication of duty to independently determine on facts and law on the said issue, as to whether the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t valuation report obtained from an independent valuer, the actual financials which were available during the course of assessment proceedings were adopted. In the present case, the ld. CIT(A) although directed the AO to adopt average of growth figure available for three years which came to 25% but ignored the growth rate based on actual figures for the future years. In the instant case, it is not pointed out as to how and in what manner the average growth figure taken by the assessee at 19% for succeeding years, on the basis of valuation report of an independent valuer was wrong. Therefore, we are of the view that the Ld. CIT(A) was not justified in adopting the figure of average growth at 25% instead of 19% adopted by the assessee. Accordingly, we modify the order of the ld. CIT(A) to this extent that the AO for the valuation of shares of M/s Dabur Overseas Ltd., shall adopt the figure of projected growth by taking average of growth figure at 19% instead of 25% directed by the ld. CIT(A). Accordingly, this issue is decided in favour of the assessee and against the department. 5. Insofar as questions pertaining to Sections 80IB and 80IC of the Act are concerned, Mr. Chawla could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocesses. Learned counsel for the assessee informed us, without refutation from the Revenue, that the forging involves heating to a desired temperature and then soaking the material at that temperature until the structure become uniform throughout the section and then cooled in a different manner to achieve the desired mechanical and molecular bonding properties. The cooling of the material at some predetermined rates causes the formation of desired structure within the metal for the desired properties with the aim (i) to improve the mechanical property such as tensile strength, hardness, deductibility, shock resistance, etc., (ii) improve machinability, (iii) increase resistance to heat and corrosion (iv) relieve stresses developed due to hot and cold working, (v) modify electrical, magnetic and molecular bonding properties, etc. The heat treatment toughens the forged part for being used as automobile parts. The process of heat treatment is absolutely essential for rendering them marketable. Without the heat treatment, the material is not fit for automobile industry. The learned counsel relied upon CIT v. Tamil Nadu Heat Treatment and Fetting Services (P) Ltd. (No. 2) (1999) 238 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities of the assessee in giving heat treatment for which it had earned labour charges and job works charges, it can thus be said that the appellant had done a process on the raw material which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. These receipts cannot be said to be independent income of the manufacturing activities of the undertakings of the assessee and thus could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB. These were gains derived from industrial undertakings and so entitled for the purpose of computing deduction under section 80-IB. There cannot be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB. 6. In view of the aforesaid, there is no infirmity in the order of the ITAT. No substa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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