INCOME TAX ACT, 1961

Section 80-IC

Deduction under section 80-IC - Disallowance under section 80-IC on account of scrap sales - Income from sale of scrap were inextricably intrinsically connected with industrial undertaking - Computation of

Assessee was having 3 manufacturing units and claimed deduction under section 80-IC @ 30% on the first two units and @ 100% on the last one. However, AO noticed substantial amount of scrap sales having been credited in the profit and loss account qua which assessee had claimed deduction under section 80-IC at respective rates of reduction. Declining the contentions raised by assessee company, AO disallowed deduction claimed under section 80-IC on the amount of scrap sales. Held: CIT (A) had duly obtained and analyzed unit wise details of scrap sold in the year under assessment and had not noticed any discrepancy therein. Hence, receipt of scrap sales claimed as deduction by assessee under section 80-IC was part and parcel of business activities and forms part of business gains, thus required to be included in gains from business to be eligible for deduction under section 80-IC. CIT(A) had erred in disallowing deduction from scrap sales under section 80-IC. Consequently, the appeal filed by assessee was allowed.

Followed:CIT v. Sadhu Forging Ltd. (2011) 336 ITR 444 (Del.) : 2011 TaxPub(DT) 1034 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13

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