Full News
ITAT allowed claim of deduction u/s 80IB (of Income Tax Act, 1961)
ITAT allowed claim of deduction u/s 80IB (of Income Tax Act, 1961)
In Visaka Industries Ltd’s case, AO made additions on account of disallowance of bad debts relating to write off of rental advance, and 'other income' not considered for allowing deduction u/s 80IB (of Income Tax Act, 1961). CIT(A) confirmed additions. ITAT confirmed addition on rental advance and held it to be capital loss. It allowed claim of deduction u/s 80IB (of Income Tax Act, 1961) as scrap was part of industrial undertaking.-500370
1. M/s Visaka Industries Ltd was engaged in the business of manufacture of asbestos sheets etc
2. It filed its return of income and declared total income of Rs. 16.5 croes.
3. Assessment was completed u/s 143(3) (of Income Tax Act, 1961) determining taxable income of Rs. 17.3 crores.
4. AO had made additions on account of disallowance of bad debts relating to write off of rental advance, and 'Other income' not considered for allowing deduction u/s 80IB (of Income Tax Act, 1961).
5. CIT(A) confirmed the additions.
On appeal, the ITAT held as under:
6. It is clear that this advance payment was not for the normal course of business/trade.
7. Since the capital asset is created, the same cannot be treated as revenue loss but capital loss.
8. In the other cases raised by assessee, the bad debts arose in the normal course of business and are revenue in nature, but, in the present case, advance written off was in the nature of capital asset.
9. Considering the above ratios laid down in the cases, we are of the opinion that the assessee is eligible to claim income from scrap sales.
10. The scrap is part and parcel of any industrial undertaking, without which, there is no manufacturing activity. Hence, entitled to claim benefit u/s 80IB (of Income Tax Act, 1961).
11. Coming to the income from insurance, the undertaking claimed loss from insurance company, it is nothing but compensation for the finished goods lost after manufacturing in the undertaking and during transit.
12. Similarly, the insurance income derived due to loss of manufactured finished goods.
13. Hence, it is entitled to claim benefit u/s 80IB (of Income Tax Act, 1961).
14. With respect to other income like interest, which is not part of industrial activities or manufacturing, hence, it is not entitled for the benefit u/s 80IB (of Income Tax Act, 1961).
15. In the result, assessee is allowed to claim benefit on scrap sales and insurance income, rest are dismissed.
Case Reference - M/s Visaka Industries Ltd vs ACIT.
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH "B", HYDERABAD
BEFORE SHRI P.MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No. 503/Hyd/2012
( Assessment Year: 2008-09)
×
