Case Law Details
Maithan Alloys Ltd. Vs PCIT (ITAT Kolkata)
PCIT revised the assessment and held that the interest earned by the assessee from late payment from the sundry debtors and VAT remission shown as miscellaneous income are not the part of the eligible profit u/s 80IE of the Act and therefore deduction u/s 80IE has been allowed in excess resulting into the mistake in the assessment order which has caused prejudice to the revenue.
So far as the issue of interest from sundry debtors is concerned, we find that the same is arising from business activity of the assessee and has been treated as part of the profit for the purpose of deduction u/s 80IE of the Act as the interest earned from the sundry debtors who has not made the payment during the credit period allowed them.
Similarly the VAT remission is also part of and arising because the business activity of the assessee. The assessee has collected sales on the applicable rates on the sales made by it availed 99% of VAT remission under the scheme of Meghalaya State Government in pursuance of Meghalaya Industries (Tax Remission) Scheme, 2006 and paid only 1% to the tax to the Govt. In our view, the said remission has direct nexus with the business of the assessee and therefore has to form a part of eligible unit and deduction u/s 80IE of the Act has to be allowed. The case of the assessee is squarely covered by the decision of Hon’ble Supreme Court in the case of CIT vs. Meghalaya Steel Ltd. wherein the similar issue was laid down in the said case. The Hon’ble Supreme Court held that the transport subsidy, interest subsidy, power subsidy and insurance subsidy has direct nexus with the business of assessee and therefore has to be treated as the part of the eligible profit for the business of deduction u/s 80IB read with Section 80IC of the Act. We therefore following the same, hold that the exercise of revisionary jurisdiction is not valid.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
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