Case Law Details
Gulshan Polyols Ltd. Vs ACIT (ITAT Delhi)
The assessee has inter alia claimed deduction under Section 80IC on certain ‘other income’ which inter alia included profit on sale of asset. The Assessing Officer disallowed the claim of deduction under Section 80IC terming it to be incidental income and thus cannot be said to be ‘derived from’ manufacture or produce of any article or thing. For holding so, the Assessing Officer relied upon the judgment rendered by the Hon’ble Supreme Court in the case of CIT vs. Sterling Foods, 237 ITR 579 (SC) wherein the Court observed that the industrial undertaking itself had to be the source of profit and the business of industrial undertaking had to directly yield that profit. The action of the Assessing Officer is clearly governed by the interpretation rendered by the Hon’ble Supreme Court on expression ‘derived from’ and is based on the stance that while the income so reflected in the books may be attributable to the business undertaking but cannot be equated with the expression ‘derived from’ the manufacturing activity. Thus, the deduction reduced on account of interpretative process cannot per se be equated with furnishing of inaccurate particulars of income. In the absence of any culpability, the imposition of penalty owing to denial of deduction on such interpretation on nicety of law does not warrant imposition of onerous penalty under Section 271(1)(c).
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-XXXV, New Delhi (‘CIT(A)’ in short) dated 25.05.2017 passed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) concerning AY 2011-12.
2. The grounds of appeal raised by the assessee reads as under:
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