Section 80IB Deduction allowed on Sale of Scrap Generated during Manufacturing

ACIT Vs Wyeth Ltd. (ITAT Mumbai)

ITAT held that deduction under Section 80IB of Income Tax Act, 1961 allowable on scrap  generated during the manufacturing process.

Ground no.3 is with respect to the disallowance of deduction under section 80IB of the Act amounting to ₹8,075/-. The assessee has claimed deduction under Section 80IB of the Act on account of profit of Goa Plant amounting to ₹27,16,35,136/-. The learned Assessing Officer noted that ₹8,075/- being sale of scrap is also included therein. Therefore, on sale of scrap deduction under section 80IB of the Act cannot be allowed. The matter reached before the learned CIT(A), who allowed the claim of the assessee. The reason was that the scrap was generated during the manufacturing process.

The learned Departmental Representative, even before us could not dispute that the scrap was not generated during manufacturing process. Thus, we do not find any infirmity in the order of the learned CIT(A). Thus, ground no. 3 of the appeal is dismissed.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

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