Ahmedabad ITAT Allows Tax Deduction U/S 80IC on Scrap and Miscellaneous Income

For notice pay, scrap sales, and miscellaneous income the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) granted deductions under Section 80 IC of the Income Tax Act, 1961.

Under section 80-IC of the Act, the taxpayer has claimed a deduction by ministering them as profit originating from the business of eligible undertaking. AO disputed the deduction for these items of income citing that this income does not originate from the business of manufacturing articles or things. In other terms, the aforesaid income does not have a direct nexus with the manufacturing activity of the eligible undertaking.

AO refused the taxpayer’s claimed deduction. On the taxpayer’s petition the concerned CIT(A) permitted the deduction on specific items as income qualified for deduction u/s 80-IC of the Act and simultaneously, confirmed the disallowance of particular items by holding them non-eligible for deduction u/s 80-IC of the Act.

From the judgment of the High Court, the bench discovered support and guidance in the case of Metrochem Industries Ltd (supra) Section 80-I of the Income-tax Act, 1961 – Deductions – Profits and gains from industrial undertakings, etc., after a certain date (Computation of deduction) – Assessment years 1994-95, 1996-97 and 1997-98 – Deduction u/s 80-I was permissible for Kasar, discount and sales-tax set off In favour of the taxpayer.

On record no material was placed stating any distinguishing feature in the case particulars of the former AY and the year under consideration, hence the two-member bench held that Madhumitha Roy (Judicial member) and Waseem Ahemed (Accountant member) concluded that the taxpayer was qualified for deduction for the income as a stated above u/s 80 IC of the Act.

Consequently, ITAT ruled that u/s 80-IC of the Income Tax Act the taxpayer was qualified for deduction for the income being miscellaneous Income, notice pay, and scrap sales, Revenues petition was dismissed, consequently.

Case Title	Torrent Pharmaceuticals Ltd. Vs DCIT
Case Number	ITA.Nos.2365/Ahd/2018&5 others A.Y.2013-14
Date	26.02.2024
Counsel For Appellant	Shri Vartik Choksi, With Shri DhrunalBhatt, ARs.
Counsel For Respondent	Shri Ritesh Parmar, CIT-DR
Ahmedabad ITAT	Read Order