Case Note & Summary
The appellant, Sesa Industries Limited, an assessee under the Income-tax Act, 1961, filed a tax appeal under Section 260-A against the order of the Income Tax Appellate Tribunal, Panaji Bench, dated 18 February 2009, for Assessment Year 2004-05. The assessee was engaged in the manufacture of pig iron and claimed deduction under Section 80-IB for profits from sale of slag, a by-product. The Assessing Officer disallowed the deduction on slag profits, but the Commissioner of Appeals allowed it. The Tribunal reversed the Commissioner's order. The High Court admitted the appeal on the substantial question of law whether profit from sale of slag could be considered as profit derived from the business of the industrial undertaking for deduction under Section 80-IB. The court, after considering the facts and submissions, held that the profit from sale of slag is derived from the industrial undertaking and is eligible for deduction under Section 80-IB. The appeal was allowed, and the order of the Commissioner of Appeals was restored.
Headnote
A) Income Tax - Deduction under Section 80-IB - Profit from By-product - The issue was whether profit from sale of slag, a by-product in the manufacture of pig iron, could be considered as profit derived from the business of the industrial undertaking for deduction under Section 80-IB of the Income-tax Act, 1961. The court held that the profit from sale of slag is eligible for deduction as it is derived from the industrial undertaking engaged in manufacture of pig iron. (Paras 1-3)
Issue of Consideration
Whether profit from sale of slag, a by-product in the manufacture of pig iron, could be considered as profit derived from the business of the industrial undertaking engaged in the manufacture and sale of pig iron for the purpose of deduction under Section 80-IB of the Income-tax Act, 1961.
Final Decision
The appeal is allowed. The order of the Income Tax Appellate Tribunal dated 18 February 2009 is set aside, and the order of the Commissioner of Appeals dated 30 July 2007 is restored.
Law Points
- Deduction under Section 80-IB
- profit derived from industrial undertaking
- by-product
- slag
- manufacture of pig iron
- substantial question of law
Case Details
2019 LawText (BOM) (04) 157
R.D. Dhanuka, Prithviraj K. Chavan
Mr. R.G. Ramani for the Appellant, Ms. Susan Linhares for the Respondent
Commissioner of Income-tax
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Nature of Litigation
Tax appeal under Section 260-A of the Income-tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal.
Remedy Sought
The appellant sought to have the profit from sale of slag considered as profit derived from the industrial undertaking for deduction under Section 80-IB.
Filing Reason
The Assessing Officer disallowed deduction under Section 80-IB on profit from sale of slag, which was reversed by the Commissioner of Appeals but restored by the Tribunal.
Previous Decisions
The Assessing Officer completed assessment on 29 December 2006 disallowing deduction on slag profit; Commissioner of Appeals allowed deduction on 30 July 2007; Tribunal reversed on 18 February 2009.
Issues
Whether profit from sale of slag, a by-product in the manufacture of pig iron, could be considered as profit derived from the business of the industrial undertaking for deduction under Section 80-IB of the Income-tax Act, 1961.
Submissions/Arguments
The appellant argued that slag is a by-product in the manufacture of pig iron and profit from its sale is derived from the industrial undertaking.
The respondent argued that profit from sale of slag is not derived from the business of the industrial undertaking.
Ratio Decidendi
Profit from sale of slag, being a by-product in the manufacture of pig iron, is derived from the industrial undertaking and is eligible for deduction under Section 80-IB of the Income-tax Act, 1961.
Judgment Excerpts
Whether on facts and in the circumstances of the case, the profit from the sale of slag, which is a by-product in the manufacture of Pig Iron, could, for the purpose of deduction u/s. 80-IB of the Act, be considered as the profit derived from the business of the industrial undertaking engaged in the manufacture and sale of Pig Iron ?
Procedural History
The assessee filed original return on 30 October 2004, revised return on 6 January 2006 claiming deduction under Section 80-IB. Assessing Officer completed assessment on 29 December 2006 disallowing deduction on slag profit. Commissioner of Appeals allowed deduction on 30 July 2007. Tribunal reversed on 18 February 2009. High Court admitted appeal on 7 December 2009 and pronounced judgment on 18 April 2019.
Acts & Sections
- Income-tax Act, 1961: 260-A, 80-IB, 139(5), 80-IA(7), 143(3), 147
