Kavitha Rajagopal ORDER
Kavitha Rajagopal, Member (J)
1. This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals)-50, Mumbai ('ld.CIT(A) for short), passed u/s.250 of the Income Tax Act, 1961 ('the Act'), pertaining to the Assessment Year ('A.Y.' for short) 2001-02.
2. The solitary issue raised by the assessee in this appeal is the denial of deduction u/s. 80IB of the Act amounting to Rs. 4,88,493/- being the compensation received by the assessee from the insurance company.
3. The brief facts are that the assessee company engaged in the manufacturing of garments which are sold through franchisees in various locations all over India. The assessee had filed its return of income dated 30.10.2001, declaring total income at Rs. 3,2560,300/- and the same was processed u/s. 143(1) of the Act. The assessee's case was selected for scrutiny and the assessment order u/s. 143(3) of the Act was passed by the ld. Assessing Officer ('A.O.' for short) dated 27.02.2004, determining the total income at Rs. 3,77,10,303/- after making a disallowance u/s. 80IB of the Act amounting to Rs. 6,56,151/- being the insurance claim and compensation received by the assessee along with the other disallowances.
4. The assessee was in appeal before the ld. CIT(A), challenging the order of the ld. A.O.
5. The ld. CIT(A) deleted the impugned addition/disallowance on this ground.
6. The Revenue was in appeal before the Tribunal, challenging the order of the ld.CIT(A) and the Tribunal had remanded this issue back to the file of the ld. A.O. for deciding the same afresh.
7. The ld. A.O. in the second round of proceeding had disallowed the claim of the assessee made u/s. 80IB of the Act vide order dated 19.12.2008 passed u/s. 143(3)r.w.s.254 of the Act towards the insurance claim and compensation of Rs. 16,28,311/- and added 30% of the same amounting to Rs. 4,88,493/- to the total income of the assessee.
8. Aggrieved, the assessee was in appeal before the first appellate authority, challenging the impugned addition made by the ld. A.O.
9. The ld. CIT(A) upheld the addition made by the ld. A.O. on the ground that the insurance/compensation claimed cannot be considered for computing the eligible profit and gains derived from the industrial undertaking of the assessee.
10. The assessee is in appeal before us challenging the order of the ld. CIT(A).
11. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that some of the assessee's stocks were destroyed and the assessee was compensated by Oriental Insurance Company of Rs. 7,51,494/-. Further to this, the ld. AR submitted that the assessee manufactures garments which are sold by its franchisees where the unsold garments lying with the franchisees remains with that of the assessee and when shortage of stocks were discovered, the same are debited to the franchisees account to the extent of the cost of the goods where the claims and compensation are credited in the assessee's account during the year under consideration amounting to Rs. 8,76,817/-. The ld. AR contended that these are compensation for lost goods which have to be credited to the material consumed by the assessee rather than crediting the same in the P & L account. The ld. AR placed reliance on the decision of the Hon'ble Gujarat High Court in the case of CIT(4) vs. Shree Rama Multi Tech Ltd. MANU/GJ/1233/2013 : [2013] 33 ta........