COMMISSIONER OF INCOME TAX Vs. SPORTKING INDIA LIMITED

JUDGEMENT

(1.) THE assessee company is an industrial undertaking within the meaning of the expression in Section 80-IA of the Income Tax Act, 1961 (hereinafter referred to as "the Act" ). For the assessment year 1998-99 an assessment was drawn under section 143 (3) of the Act. Assessing Officer (AO) subsequently issued notices on the ground of income escaping assessment for the reason that the Assessing Officer felt that the assessee company was not entitled to the benefit of Section 80-IA.

(2.) THE facts are that on account of loss of goods which were destroyed by fire, the assessee company was given an insurance claim of Rs. 39,35,841/ -. The assessing Officer was of the view that the amount received from the Insurance company is not "derived from" the manufacturing activity of the assessee company and consequently the assessee was not entitled to the benefit of section 80-IA. The order of the Assessing Officer was, however, set aside by the CIT (A) and which order was confirmed by the ITAT resulting in the Revenue being in appeal in this Court under Section 260-A of the Act. The substantial question of law which has been framed in this case is as under: "whether in the facts and circumstances of the case, learned ITAT/cit (A) erred in deleting the disallowance made by the Assessing Officer on account of Assessee's claim for deduction under Section 80ia in respect of insurance claim received?"

(3.) SECTION 80-IA as it stood at the relevant time for the concerned assessment year reads as under: