Court held that the penalty recovered from suppliers and contractors for delay in execution of works contract, unclaimed balances outstanding pertaining to security deposits and earnest money deposits of contractor written back in the books of account, rebate from power generators, interest income (fixed deposit for opening of letter of credit to Power Grid Corporation Ltd. had to be taken into account while computing the deduction under S. 80IA(4) of the Act. Court also held that ,miscellaneous recovery from employees, the difference between the written down value/book value of released assets, commission from collection of electricity duty, and rental income could not be taken into account while computing the deduction under S .80IA(4) of the Act ( AY. 2006-07 to 2008-09)
Hubli Electricity Supply Co. v. DCIT (2018) 404 ITR 462/ 170 DTR 332 / (2020) 314 CTR 650 (Karn) (HC)
S. 80IA :Industrial undertakings – Distribution of electricity- Penalty Recovered from suppliers for delay in execution of contracts, unclaimed balances of contractors, rebate from power generators, interest on fixed deposits for opening letter of credit to power grid Corporation is includible in profits- Miscellaneous recovery from employees, difference between written down value and book value of released assets, commission for collection of electricity duty, rental income is not part of profits.