Chapter VIA of the Income Tax Act, 1961 (herein after referred as the Act) covers only deductions available to assessee under Section 80A of the Income Tax Act, 1961. The assessee by some act as mentioned can reduce its taxable under this provision. Amongst number of sub-sections of chapter VIA, the most important is Section 80IA and 80IB as this relates to the deductions on the profit made on infrastructures projects and also the most litigated sections. In case you claim deductions under this section, 90% chances are that Assessing Officer will dispute your claim and then the process of litigation begins.
The Hon’ble High Court of Delhi stated in CIT v. Sadhu Forgings Ltd. that activity of forging which involves heat treatment of material to produce automobile parts is “manufacture “ and therefore, labour charges and job work charges earned by the assessee for doing the job of forging for customers are gains derived from industrial undertakings and the same are entitled for deduction under section 80IB. Sale of scrap which generated in the process of manufacturing activity and proximate there to constitute gains derived from Industrial undertaking for the purpose of computing deduction under section 80IB.
 46 SOT 366( Agra) (Trib)
 46 SOT 287 (Hyd) (Trib)
 199 Taxman 149 (P & H.) (Mag.)( High Court)
 57 DTR 194/242 CTR 158 ( Delhi) (High Court)