TMI Blog2022 (7) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... and was entitled to certain benefits under a scheme formulated by the State Government. However, on facts, the assessee therein claimed the transport expenditure to be incidental expenditure of the assessee s business and while considering the said plea, it was pointed out that the subsidy recoups and that the purpose of recoupment is to make up the possible profit for operating in a backward area and the subsidises were inseparably connected with the profitable conduct of the business and, therefore, the assessee was entitled to the benefit of Section 80IC - The Hon ble Supreme Court in Meghalaya Steels Ltd. (supra) held that the decision in Merinoply Chemicals Ltd. [ 1993 (8) TMI 29 - CALCUTTA HIGH COURT ] correctly appreciated the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, is indeed, covered by the provisions embodied under Section 80IB or 80IC of the Act. In the light of the above discussions, we are of the view that the tribunal had rightly allowed the appeals filed by the assessee and no grounds have been made out to interfere with the said order. Accordingly, the appeal fails and the same is dismissed and the substantial questions of law are answered against the revenue. - THE HON BLE JUSTICE T.S. SIVAGNANAM AND THE HON BLE JUSTICE BIVAS PATTANAYAK Mr. Vipul Kundalia, Adv. Mr. Anurag Roy, Adv. ...for the appellant/revenue Mr. Pranit Bag, Adv. Ms. Ashis Choudhury, Adv. Ms. Aindrilla Basu, Adv., . . . for the respondent/assessee ORDER The Court:- This appeal filed by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not applicable in the instant case since it was on the issue of subsidy and not on VAT reemission? We have heard Mr. Vipul Kundalia, learned standing counsel appearing for the appellant/revenue and Mr. Pranit Bag, learned counsel appearing for the respondent/assessee. The short question involved in this appeal is whether the remission of Value Added Tax (VAT) extended to the respondent/assessee pursuant to a scheme formulated by the State Government can be claimed as a deduction under Section 80IC of the Act. The learned tribunal had disposed of a batch of matters and the assessee s case pertains to remission of VAT which the assessee contended to form part of the profits and gains of the eligible unit and, therefore, the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India was considered by the Hon ble Supreme Court in Meghalaya Steels and the relevant portion of the judgment is as follows : 20. Liberty India being the fourth judgment in this line also does not help the Revenue. What this Court was concerned with was an export incentive, which is very far removed from reimbursement of an element of cost. A DEPB drawback scheme is not related to he business of an industrial undertaking for manufacturing or selling its products. DEPB entitlement arises only when the undertaking goes on to export the said product, that is, after it manufactures or produces the same. Pithily put, if there is no export, there is no DEPB entitlement, and therefore, its relation to manufacture of a product and/or sale wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. It is a fact that the assessee was a manufacturer of plywood, it is also a fact that the assessee has its unit in a backward area and is entitled to the benefit of the scheme. Further is the fact that transport expenditure is an incidental expenditure of the assessee s business and it is that expenditure which the subsidy recoups and that the purpose of the recoupment is to make up possible profit deficit for operating in a backward area. Therefore, it is beyond all manner of doubt that the subsidies were inseparably connected with the profitable conduct of the business and in arriving at such a decision on the facts the Tribunal committed no error. In our considered view, the facts of the case in Merinoply Chemicals L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the decision of the High Court at Delhi in the case of Commissioner of Income Tax, Delhi V, New Delhi Vs. Ritesh Industries Ltd., reported in (2005) 274 ITR 324. The said case pertains to duty drawback claim and which issue had been considered by the Hon ble Supreme Court in Meghalaya Steels Ltd. Therefore, the decision could not render any assistance to the case of the revenue before us. Reliance was also placed on the decision of the Punjab and Haryana High Court in the case of Commissioner of Income Tax, Patiala Vs. M/s. H.M. Steels Ltd., reported in 2015 SCC Online P H 13151. In the said case the issue was whether the sales tax rebate can be said to be derived from any business. What has been granted to the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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