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2011 (11) TMI 511 - AT - Income TaxDeduction u/s 80-IB denied on Cenvat availed - Revenue treated Cenvat like a scheme of duty drawback - assessee received Cenvat on excise duty paid on purchases of raw material and debited it in the Cenvat adjustment (recoverable amount)account - excise duty payable on sales is adjusted against the said account - Held that:- As assessee reflected purchases in the P&L A/c inclusive of excise duty and consequently Cenvat availed during the year has been credited in the P&L A/c it is apparent that net effect of the accounting methodology employed by the assessee did not impact the derivation of profits and gains ascertainable for the purposes of deduction u/s 80-IB. Also, Revenue have not demonstrated as to how the Cenvat Scheme is parallel to the scheme of DEPB or Duty Draw Back. Therefore, CIT(A) was not justified in upholding the dis-allowance. In CIT vs. Meghalaya Steels Ltd. (2010 (9) TMI 679 - GAUHATI HIGH COURT) it was held that Cenvat scheme is only a mechanism to compute final excise duty on sales, based on the value addition undertaken by the seller and does not represent income liable to be taxed - Decided in favor of assessee.
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