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2017 (5) TMI 1630 - HC - Income TaxDeduction u/s 80IB on the amount of duty drawback - Income from Business – Held that:- On the very first issue, the issue is squarely covered by the decision of Supreme Court in Liberty India (2009 (8) TMI 63 - SUPREME COURT) as held duty drawback, rebate etc. should not be treated as adjustment (credited) to cost of purchase or manufacture of goods. - They should be treated as separate items of revenue or income and accounted for accordingly - for the purposes of AS-2, Cenvat credits should not be included in the cost of purchase of inventories - duty drawback, DEPB benefits, rebates etc. cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking - Duty drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/80-IA/80-IB The attempt made to distinguish the same by subsequent judgment, in our considered opinion, will not apply inasmuch as there is no cash transaction and netting off will not apply in the present case, therefore, first issue is required to be answered in favour of the department and against the assessee. Allowing deduction u/s 80IB on interest earned on FDRs - interest income is not a business income and certainly not derived from the business of the industrial undertaking - Decided against assessee.
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