TMI Blog2006 (7) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture of the goods which were ultimately exported out of India. The deduction under s. 80-IB was claimed at Rs. 28,73,753. The AO restricted the claim to Rs. 20,94,545. The difference was on account of denial of deduction under s. 80-IB with respect to income earned by the assessee by way of duty drawback with respect to export made by it. The CIT(A) has since allowed the claim of the assessee on the ground that the duty drawback income can be said to have been derived from the industrial undertaking so as to qualify for deduction under s. 80-IB. The CIT(A) has relied upon the decision of the Tribunal in the case of A.P. Industrial Components Ltd. vs. Dy. CIT (2002) 74 TTJ (Hyd) 272 in corning to this conclusion. Against the aforesaid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing Calico Printing Co. Ltd. vs. CIT (1981) 25 CTR (Guj) 263 : (1982) 137 ITR 616 (Guj); (e) CIT vs. Madras Motors Ltd. (2002) 174 CTR (Mad) 221 : (2002) 122 Taxman 516 (Mad); (f) CIT vs. India Pistons Repco Ltd. (1987) 66 CTR (Mad) 124 : (1987) 167 ITR 917 (Mad); (g) Anil L. Shah vs. Asstt. CIT (2005) 95 TTJ (Mumbai) 216. 5. We have carefully considered the rival submissions. Sec. 80-IB of the Act provides for deduction of profits and gains which are derived from any of the eligible business specified therein, while computing total income of an assessee. The presence of the expression "derived from" in the s. 80-IB is the crux of the matter in dispute before us. The said expression also finds usage in certain other secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Guj). The Hon'ble High Court was considering as to whether the duty drawback income received by the assessee would constitute income "derived from" an industrial undertaking so as to qualify for relief under s. 80J of the Act. The following discussion made by the Hon'ble High Court is worth of notice: "The object of the duty drawback scheme is to reimburse exporters for tariffs paid on the imported raw materials and intermediates and excise duties paid on domestically produced inputs which enter into export production. Customs duties and excise duties on input raise the cost of production in industries and thereby affect the competitiveness of exports. Therefore, exporters need to be assisted for neutralizing the escalation in their cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Madras High Court in the case of CIT vs. Jameel Leathers Uppers (2000) 246 ITR 97 (Mad) on this issue. In the aforesaid two decisions, the issue related to the entitlement of the assessee for relief under ss. 80-I and 80J, respectively in the context of the duty drawback income. 7(a). On this, we find that there is neither a decision of the Hon'ble jurisdictional High Court and nor that of the apex Court. Therefore, without going into the relative merits of the two views, we respectfully follow the view which is favourable to the assessee having regard to the trite law on the issue. This explains our preference to follow the reasoning enunciated by the Hon'ble Gujarat High Court in the case of India Gelatine Chemicals Ltd. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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