TMI Blog2009 (11) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... is 2004-05. The substantial question of law formulated for entertainment of the appeal is as follows : "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in rejecting the deduction under section 80-IB in respect of duty drawback ?" 2. The statement of facts culled out from the memorandum of grounds are as follows : The assessee for the assessment year 2004-05 filed a return on November 1, 2004, admitting a total income of Rs. 3,89,97,640. The return was processed under section 143(1) of the Income-tax Act. The assessee claimed deduction under section 80-IB of the Act in respect of duty draw-back amounting to Rs. 2,85,88,324 relating to a small scale unit situated at Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows (page 200) : "In respect of the assessee's own case pertaining to the assessment year 2001-02, this court in Sakthi Footwear v. Asst. CIT (No. 1) [2009] 317 ITR 199 (Mad) T. C. (A) No. 1252 of 2007-[2009] 317 ITR 194 (Mad) dated November 7, 2007, to which one of us (K. Raviraja Pandian J.) was a party, held thus (pages 196-197) :₹ 4. As far as the first question is concerned, viz., the deduction under section 80-I in respect of duty drawback, the learned counsel for the appellant placed reliance on the Gujarat High Court decision reported in CIT v. India Gelatine and Chemicals Ltd. [2005] 275 ITR 284 wherein it was held that duty drawback was "derived from" the industrial undertaking and, therefore, would be eligible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 467 ; AIR 1997 SC 690 the Division Bench held that, the Supreme Court held the word "derived" is usually followed by the word "from", and it means : get or trace from a source; arise from, originate in ; show the origin or formation of. The Division Bench also followed the decision of this court reported in CIT v. Pandian Chemicals Ltd. [1998] 233 ITR 497 (Mad). 7. In the said decision, this court held that profits or gains eligible for deduction under section 80HH must be derived from the actual conduct of the business. This court further held that the mandate of law is that unless the source of the profit is the undertaking, the assessee is not eligible to claim deduction under section 80HH ; that mere commercial connection between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titlement of the appellant to deduction under section 80-I in respect of duty drawback'." 5. The said judgment of the Division Bench has been confirmed by the Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218 wherein it was observed as follows (page 234) : "17. The next question is what is duty draw back ? Section 75 of the Customs Act, 1962, and section 37 of the Central Excise Act, 1944, empower the Government ofIndia to provide for repayment of customs duty and excise duty paid by an assessee. The refund is of the average amount of duty paid on materials of any particular class or description of goods used in the manufacture of export goods of specified class. The Rules do not envisage a refund of an amount a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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