TMI Blog2012 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal by the revenue is directed against the order dated 9.7.2009 of CIT(A) for the assessment year 2006-07. The disputes raised in this appeal relates to nature of income from import entitlements and allowability of profit eligible for deduction under section 80HHC while computing book profits under section 150JB. 2. We first take up the issue regarding nature of income from import entitlements. The AO noted that the assessee had shown income of Rs.54.08 lacs from import entitlement and duty drawback of Rs.33.90 lacs. The AO, therefore, asked the assessee to explain as to why the above amount should not be considered as income and claim of deduction under section 80IB in respect of the said issue should not be disallowed. The assessee submitted that the import entitlement of Rs.54.08 lacs referred to entitlement of the company for DEPB licence. The assessee had utilized only a sum of Rs.11,50,012/- in the business which would only go to reduce the cost of the material. No part of the entitlement had been transferred and, therefore, provisions of section 28(iiid) were not applicable. It was thus argued that the sum of Rs.54.08 lacs was not taxable. As regards duty drawback, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the duty draw back could not be assessed as income. Aggrieved by said decision revenue is in appeal before the Tribunal. 2.2 Before us, the ld. AR for the assessee submitted that the assessee did not even apply for DEPB credit and, therefore no income had accrued on this account. It was also submitted that similar issue had arisen in assessee s own case in assessment year 2005-06 and the Tribunal had restored the issue to the file of AO for fresh adjudication in the light of judgment of Hon ble High Court of Bombay in the case of Kalpataru Colours and Chemicals (328 ITR 451). As regards duty drawback, the ld. AR reiterated the submissions made before lower authorities that it was not incentive and only refund of duty already paid and, therefore, no income element was involved. Reliance was placed on the decision of Delhi Bench of the Tribunal in the case of J.K. Aluminium Co. vs. ITO in ITA No.3303/Del/2010. The ld. DR on the other hand supported the order of AO and placed reliance on the findings given by AO. It was also submitted that the decision of the Tribunal relied upon by the ld. AR was distinguishable. 2.3 We have perused the records and considered the rival con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In that case, the assessee was manufacturing products which were exempt from excise duty however, as per procedure laid, the assessee has to first pay excise duty on removal of goods from the bonded warehouse and make claim of refund of excise duty paid by the seventh day of the following month. The payments had been debited in the P L account and on refund identical amount had been credited to the P L Account. Thus there was no effect on the profit/loss. The Hon ble High Court observed that refund of excise duty was directly linked to manufacturing activity and, therefore, the same could not be excluded for computing deduction under section 80IB of the Act. The case of the assessee is different. The assessee is not manufacturing any excise duty free product. The assessee is entitled to refund of excise duty on export of goods under the Exim Policy. However, the full facts are not clear. It is not clear whether duty paid imported material had been exported as such or it had been utilized in the manufacture of some product which had been exported. In case the duty paid imported material had been exported, in the same condition, there is no manufacturing activity and therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit eligible for deduction under section 80HHC on the basis of adjusted book profit amounting to Rs.9,23,17,316/- had to be reduced while working out the book profit in view of the decision of the Tribunal in the case of DCIT Vs. M/s. Syncome Formulations (I) Ltd. dated 14.3.2005 in ITA No.2711/M/2003. Aggrieved by the said decision the revenue is in appeal. 3.1 Before us the ld. Authorised Representative submitted that the same issue had arisen in assessment year 2005-06 in which the Tribunal in order dated 28.9.2011 in ITA No.967/M/2009 held that following the judgment of Hon'ble Supreme Court in the case of Ajanta Pharma Ltd. (327 ITR 305) entire export profit earned by the assessee was eligible profit under section 80HHC(3) and thus be reduced under section 115JB. The ld. Departmental Representative on the other hand submitted that since from assessment year 2005-06 no deduction was allowable, no deduction on account of section 80HHC could be allowed while computing book profits. 3.2 We have perused the records and considered the rival contentions carefully. The dispute is regarding reduction of book profit by the amount of profit eligible for deduction under section 80HH ..... X X X X Extracts X X X X X X X X Extracts X X X X
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