TMI Blog2014 (12) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... 41(1)(a) of the Act after excise duty refund received by assessee has to be treated as part of the business profit, hence, eligible for deduction u/s 80IB - assessee will be eligible to claim deduction u/s 80IB on the income accruing from refund of excise duty. Issue covered by the decision of SC in M/s Liberty India Versus Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] or not Held that:- The facts are clearly distinguishable and do not apply to the facts of the present case - In case of Liberty India, the honble Supreme Court was considering the profits derived from sale/transfer of DEPB/Duty Draw Back Benefits - DEPB/Duty Draw Back Benefits, is given under a scheme framed under the Customs Act and it is transferable, in other words, it is a marketable commodity - Excise duty refund by assessee in the present case is neither a marketable commodity nor transferable - It is only a refund of expenditure already incurred by assessee, hence the decision will not apply the order of the CIT(A) is upheld Decided against revenue. Taxability of excise duty refund Capital receipt or not Held that:- Assessee has not only treated excise duty refund as a revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the manufacture and sale of pesticides and fertilizers. Assessee for the purpose of manufacturing pesticides has set up a unit in Jammu and Kashmir (in short J K). Government of India declared a new industrial policy holding out various concessions and incentives for the state of J K vide notification No. 1(13)2000-NER, dated 14/06/2002 for enabling state of J K to develop an environment for industrial development, improving availability of capital and increase in market access to provide fillip to private investment in the State. Pursuant to the said industrial policy of Government of India various incentives like capital subsidy, interest subsidy, insurance subsidy, etc. were announced for new units to be set up in the state of J K. As part of the overall incentives to be provided for the new units to be set up in state of J K, excise duty subsidy was also announced by Central Excise Department vide Notification NO. 56/02-CE dated 14/11/02 on the goods manufactured at the undertaking situated in specified areas of J K. As per the said notification, assessee became entitled to claim excise duty refund on account of duties paid other than those through CENVAT credit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious decisions placed before her allowed assessee s claim of deduction u/s 80IB on excise duty refund. The finding of the learned CIT(A) on this issue is reproduced hereunder: 5. The appellant is engaged in the business of pesticides and fertilizers. It had set up its manufacturing unit in Jammu Kashmir which is the backward area. As per the Government Notification No. 1(13)/2000-NER dated 14.06.2002,the assessee is entitled for refund of Excise Duty of 100% for period of 10 years. This Notification was issued by Government of India to promote industrial development, to improve availability of capital and to increase market access in the backward State of Jammu Kashmir. The mechanics of this exemption is, the manufacturer would submit a statement of Excise Duty paid to Excise authorities by 7th of the following month in which the Excise Duty was paid. The authorities, after due verification, would refund the Excise Duty to the manufacturer by 15th of the following month. In the instant case, the Excise Duty paid during the relevant year was ₹ 6.06 crores. The sales do not include Excise Duty. Correspondingly the Excise Duty paid was also not debited to Profit and Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. CIT Vs. Meghalaya Steels Ltd., 332 ITR 91 (Gauhati) 3. M/s J.K. Aluminium Co., ITA No. 3303/Del./2010 4. Diamond Tool Industries Vs. DCIT, ITA No. 2080/Mum/11 5. Addl. CIT Vs. Total Packaging Services, ITA No. 5346/Mum/09 8. Having considered rival submissions and perused the orders of revenue authorities as well as other materials on record and after having applied our mind to the decisions relied upon by the parties, we do not find any infirmity in the order of ld. CIT(A) in allowing benefit u/s 80IB to assessee on excise duty refund for the following reasons. 9. It is clear from the assessment order that AO has denied 80IB deduction on excise duty refund for the sole reason that it cannot be treated as income derived from eligible business of the undertaking. However, as can be seen from the facts brought on record, there is no dispute that assessee has paid the excise duty on the goods manufactured and sold and as such it forms part of the sale price of assessee. Therefore, payment of central excise duty is integrally connected with the manufacturing and sale of goods produced by assessee. It is also not in dispute that as per the industrial policy resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt not liable to tax. 2. The learned CIT(A) has erred in not adjudicating the ground relating to excise duty rebate received by the Respondent in pursuance of notification issued under the industrial policy of the State Government of Jammu and Kashmir, for attracting/setting up of new industries in the state and increasing the employment in the state, is capital receipt and not liable to tax. 12. Grounds raised by assessee in C.O. for AY 2008-09 are as under: 1. Excise duty rebate being an incentive granted to the Respondent in the State of Jammu and Kashmir, pursuant to the notification issued under the industrial policy of the State Govt. of Jammu and Kashmir for attracting/setting up of new industries in the state and increasing the employment in the state, is a capital receipt not liable to tax. 2. The learned CIT(A) has erred in not adjudicating the ground relating to excise duty rebate received by the Respondent in pursuance of notification issued under the industrial policy of the State Government of Jammu and Kashmir, for attracting/setting up of new industries in the state and increasing the employment in the state, is capital receipt and not liable to tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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