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COMMISSIONER OF INCOME TAX-II Versus M/s. HIREN ALLUMINIUM LTD

2015 (7) TMI 783 - GUJARAT HIGH COURT

Deduction u/s.80IB - ITAT confirming the order passed by CIT(A) in directing not to exclude the following income, i.e.Interest on delayed payment from debtors,Interest on loan advances to group concerns,Interest on fixed deposits and Income by way of sale of DEPB entitlement from profit of the business for working of deduction u/s.80IB - Held that:- As relying on Nirma Industries Ltd. V/s. Deputy Commissioner of Income-Tax (2006 (2) TMI 92 - GUJARAT High Court) as well as Commissioner of Income- .....

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e of Liberty India V/s. Commissioner of Income-Tax (2009 (8) TMI 63 - SUPREME COURT) has categorically held that such income cannot be treated as income from business activities and, therefore, no deduction can be granted under the provisions of 80-IB. Decided against assessee. - TAX APPEAL NO. 858 of 2010 - Dated:- 15-7-2015 - MR. A.J.DESAI AND MR. A.G.URAIZEE, JJ. FOR THE APPELLANT : MR MR BHATT, LD.SENIOR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE FOR THE OPPONENT : MR SAURABH SOPARKAR, LD.SENI .....

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he judgement and order dated 15/05/2009 passed by Income Tax Appellate Tribunal, A-Bench, Ahmedabad in ITA No.2339/Ahd/2006, by which, the appeal preferred by the revenue challenging the order of Commissioner of Income Tax (Appeals)-VIII, Ahmedabad, has been partly allowed. 3. Brief facts, arise from the record of the case, are as under: That the respondent is an industrial undertaking registered under the provisions of Companies Act,1956 and is in business of manufacturing aluminium wire rods, .....

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Tax (Appeals). By judgement and order dated 29/08/2006, the appeal preferred by the assessee was partly allowed and it was held that the petitioner was entitled for the deductions provided under section 80-IB of the Act for DEPB. The said decision was challenged by revenue before the Income Tax Appellate Tribunal, A-Bench, Ahmedabad, which came to be dismissed by the Tribunal vide order dated 15/05/2009. Hence, the present appeal. 4. At the time of hearing, following substantial question was ra .....

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of sale of DEPB entitlement ₹ 10,53,381/-?" 5. Mr.M.R.Bhatt, learned Senior Counsel assisted by Mrs.Mona Bhatt, learned advocate appearing for the petitioner has fairly submitted that the appeal is required to be partly allowed in view of the ratio laid down by Hon ble Apex Court. He would submit that though the disputed question is bifurcated in four parts, the appeal is required to be allowed as far as 4th part of the question i.e. with regard to income received by the assessee by .....

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on 80-IB : they belong to the category of ancillary profits of such undertaking. Profits derived by way of incentives such as DEPB cannot be credited against the cost of manufacture of goods debited in the profit and loss account and they do not fall within the expression profits derived from industrial undertaking under section 80-IB. Therefore, he would submit that the Tribunal has wrongly allowed income of DEPB under the provisions of section 80-IB. He, therefore, would submit that the appeal .....

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is no need to answer the same. He would submit that the Tribunal has rightly held that the petitioner is entitled for the set off u/s.80-IB for the amount of interest on delayed payment. By relying upon the decision rendered in the case of Nirma Industries Ltd. V/s. Deputy Commissioner of Income-Tax - [2006]283 ITR 402(Guj) as well as in the case of Commissioner of Income-Tax V/s. Nirma Ltd. - [2014]367 ITR 12 (GUJ), has submitted that there is no need to interfere with the judgement of Tribuna .....

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siness and the assessee would be entitled for deduction on such interest on its total income. Therefore, learned Tribunal has rightly confirmed the order in favour of the assessee by the CIT (Appeals). 8. As far as deduction granted by the Commissioner of Income Tax (Appeals) as well as the Income Tax Appellate Tribunal with regard to the income received by the assessee so far as sale received from DEPB is concerned, the Hon'ble Supreme Court in the case of Liberty India V/s. Commissioner of .....

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acquisition. Hence, trade discounts, rebate, duty drawback, and such similar items are deducted in determining the costs of purchase. Therefore, duty drawback, rebate, etc., should not be treated as adjustment (credited) to the cost of purchase or manufacture of goods. They should be treated as separate items of revenue or income and accounted for accordingly (see: page 44 of the Indian Accounting Standards and GAAP by Dolphy D'souza). Therefore, for the purposes of AS2, Cenvat credits shou .....

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