TMI Blog2007 (7) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... direct but only incidental. – benefit of deduction u/s 80Ib is not allowed for duty drawback - 496 and 495 of 2006 - - - Dated:- 26-7-2007 - M. M. KUMAR and AJAY KUMAR MITTAL JJ. Yogesh Putney for the appellant. S. K Mukhi for the respondent. JUDGMENT The judgment of the court was delivered by M. M. KUMAR J. - The Revenue has preferred I. T. A. Nos. 495 and 496 of 2006 against the common order dated September 28, 2005, passed by the Income-tax Appellate Tribunal, Delhi Bench, "SMC", New Delhi (for brevity, "the Tribunal"), in I. T. A. No. 5169/Delhi of 2004 in respect of the assessment year 2001-02 (in the case of Lakhvinder Singh) and I. T. A. No. 5175/Delhi of 2004 and in respect of the assessment year 2001-02 (in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated January 16. 2004 (A-1) before the Commissioner of Income-tax (Appeals), who differed with the Assessing Officer and held that the duty drawback received by the assessee-respondent was inextricably linked with the production cost of the goods manufactured by the assessee-respondent. Accordingly, it was held that the duty drawback was trading receipt of the industrial undertaking. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to allow deduction under section 80-IB on the amount of duty drawback of Rs. 13,60,673. 4. On further appeal filed before the Tribunal, the decision taken by the Commissioner of Income-tax (Appeals) was confirmed and the appeal of the Revenue was dismissed, vide its order dated Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is a difference between the phraseology of section 80-I, which was considered by the hon'ble Delhi High Court and that of section 80-IB which is the subject-matter of controversy in the present cases and which has risen before the Delhi Benches of the Tribunal in the above cited cases. Whereas section 80-I refers to 'profits and gains' derived from an 'industrial undertaking', section 80-IB refers to 'profits and gains' derived from any business referred to in sub-sections (3) to (11), (11A) and (11B) (such business being hereinafter referred to as the eligible business) ... sub-section (3) refers to industrial undertakings located in different areas classified as backward." 6. Mr. Yogesh Putney, learned counsel for the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the respondent-assessee, on the other hand, has vehemently argued that the consistent view taken by various courts is that any duty of customs and excise repaid as drawback to an assessee against export under the Customs and Central Excise Duties Drawback Rules, 1971, if inextricably linked with the industrial undertaking then deductions under section 80-IB are allowable. In that regard, learned counsel has placed reliance on a Division Bench judgment of this court in the case of Phatela Cotgin Industries P. Ltd. v. CIT [2008] 303 ITR 411 (P H) (being I. T. A. No. 432 of 2005, decided on May 31, 2007) which pertains to deductions claimed under sections 80HH and 80-I of the Act. The assessee had claimed that interest received on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be higher than imported goods used in the exported goods. Sale proceeds should reach India of such exported goods, etc. Section 75 of the Customs Act Drawback should be allowed of duties of customs used in the manufacture or processing of such goods or carry out any operation on such goods. Customs and Central Excise Duty Drawback Rules, 1995. 2.(a) "Drawback" in relation to any goods manufactured in India, and exported, means the rebate of duty chargeable on any imported materials or excisable materials used in the manufacture of such goods; (b) "Excisable materials" means any material produced or manufactured under this Act, in India subject to duty of excise under this Act, in India s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the hon'ble Supreme Court in Sterling Foods Ltd's case [1999] 237 ITR 579 has held in favour of the Revenue. After referring to section 80HH, their Lordships had observed as under (page 584): "We do not think that the source of the import entitlements can be said to be the industrial undertaking of the assessee. The source of the import entitlements can, in the circumstances, only be said to be the Export Promotion Scheme of the Central Government whereunder the export entitlements become available. There must be, for the application of the words 'derived from', a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus is not direct but only incidental. The industrial undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
