2010 (2) TMI 1146 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of whether Duty Draw Back and profit on sale of licenses can be considered as income derived from the business of an industrial undertaking for the purpose of claiming deduction under section 80-IA of the Income-tax Act, 1961.

Summary:

Issue 1: Deduction under section 80-IA for Duty Draw Back and profit on sale of licenses
The Revenue filed an appeal under section 260A of the Income-tax Act against the order of the Income-tax Appellate Tribunal, which had excluded an amount under the head 'Business profit'. The Tribunal had relied on a decision of the Delhi High Court in a similar case. The Revenue raised questions regarding the correctness of allowing deduction under section 80-IA for Duty Draw Back and profit on sale of licenses. The High Court referred to the decision in the case of Liberty India v. CIT, where it was held that Duty Draw Back receipt and DPEB benefits do not qualify for deduction under section 80-IA. The High Court upheld this view and ruled in favor of the Revenue, stating that the same principle applies to profit derived from the sale of licenses.

Decision:
The High Court allowed the appeal filed by the Revenue and answered the questions of law against the assessee-respondent, concluding that Duty Draw Back and profit on sale of licenses do not qualify for deduction under section 80-IA of the Income-tax Act.