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Issues involved: Appeal against order treating certain receipts as income not forming part of export profit eligible for deduction u/s 10BA of the Act.
Summary: The appeal was filed by the assessee against the order of the Ld. CIT (A) dated 15th February, 2010, contending that the authorities erred in treating the receipt of DDB and DEPB as income not forming part of the export profit eligible for deduction u/s 10BA of the Act. The assessee, a partnership concern engaged in manufacturing, processing, and export of handicraft articles, mainly wooden, claimed deduction u/s 10BA of the Act. The Ld. Assessing Officer restricted the claim of deduction based on eligible export sales and disallowed certain articles as non-eligible. The assessee failed to produce receipts of DEPB and DDB, which were not considered allowable for deduction u/s 10BA by the revenue. The Ld. CIT (A) denied the claim based on the decision of the Hon'ble Apex Court in Liberty India Vs CIT, which was challenged before the Tribunal. Upon review, the Tribunal found that the Duty Draw Back receipt (DDB) and DEPB do not form part of the net profit of an eligible industrial undertaking for the purpose of deduction u/s 10BA, in line with the decision of the Hon'ble Apex Court. The Tribunal noted that the wording in relevant sections of the Act emphasizes profit "derived from" export, and only the eligible articles were considered for exemption while non-eligible articles were disallowed. Consequently, the Tribunal affirmed the decision of the Ld. CIT (A) and dismissed the appeal of the assessee. This order was pronounced in the open court on 8-10-2010.
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