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2014 (6) TMI 981 - HC - Income TaxEligibility for deduction under section 80IB - DEPB and duty drawback not considering - Held that - We are not in agreement that the ITAT has erred in not considering both the aspects viz. the duty drawback as also the claim which was made towards DEPB. If DEPB was covered by Liberty India s judgment 2009 (8) TMI 63 - SUPREME COURT then failure to consider duty drawback claim is unsustainable is the plea. We are unable to agree with the same. Supreme Court has considered both the claims and held as above. Therefore ratio of that judgment is clearly applicable to the facts and circumstances of the present case. The Tribunal did not commit any error in holding that if the claim was of Daman Unit of the Assessee then the matter was squarely covered against the Assessee and in favour of the Revenue by Liberty India judgment. From the copy of the order passed by the Delhi High Court in the case of Dharampal Premchand Ltd. 2010 (9) TMI 155 - DELHI HIGH COURT it is apparent that Assessee filed return declaring certain income which included amount refunded as excise duty. The Assessing Officer held that the refund of excise duty was not income derived and therefore the Assessee was not entitled to include the same in its income. It is in that event the Assessing Officer held that the deduction under section 80-IB in respect of that unit could not be granted. The Assessing Officer s order was reversed by the Commissioner of Income Tax (Appeals). The Tribunal reversed the order of the Commissioner of Income Tax (Appeals). As a result of the above discussion and finding that the Tribunal s order is not vitiated by any perversity we proceed to dismiss this Appeal
Issues:
1. Challenge to the common order passed by the Tribunal 2. Eligibility for deduction under section 80-IB of the Income Tax Act 1961 3. Claim for DEPB and duty drawback 4. Application of judgment in the case of Liberty India vs. CIT 5. Comparison of facts between present case and previous judgments 6. Interpretation of duty drawback and DEPB benefits 7. Applicability of Supreme Court judgments and subsequent High Court judgments 8. Consideration of duty drawback and DEPB claims under section 80-IB Analysis: 1. The appellant challenged the common order passed by the Tribunal, raising issues related to the exchange rate difference eligible for deduction under section 80-IB of the Income Tax Act 1961. The Tribunal allowed the deduction following a previous judgment of the Court. 2. The remaining claim was regarding DEPB and duty drawback. The appellant argued that the Tribunal erred in brushing aside the duty drawback claim, leading to a substantial question of law. The appellant also highlighted discrepancies in the application of the judgment in the case of Liberty India vs. CIT. 3. The appellant contended that the Tribunal's order was erroneous, citing previous cases where similar claims were remanded for reconsideration. The appellant argued for the application of subsequent judgments to support their claim for additional grounds mentioned in the appeal memo. 4. The Tribunal found that duty drawback and DEPB benefits do not form part of the net profits of eligible industrial undertakings under section 80-IB, following the judgment in the case of Liberty India. The Supreme Court's decision emphasized that these benefits are incentives and not profits derived from eligible businesses. 5. The Court analyzed the facts of previous cases to distinguish the nature of incentives and subsidies provided, concluding that the claims for duty drawback and DEPB benefits were not deductible under section 80-IB. The Court found the Tribunal's decision to be in line with the legal principles established in relevant judgments. 6. The Court rejected the appellant's arguments regarding the applicability of previous judgments and upheld the Tribunal's decision, stating that the duty drawback and DEPB benefits were not eligible for deduction under section 80-IB. The Court dismissed the appeal, finding no error or perversity in the Tribunal's order.
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