2009 (7) TMI 19 - HC - Income Tax

Deduction u/s 80IB Duty Drawback and Premium on DEPB ITAT hold that the appellant was not entitled to the deduction u/s 80IB in respect of profits and gains arising on account of duty drawback and premium on DEPB which is intrinsically related/connected to the business profits of the industrial undertaking ITAT order upheld by following the decision in the matters of India v. Commissioner of Income Tax 2007 -TMI - 1767 - HIGH COURT PUNJAB AND HARYANA and Five Star Rugs v. Commissioner of Income Tax 2008 -TMI - 13576 - PUNJAB AND HARYANA High Court

Summary

Issues:
1. Deduction under Section 80IB of the Income Tax Act for export incentives disallowed.
2. Applicability of earlier judgments in denying the deduction.
3. Dispute regarding eligibility for claiming deduction under Section 80IB.

Analysis:
1. The appellant appealed under Section 260A of the Income Tax Act against the order disallowing deduction under Section 80IB for export incentives. The Tribunal upheld the disallowance based on the judgment in C.I.T. v. Sterling Foods (1999) 237 ITR 579. The CIT(A) also referred to judgments in Liberty India v. Commissioner of Income Tax (2007) 293 ITR 520 and Five Star Rugs v. Commissioner of Income Tax (2007) 293 ITR 553 to support the disallowance. The appellant's claim was thus denied based on these precedents.

2. The appellant contested the denial of the deduction by arguing that the Tribunal's reliance on previous judgments was unjustified. The appellant claimed that the judgments cited were distinguishable on facts. However, the appellant's counsel could not dispute that the matter was covered against him by earlier judgments of the Court, including the judgment in M/s Raj Overseas v. Commissioner of Income Tax, Karnal. The Tribunal's decision was based on the consistency of the legal precedents and the appellant's failure to provide a valid argument against them.

3. The appellant further challenged the Tribunal's decision on the grounds of eligibility for claiming deduction under Section 80IB. The appellant argued that the Tribunal's findings were perverse and not supported by the evidence on record. The appellant claimed that the Tribunal misdirected itself by considering irrelevant factors and applying erroneous criteria in deciding the issue of eligibility for the deduction. However, the Court found no merit in the appellant's arguments and dismissed the appeal, upholding the Tribunal's decision based on the established legal principles and precedents.

In conclusion, the Court dismissed the appeal as the appellant's claims for deduction under Section 80IB were disallowed based on consistent legal precedents and the appellant's failure to provide a valid argument against them. The Court upheld the Tribunal's decision, emphasizing the importance of legal consistency and adherence to established principles in tax matters.