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2014 (8) TMI 5 - HC - Income TaxDeduction u/s 80IA - Central Excise Duty set off and Sales Tax set off Whether the Tribunal was right in law in confirming that assessee was not entitled to deduction u/s 80IA of the Act, 1961 in respect of Central Excise Duty set off and sales tax set off - Held that - In respect of DEPB and duty drawback the assessee is not entitled to deduction under Section 80IB of the Act - Following the decision in M/s Liberty India Versus Commissioner of Income Tax 2009 (8) TMI 63 - SUPREME COURT - the assessee must claim the Central Excise Duty set off to be in the nature of duty drawback linked with export profit while claiming deduction u/s 80HHC of the Act - for claiming deduction u/s 80HHC, the assessee itself claimed that Central Excise Duty set off is export incentive by way of duty drawback, the assessee cannot take different stand while claiming deduction u/s 80IA - the stand taken by the assessee while claiming deduction u/s 80HHC under the Act, the Tribunal has rightly held that the assessee shall not be entitled to deduction u/s 80IA of the Act on the Central Excise Duty set off as well as Sales Tax set off Decided against Assessee.
Issues:
- Interpretation of Section 80IA of the Income Tax Act, 1961 regarding Central Excise Duty set off and Sales Tax set off for deduction. Analysis: 1. The judgment involves a group of appeals by a closely held company regarding the deduction under Section 80IA of the Income Tax Act, 1961 for the assessment years 1994-95, 1995-96, and 1996-97. The company claimed deductions for Central Excise Duty set off and Sales Tax set off, which were disallowed by the Assessing Officer initially. 2. The company appealed to the CIT(A), who allowed the deductions, but the ITAT partly allowed the revenue's appeal based on the Supreme Court's decision in CIT vs. Sterling Foods. The ITAT held that the Central Excise Duty set off and Sales Tax set off should not be included for computing deduction under Section 80IA. 3. The company contended that the ITAT erred in its interpretation, arguing that the receipts were not claimed as export incentives but were linked to business activities. The company emphasized that the ITAT did not properly consider the material on record and failed to provide a reasoned order. 4. The company relied on a decision by the ITAT, Lucknow Bench, to support its argument for quashing the ITAT's order and reconsidering the appeal based on the material produced. 5. The revenue opposed the appeals, citing the Supreme Court's decision in Liberty India Limited, supporting the ITAT's decision that the company cannot claim different stands for deductions under Section 80HHC and Section 80IA. The revenue urged the court to dismiss the appeals. 6. The court noted that the issue was covered by previous Supreme Court decisions in Liberty India vs. CIT and Sterling Foods. Considering the nature of the Central Excise Duty set off and Sales Tax set off as linked to export profits, the court agreed with the ITAT's decision that the company could not claim deductions under Section 80IA based on its earlier stand for Section 80HHC. 7. Therefore, the court dismissed all the appeals, holding that the company was not entitled to deductions under Section 80IA for Central Excise Duty set off and Sales Tax set off, based on the principles established in previous Supreme Court judgments and the company's own claims regarding the nature of the receipts.
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