2017 (5) TMI 1404 - HC - Income Tax

Deduction u/s 80IB in respect of excise duty rebate/refund - Held that - Since the issue had been decided on the basis of concession given in Liberty India s case (2006 (9) TMI 487 - PUNJAB & HARYANA HIGH COUR ) it was argued that in various decisions the relief under Section 80IB of the Act could not be declined on Excise Duty refund and thus the matter requires to be re-adjudicated. It was prayed by learned counsel for the appellant which could not be effectively controverted by the learned counsel for the respondent-revenue that in such circumstances the matter be remanded to the Assessing Officer who shall examine the factual matrix and keeping in view the legal position in this aspect decide afresh in accordance with law. As a result of the above it is held that the matter with regard to relief under Section 80IB of the Act requires to be re-adjudicated. Consequently the matter is remanded to the Assessing Officer to decide it afresh after hearing the parties by passing a speaking order in accordance with law. As a result the appeal stands disposed of accordingly.

Summary

Issues:
1. Whether deduction under Section 80IB of the Income Tax Act could be declined in respect of excise duty rebate/refund.

Analysis:
The appellant-assessee filed an appeal under Section 260A of the Income Tax Act against the order passed by the Income Tax Appellate Tribunal for the assessment year 2004-05. The appellant raised substantial questions of law regarding the disallowance of the claim for deduction under Section 80IB in respect of export rebate/refund, the rejection of the correct claim, and the eligibility of income derived from the export of goods for deduction under Section 80IB. The appellant argued that the export rebate/refund was an integral part of business profits derived from exports and should be allowed as a deduction. The Tribunal had equated duty drawback with the refund/rebate of Excise Duty on exports, leading to the disallowance of the claim. The appellant contended that the matter required re-adjudication based on the factual matrix and legal position, seeking a remand to the Assessing Officer for a fresh decision.

The High Court noted that the issue revolved around whether deduction under Section 80IB of the Act could be declined concerning excise duty rebate/refund. The Tribunal had relied on a previous decision against the appellant, but the appellant disputed this and argued that the Excise Duty refund was in adjustment of Excise Duty paid and should not affect the eligibility for deduction under Section 80IB. The Court agreed with the appellant's contention and held that the matter required re-adjudication. Consequently, the Court remanded the matter to the Assessing Officer for a fresh decision after considering the factual matrix and legal position, emphasizing the need for a speaking order in accordance with the law.

In conclusion, the High Court allowed the appeal by the appellant-assessee and remanded the matter to the Assessing Officer for re-adjudication regarding the claim for deduction under Section 80IB of the Income Tax Act in respect of excise duty rebate/refund. The Court emphasized the importance of considering the factual matrix and legal position in making a fresh decision, ensuring compliance with the law. The appeal was disposed of accordingly, with directions for a speaking order to be passed by the Assessing Officer after hearing both parties.