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TMI Blog2012 (6) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... d that:- in the case M/s. Hindustan Mint & Agro Products Pvt. Ltd. (2009 - TMI - 64377 - ITAT DELHI-C - Income Tax) , ground raised by the assessee is adjudicated in favour of the Revenue and against the assessee, appeal of the assessee is dismissed - I.T.A. No. 256(ASR)/2010. - - - Dated:- 15-6-2011 - ORDER Per H.L. Karwa, Vice President. This appeal by the assessee is directed against the order of the CIT(A), Jalandhar dated 23-3-2009, relating to the assessment year 2001-02. 2. Ground No.1 reads as under:- That the ld. CIT(A) has erred in upholding the assumption of jurisdiction for re-assessment and also the validity of the assessment order. The submissions made have not been properly appreciated. 3. At the very outset, Shri Sandeep Vijh, C.A., the learned counsel for the assessee, submitted that this ground of appeal is covered against the assessewe by the decision of this Bench of the Tribunal dated 9-10-2009 passed in assessee s own case in ITA Nos.155, 156 157(ASR)/2009, relating to the assessment years 2002-03, 2003-04 and 2004-05. 4. While deciding a similar issue in ITA Nos.155, 156 157(ASR)/2009, this Bench of the Tribunal held as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Jurisdictional High Court, in the case of Liberty India Vs. CIT (supra). The Hon ble Supreme Court, after discussions of the rival submissions, adjudicated the issue, in question, in clear terms against the assessee and in favour of the Revenue, vide para 24 of the impugned decision. However, for the purpose of proper appreciation of the decision, the relevant and operative part of the impugned decision is reproduced hereunder: Discussions and Findings: 12. In this batch of Civil Appeals we are concerned with admissibility of the amounts of duty drawback and DEPB for deduction under section 80-IB. 13. Before analyzing section 80-IB, as a prefactory note, it needs to be mentioned that the 1961 Act broadly provides for two types of tax incentives, namely, investment linked incentives and profit linked incentives. Chapter VI-A which provides for incentives in the form of tax deductions essentially belong to the category of profit linked incentives . Therefore, when Section 80-IA/80-IB refers to profits derived from eligible business, it is not the ownership of that business which attracts the incentives under section 80-IA/80-IB is the generation of profits (operational pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Hence, according to the Department, in the present cases, the first degree source is the incentive scheme/provisions of the Customs Act. In this connection, Department places heavy reliance on the judgment of this Court in Sterling Food (supra).Therefore, in the present cases, in which we are required to examine the eligible business of an industrial undertaking, we need to trace the source of the profits to manufacture (see CIT Vs. Kirloskar Oil Engines Ltd. reported in (1986) 157 ITR 762. 15. Continuing our analysis of Sections 80-IA/80-IB it may be mentioned that sub-section (13) of Section 80IB provides for applicability of provisions of sub-section (5) and sub-sections (7) to (12) of Section 80-IA, so far as may be, applicable to the eligible business under section 80-IB. Therefore, at the outset, we stated that one needs to read Sections 80-I, 80-IA and 80-IB as having a common Scheme. On perusal of sub-sections (5) of Section 80-IA, it is noticed that it provides for manner of computation of profits of an eligible business. Accordingly, such profits are to be computed as if such eligible business is the only source of income of the assessee. Therefore, the devices adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of duty paid on materials of any particular class or description of goods used in the manufacture of export goods of specified class. The Rules do not envisage as refund of an amount arithmetically equal to customs duty or central excise duty actually paid by an individual importer-cum manufacturer. Section section(2) of Section 75 of the Customs Act requires the amount of drawback to be determined on a consideration of all the circumstances prevalent in a particulars trade and also based on the facts situation relevant in respect of each of various classes of goods imported. Basically, the source of duty drawback receipt lies in Section 75 of the Customs Act and section 37 of the Central Excise Act. 18. Analysing the concept of remission of duty drawback and DEPB, we are satisfied that the remission of duty is on account of the statutory/policy provisions in the Customs Act/Scheme(s) framed by Government of India. In the circumstances, we hold that profits derived by way of such incentives do not fall within the expression Profits derived from industrial undertaking in Section 80-IB. 19. Since reliance was placed on behalf of the assessee(s) as AS-2 we need to analys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Opening Stock 100 Sales 1,000 Purchases (including customs 500 Duty Drawback 100 Duty paid) received Manufacturing overheads 300 closing stock 200 Net Profit 200 1,300 1,300 Note: In above example, Department is allowing deduction on profit of Rs.100 under section 80IB of the 1961 Act. 24.In the circumstances, we hold that Duty Drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/80IA/80IB of the 1961 Act. 25. The appeals are, accordingly, dismissed with no order as to costs. 7.4 In view of the above discussions, we are of the considered opinion that the issue in question is squarely covered by the decision of the Hon ble Apex Court in the case of M/s. Liberty India Vs. CIT, dated 31st August, 2009 (supra), as reproduced above. It is essential to point out here that the binding nature of the judicial mandate of the Hon ble Supreme Court of India, as contained in the decision of M/s. Liberty India Vs. CIT (supra), cannot be obliterated by way of shifting the locus and focus, from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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