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TMI Blog2013 (4) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible business. Import of the words "derived from" is narrower as compared to that of the words "attributable". Thus DEPB/Duty Drawback benefits did not form part of net profit of eligible industrial undertaking for the purposes of section 80-I/80-IA/80-IB - in favour of the revenue. Whether disclosures of income can be said to be derived from business for the purposes of computation of deduction u/s 80-IB - assessee voluntarily surrendered additional income of Rs.15 lakh for taxation on account of difference in stock, cash and unexplained investment in factory building - Held that:- Amount of surrender was due to valuation difference as accepted by AO and it was specifically stated that this was not unexplained investment u/s 69. A b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for declining the claim export incentives Duty Drawback/DEPB u/s 80lB on the ground of placing reliance on the judgement of Hon'ble Punjab Haryana High Court in the case of Liberty India vs. CIT 207 CTR 243 (P H), whereas the Duty Drawback received by the appellant is derived from an industrial undertaking as per the genesis of the word derived in its true sense and spirits. b) That the action of the CIT(A) is unsustainable in denying the claim of the Duty Drawback/DEPB, which is having direct nexus and being germane to the business as per the judgement of Union of India vs. Rajindra Dyeing and Printing Mills Ltd. 2005 (180) E.L.T. 433 (SC, Sun Industries, 1988(35) L.T. 241 (SC) (Recently Hon'ble High Court of Rajasthan In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Exports Ltd. vs Commissioner of Income Tax (2007) 288 ITR 494 (P H), the AO held that export benefits are not the profits derived from industrial undertaking and not includible in the income of the assessee for including special deduction. The Assessing Officer considered the surrendered income as income from other sources by making an addition of Rs. 50 lakh. 3. Being aggrieved by the above assessment order, the assessee filed an appeal before the Commissioner of Income Tax (A) but remained empty handed because the appeal was dismissed on all the grounds raised by the assessee. Now, the assessee is before this Tribunal in this second appeal with the grounds as mentioned hereinabove. Ground No. 2(a) (b) 4. We have heard rival arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has considered the ratio of its own judgment in the case of Sterling Foods (supra), judgment of Hon'ble High Court of Delhi in the case of Ritesh Inds. Ltd. (supra) and the judgment in the case of Punjab Haryana High Court in the case of Commissioner of Income Tax vs Lakhwinder Singh (2009) 317 ITR 209 (P H) and has held that section 80-IB of the Act provides for allowing a deduction in respect of profits and gains derived from the eligible business. Their lordships held that the import of the words "derived from" is narrower as compared to that of the words "attributable". Finally, the Hon'ble Apex Court held that DEPB/Duty Drawback benefits did not form part of net profit of eligible industrial undertaking for the purposes of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.22,30,000/- in this regard. The DR further submitted that the amount of difference in stock valuation is not an income derived from business and it does not form a part of the net profits eligible for deduction u/s 80-IB of the Act, therefore, the authorities below rightly added the surrendered amount to the income of the assessee and also rightly denied the deduction and exemption u/s 80-IB of the Act. 8. At the outset, we observe that three additions were made during the course of search on three counts i.e. difference in stock, difference in cash and unexplained investment in factory building of the assessee. 9. The issue for consideration by us is that whether these three disclosures of income can be said to be derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the authorities, the stock was valued at the cost price, which resulted into increase in valuation and amount surrendered to by peace and harmonious relationship with the department. So the amount of surrender was due to valuation difference and thee was not unexplained investment in stock as defined in section 69." 11. In view of above, this was accepted by the Assessing Officer and it was specifically stated that this was not unexplained investment u/s 69 of the Act. A bare perusal of the assessment order shows that it was on estimate basis on GP rate of earlier years. It is nothing but business profit, hence it was derived from business and deduction u/s 80-IB of the Act should be granted on the same. 12. Next issue and items a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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