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TMI Blog2013 (6) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... The question which the assessee raises in the present Tax Appeal was precisely before the Apex Court in the case of Liberty India (supra) wherein context of the deduction u/s 80IA and 80IB held that the benefits of DEPB (as also duty drawback, rebate, etc.) would constitute independent source of income beyond the first degree nexus between the profits and the industrial undertaking. Thus this decision leaves no scope for any doubt or debate. In contrast, the decision in the case of Topman Exports (supra) was rendered in the background of deduction u/s 80HHC. The question was to what extent the receipts of sale of DEPB scrips should be ignored for the purpose of computing such deduction. It was in this background the Supreme Court held n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t supplement each other ? (d) The Ld.Tribunal erred in law and on facts by failing to appreciate that what is to be deducted u/s 80IB and like provisions under Chapter VI-A, from Gross total income is the net income or profit and not the gross receipts and therefore to calculate the eligible profit u/s 80IB of the industrial undertaking, the profit element of DEPB license is only to be deducted and not the gross receipts ? 2. Short question pertains to the treatment that the DEPB credits should be given for the purpose of computing assessee s claim of deduction under Sections 80IA and 80IB of the Income-tax Act, 1961 (hereinafter referred to as the Act ). We are concerned with the assessment year 2002-03. The assessee contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present Tax Appeal was precisely before the Apex Court in the case of Liberty India (supra) as can be seen from the facts recorded in paragraph 5 of the judgment, which reads as under : 5. The appellant, a partnership firm, owns a small scale industrial undertaking engaged in manufacturing of fabrics out of yarns and also various textile items such as cushion covers, pillow covers etc. out of fabrics/yarn purchased from the market. During the relevant previous year corresponding to Assessment Year 2001-2, appellant claimed deduction under Section 80-IB on the increased profits of Rs. 22,70,056.00 as profit of the industrial undertaking on account of DEPB and Duty Drawback credited to the Profit Loss account. The Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95,740/- on sale of DEPB licence stood covered by the decision of this Court in Sterling Food (supra). Hence, to that extent, appellant was not entitled to deduction under Section 80-IB. Against the decision of CIT(A) allowing deduction on duty drawback, the revenue went in appeal to the Tribunal which following the decision of the Delhi High Court in the case of CIT v. Ritesh Industries Ltd. reported in 274 ITR 324, held that the amount received by the assessee on account of duty drawback was not an income derived from the business of the industrial undertaking so as to entitle the assessee to deduction under Section 80-IB. 5. It was in this background that the Supreme Court held and observed as under : 22. The cost of purchase inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking. 6. The Supreme Court, thus, in context of the deduction under Sections 80IA and 80IB of the Act held that the benefits of DEPB (as also duty drawback, rebate, etc.) would constitute independent source of income beyond the first degree nexus between the profits and the industrial undertaking. In our opinion, this decision leaves no scope for any doubt or debate. In contrast, the decision in the case of Topman Exports (supra) was rendered in the background of deduction under Section 80HHC of the Act. The question was to what extent the receipts of sale of DEPB scrips should be ignored f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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