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TMI Blog2013 (11) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... xport incentives pursuant to policies and schemes of the Government, would not form part of expenses of the business. Merely because some expenses have been incurred on getting DDB incentives, which incentives have neither any direct nexus nor are derived from business of industrial undertaking and are also included in the net profits and gains of such undertaking, any expenditure having nexus with such export incentive as DDB would also not qualify for allowable deduction under Section 57 or 71 of the Act - Gross receipt of DDB incentive, without reduction of expenditure spent for its recovery, is to be excluded from allowable deductions under Section 80-IB of the Act – Decided in favor of Revenue. - ITA No. 888 of 2010 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith respect to duty drawback receipt. Still aggrieved from the order of the Commissioner of Income Tax (Appeals), the assessee preferred another appeal before the Income Tax Appellate Tribunal, Chandigarh Bench-B, Chandigarh. The appeal was also preferred by the revenue qua deductions allowed under Section 80IB of the 1961 Act to the assessee. The Income Tax Appellate Tribunal vide order dated 28.4.2010 partly allowed the appeal of the respondent-assessee though dismissed the appeal of the revenue. While allowing certain receipts to be eligible for deduction under Section 80IB, the appellate authority also allowed the assessee to exclude expenses incurred on realization of receipts of duty drawback. Relevant extract of order dated 28.4.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra)? During the course of arguments addressed by the parties, this question of law was modified in the following terms:- Whether disallowance of deduction under Section 80IB on duty drawback is to be made on its gross amount or after reduction of expenses? Praying for answer of this question in its favour, the Revenue wants quashing of the impugned order ,. Plea of the assessee is that DDB is an incentive which is given specially to reduce the cost of manufacturing of goods. The assessee pays custom and excise duties on the goods which are transported by it in the course of its business. It is claimed that as these duties escalate the cost of production, expenses made on realization of duty drawback ought to be eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax v. Rachna Udhyog, (2010) 230 CTR (Bom) 72 also held that deduction of export incentive inter-alia in the nature of DDB is not allowable under Section 80IB. It is contended by the assessee that Income Tax Appellate Tribunal was right in granting concession of exclusion of expenses incurred for realization of DDB as the expenses are met out of income from the business of the assessee in the regular course of its transactions of manufacturing of export goods on which DDB incentives become available to the assessee. This contention of the assessee lacks merit. When income on DDB falls exclusively in the domain of export incentives earned by the assessee in the nature of facility provided under legislative enactments or by Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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