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TMI Blog2014 (1) TMI 1596X X X X Extracts X X X X X X X X Extracts X X X X ..... efective No. - 4 of 2014, Income Tax Appeal Defective No. - 5 of 2014 - - - Dated:- 17-1-2014 - Dr. Dhananjaya Yeshwant Chandrachud,CJ And Dilip Gupta,JJ. For the Appellant : Shambhu Chopra, Sr. S.C. ORDER The aforesaid appeals by the Revenue arise from a common judgment of the Income Tax Appellate Tribunal, Lucknow Bench dated 27 August 2013 in a batch of four appeals. The assessment years are 2003-04, 2004-05, 2005-06 and 2006-07. The Revenue has raised the following questions of law :- 1. Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was justified in setting aside the issue and remitting to the CIT (A) for adjudication de novo without appreciating the fact that the case is squarely cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the object behind DEPB is to neutralize the incidence of customs duty payment on the import content of export product. This neutralization is provided for by credit to customs duty against export product. Under DEPB, an exporter may apply for credit as a percentage of FOB value of exports made in freely convertible currency. Credit is available only against the export product and at rates specified by DGFT for import of raw materials, components etc.. DEPB credit under the Scheme has to be calculated by taking into account the deemed import content of the export product as per basic customs duty and special additional duty payable on such deemed imports. Therefore, in our view, DEPB/Duty drawback are incentives which flow from the Schemes f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of such incentives do not fall within the expression "profits derived from industrial undertaking" in section 80-IB." The issue, therefore, stands squarely covered by the judgment of the Supreme Court. Despite a binding judgment of the Supreme Court, the Tribunal observed as follows:- ".......... On these facts, as learned counsel rightly pleads, it cannot be an open and shut inference that the duty drawback receipts are independent sources of income on standalone basis and that these receipts have no first degree nexus with the business activity of the industrial undertaking. There is still a room for the consideration of the plea that but for the duty drawback, the assessee would not have carried out the business activity in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm that lack of nexus in one factual matrix must essentially imply lack of that nexus in all factual matrixes. On the other hand, on the peculiar facts of this case, duty drawback receipts, at least at the first-sight, appear to be integral part of the business receipts, but for which even running of industrial undertaking does not make sense, and, therefore, it cannot be viewed as ancillary or incidental profits or industrial undertaking or a standalone and independent source of income. ................" On this reasoning, the Tribunal held that adjudication by it "is certainly not the end of the road but when the matter travels to higher forum it would certainly appropriate that all the relevant facts are before Their Lordships". On th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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