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TMI Blog2015 (1) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income for the year under consideration on 30.11.1997, declaring its total income at Rs. 10,75,13,910/-. Subsequent thereto, the case of the assessee was examined and the AO concerned, assessed its income at Rs. 18,29,00,840/-. Hence, the assessee approached the CIT(A) against the same and the CIT(A) allowed the same in part. It appears that, then, the assessee as well as the Revenue, both carried the matter before the Tribunal by filing separate appeals / cross-objections. The Tribunal, after hearing the parties, allowed the appeals / cross objections in part. Hence, the present appeal. 3. At the time of admitting this Tax Appeal, following questions of law were framed by this Court; &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the facts and circumstances of the case, the ITAT was right in law in holding that income from Advance License Benefit Receivable, Pass Book Benefit Receivable and profit on sale of import license is not derived from industrial undertaking and thus not eligible for deduction u/s 80I and 80IA of the Act? (vii) Whether, in the facts and circumstances of the case, the ITAT was right in law in not granting set off of expenditure against income for the purpose of calculating deduction u/s 80HHC of the Act ? (viii) Whether, in the facts and circumstances of the case, the ITAT was right in law in allowing deduction u/s 80M after deducting management expenses from the gross dividend received when no such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Deputy Commissioner of Income-tax v. Sun Pharmaceuticals Ind. Ltd., [2010] 329 ITR 479 (Guj). In that case, the Appellate Tribunal found that the land in question was not acquired by the assessee. It was held that merely because the deed was registered, the transaction in question would not assume a different character. The lease rent was very nominal and by obtaining the land on lease, the capital structure of the assessee did not undergo any change. It was further held that the assessee only acquired a facility to carry on business profitably by paying nominal lease rent and that the lease rent paid by the assessee to GIDC was allowable as revenue expenditure. In view of the above principle, the question no.(iii) is answered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection with question No.6 framed, herein, invited our attention to a decision of the Apex Court in "LIBERTY INDIA VS. CIT", [2009] 317 ITR 218, wherein, the Apex Court has observed and held as under; "DEPB / Duty drawback are incentives which flow from the schemes framed by the Central Government or from Section 75 of the Customs Act, 1962. Incentive profits are not profits derived from eligible business under section 80I-B : they belong to the category of ancillary profits of such undertaking. Profits derived by way of incentives such as DEPB / Duty drawback cannot be credited against the cost of manufacture of goods debited in the profit and loss a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not the entire amount received by the assessee on sale of DEPB credit but, the sale value less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Accordingly, the question no. (v) is answered in favour of the assessee and against the Revenue." 19. Mr. Mehta fairly accepted the principle of law enunciated by the Apex Court and followed by this Court in the above referred decision, and hence, question No.7 is answered in favour of the assessee and against the revenue. 20. As regards question No.8, Mr. Soparkar, submitted that the Tribunal has erred in assuming that the assessee would have incurred some expenditure for the purpose of earning dividend and based on that assumption, while cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that unless there is a finding that the assessee has actually incurred expenditure to earn dividend income, the Revenue has no basis to reduce the amount of dividend, which would qualify for deduction under Section 80M of the Act. The various High Courts, as referred to herein above, has taken the same view. Respectfully, following the aforesaid judgments of different High Courts, we answer question No.8 in negative and in favour of the assessee by holding that when no expenditure are shown to have been incurred by the assessee for earning gross dividend income, deduction under Section 80M of the Act cannot be curtailed to reduce the amount qualifying for claim of deduction under Section 80M of the Act by assuming the amount of expenditure, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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