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TMI Blog2015 (10) TMI 2182X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,52,620/- for the A.Y. 2011-12 made u/s. 40(a)(ia) r.w.s. 194C towards the payment of demurrage to parties in India. 3. We have heard rival submissions and perused the orders of the lower authorities and the material available on record. In the instant case, the Assessing Officer on verification of P & L a/c found that the assessee has claimed deduction for local freight and export freight charges. The assessee explained that the clearing and forwarding agents were appointed to provide services to facilitate the movement of goods for sale/export by performing various functions such as arranging the documentation, finding carrier etc., for which they charge fees/ remuneration. They are not the transporters/carriers of the goods, but on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(a)(ia) of the Act. 5. On appeal, Ld. CIT(A) held that the amount reimbursement to the clearing and forwarding agents is the actual air freight paid by them to the airlines. The assessee contended that the clearing and forwarding agents presents the actual air freight bill to claim the reimbursement and this reimbursement does not have any service charges or any element of profit embedded in it and therefore, on the facts, the provisions of sec. 194C or the CBDT circular is not applicable. He held that in the case of M/s. Zephyr Biomedicals for A.Y. 2009-10, he deleted the disallowance made by the Assessing Officer and consequently he directed the Assessing Officer to delete the disallowance made u/s. 40(a)(ia) of the Act for non-deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 237 ITR 579 , Pandian Chemicals Ltd. Vs. CIT reported in 262 ITR 278 and Liberty India Vs. CIT reported in 317 ITR 218 held that tax incentive is incentive profit and the same is not eligible for deduction u/s. 80IB of the Act. 10. On appeal, Ld. CIT(A) following the decision of the Hon'ble Gauhati High Court in the case of CIT Vs. Meghalaya Steels Ltd. reported in (2011) 221 Taxmann 79, who after considering the decision of the Hon'ble Supreme Court in the case of Liberty India (supra), held that excise duty refund is inextricably linked with manufacturing activity and hence is eligible for deduction u/s. 80IB, allowed the claim of deduction u/s. 80IB to the assessee on Goa VAT incentive. 11. Being aggrieved by this or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial undertaking and consequently is eligible for deduction u/s 80-IB of the Act. In this view of the matter, the order of the ld.CIT(A) is set aside and the A.O. is directed not to exclude the sales tax incentive of 12,94,1097- and Rs. 84,687/- from the profit of Unit-1 and Unit-II respectively while calculating deduction u/s 80-IB of the Act. The ground raised by the assessee is accordingly allowed." 14. Further, on a similar issue, Hyderabad Bench of the Tribunal in the case of DCIT Vs. Coromandel International Ltd. in I.T.A.No. 1147 & 1157/HYD/2014 & C.O.Nos. 52 & 53/HYD/2014 vide order dated 21/11/2014 , held as under:- "8. Having considered rival submissions and perused the orders of revenue authorities as well as other materials on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit, hence, eligible for deduction u/s 80IB of the Act. Otherwise also, as payment of excise duty is directly linked with the manufacturing of goods, refund of excise duty has to be treated as income derived from eligible business as provided u/s 80IB. In the aforesaid view of the matter, assessee will be eligible to claim deduction u/s 80IB on the income accruing from refund of excise duty. So far as the ratio in case of Liberty India Vs. CIT (supra), the facts are clearly distinguishable and do not apply to the facts of the present case. In case of Liberty India, the hon'ble Supreme Court was considering the profits derived from sale/transfer of DEPB/Duty Draw Back Benefits. DEPB/Duty Draw Back Benefits, is given under a scheme fra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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