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TMI Blog2005 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Income-tax Appellate Tribunal, Delhi Bench, whereby the Tribunal has partly allowed the assessee company's appeal and held it entitled to deduction under section 80-I of the Act on the duty drawback amount of Rs. 46,66,113. The assessee filed an income-tax return for the assessment year 1991-92 declaring an income of Rs. 8,71,055 and claiming deductions including a deduction on the duty drawback amount of Rs. 46,66,113 under section 80-I of the Act. The Assessing Officer denied the deduction on the said amount of duty drawback on the ground that the same did not constitute income of the assessee derived from industrial undertaking. Aggrieved the assessee appealed to the Commissioner of Income-tax (Appeals) who upheld the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -95 upon which the Tribunal had placed reliance had not been accepted by the Revenue and that the said orders had also been separately assailed in appeals which were pending disposal in this court. In Ritesh Industries Ltd.'s case [2005] 274 ITR 324 (Delhi), a similar question was formulated by this court for determination. The assessee, in that case also, had received duty drawback on the export of garments. The question was whether the amount so received by the assessee could be considered to be profits and gains derived from an industrial undertaking within the contemplation of section 80-I of the Act. Relying upon a Division Bench's decisions of the Madras High Court in CIT v. Jameel Leathers and Uppers [2000] 246 ITR 97 and CIT v. Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." The question that falls for our consideration thus stands squarely answered against the assessee and in favour of the Revenue by the above decision. The duty drawback on exports is a benefit flowing under the scheme formulated by the Government to encourage exports. While any such receipt in the hands of the assessee would certainly constitute profits or gains of the business in terms of section 28 of the Act the same would not amount to profits or gains "derived from the industrial undertaking". That is because the gain that arises to the assessee is not directly out of the industrial undertaking but on account of the scheme for refund of duty drawback paid on the raw material utilized as inputs by the assessee. Our attention was dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an indirect or incidental benefit which could not qualify for deduction. Taking the same logic further, the Madras High Court declared that cash assistance, duty drawback or import entitlements were all attributable to the business carried on by the assessee, as the assessee would not be entitled to any such benefits had it not been carrying on business, but the income or the benefits derived under the scheme which envisaged the grant of such benefits could not be termed as "derived from the business". We would, with respect to the judges, who took a contrary decision in the Gujarat case, follow the line of reasoning adopted by this court in Ritesh Industries' case [2005] 274 ITR 324 and that adopted by the Madras High Court in the cases r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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