2004 (9) TMI 36

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..... business by virtue of section 28 of the Act, but, it cannot be construed as profits or gains "derived" from the industrial undertaking for, its immediate and proximate source is not the industrial undertaking but the scheme for duty drawback - In view of this, the appeal is required to be allowed. We answer the question in favour of the Revenue
Judge(s) : B. C. PATEL., BADAR DURREZ AHMED. JUDGMENT The judgment of the court was delivered by B.C. Patel C.J.- The present appeal under section 260A of the Income-tax Act, 1961 (hereinafter referred as "the Act"), is preferred by the Revenue raising the following question: "Whether the amount of 'duty drawback' can be regarded as income derived from an industrial undertaking so as to entit .....

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..... case was as under: "Whether the Appellate Tribunal is right in law in holding that 'cash assistance' and 'duty drawback' received from the Government by the assessee are includible in the profits derived from the industrial undertaking and eligible for relief under sections 80HH and 80J of the Income-tax Act, 1961?" We need not set out section 80HH or section 80J of the Act as the relevant part is the same as that of section 80-I of the Act. In that case the assessee's claim was negatived by the Income-tax Officer and ultimately the Tribunal upheld the order made by the Commissioner, who granted benefits. The court, considering various decisions, answered the question in favour of the Revenue and against the assessee. The Division Bench .....

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..... estion of import entitlements. The court observed as under: "We do not think that the source of the import entitlements can be said to be the industrial undertaking of the assessee. The source of the import entitlements can, in the circumstances, only be said to be the Export Promotion Scheme of the Central Government where-under the export entitlements become available. There must be, for the application of the words 'derived from', a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus is not direct but only incidental. The industrial undertaking exports processed sea food. By reason of such export, the Export Promotion Scheme applies. Thereunder, the assessee is entitled to import ent .....

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