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TMI Blog2011 (12) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... r taking and hence the appellant is not entitled for deduction under section 801B. 4. (a) The above grounds are independent and without prejudice to one another. (b) The assessee craves leave to add, delete, and alter/modify the above grounds of appeal. 2. The assessee is an individual. He is engaged in the business of manufacturing of IT based electronic products which is Public Address System. The assessee filed the return of income on 30/10/2007 showing the total income at Rs. 17,930/-. The assessee s unit of manufacturer of IT enabled public address system was located in Jammu, and was under the name and style Platinum I.T. Solutions( hereinafter referred to as PITS) and other unit located in the State of Sikkim under the name and style of Peninsula Technologies (hereinafter referred to as PT). The assessee maintained separate books of accounts of these two undertakings showing net profit at Rs. 10,12,51,571/- from the undertaking Platinum I.T. Solutions and Rs. 29,93,267/- from Peninsula Technologies. The assessee has claimed deduction of Rs.10,12,33,644/- u/s. 80 IB in respect of PITS and Rs. 29,93,267/- u/s. 80IB relating to PT. In this way total income was compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty paid or refunded is directly connected with the activities of the unit and therefore, the same forming part of the profits of the unit will not be taxable and will be exempt u/s.801B of the Act. 2. The crediting or debiting of the Profit Loss A/c. in respect of the excise refund is only a mode of accounting the net result being as nil the refund and payment of identical sums. 3. There is no refund of excess excise duty paid but only refund of the amount actually paid. 4. Such refunds not income as such, and even if it is income it is directly derived from the industrial unit. As such. if at all it is taxable, the same would b4e exempt under the provisions of S.80IB, 4. The AO rejected the claim of the assessee relying on the decision of the Hon ble Supreme Court in the case of Liberty India vs. CIT, 317 ITR 218 (SC). According to the AO the refund of excise duty in view of Notification is more or less equivalent to DEPB or duty draw back benefit, where they were considered only as ancillary profit having got no first degree of nexus. Therefore, in his considered view, on the factual circumstances of the case the ratio of decision of Liberty India Ltd. vs. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of the excise duty under Central excise Notification No. 56 of 2002 paid by the manufacturer is provided just to met out various challenges, difficulties or with a view to attract the manufacturer to a particular area instead of pre-occupied industrial area or developed area. Thus such exemption of duty gives commercial benefit to the assessee. The CIT(A) also referred to the following decisions rendered in the context of the very same scheme by the Amritsar Bench of the ITAT. In this background the Hon ble Amritsar Bench of ITAT in the case of Vinodkumar Jain Prop. Of M/s. V.K.Metal Works Vs. ITO Ward 1(3) Jammu ITA No.180(ASR)/2009 dated 31/12/2009 and in the case of Shri Balaji Alloys vs. ITO and in the other case of Pee Ell Alloys vs. ITO (ITA No.209/Asr/2009, A.Y 2005-06); Ravenbhel Healthcare (P) Ltd. vs. ITO (ITA No.305/Asr/2009; A.Y 2005-06 and ITO vs. Ravenbhel Healthcare (P) Ltd. (ITA No.302/Asr/2009; A.Y 2005-06), wherein it was held that the receipt in question was a revenue receipt chargeable to tax. 6. Aggrieved by the order of the CIT(A), the Assessee is in appeal before the Tribunal. Before us ld. Counsel for the assessee addressed arguments of ground No.2 ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the State of Jammu and Kashmir, makes it explicit that the concessions were issued to achieve twin objects viz. (i) Acceleration of industrial development in the State of Jammu and Kashmir, which had been found lagging behind in such development and (ii) Generation of employment in the State of Jammu and Kashmir. Amendment introduced to the Office Memorandum vide Notification of November 28, 2003 of the Government of India, Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) eloquently demonstrates the Central Government's intention in extending the incentives. The Government's objective, as conveyed by Hon'ble the Prime Minister at Srinagar on April 19, 2003, was, for creation of one lac employment and self employment opportunities in Jammu and Kashmir State. 23) To achieve the purpose and objective referred to herein above, it was, inter alia, provided in the Central Excise Notifications that the exemptions contained in the Notifications would be available only on production of Certificate from General Manager of the concerned District Industry Centre to the Jurisdictional Deputy Commissioner of the Central Excise or the Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional provision in the Scheme that incentives would become available to the industrial units, entitled thereto, from the date of commencement of the commercial production, and that these were not required for creation of New Assets cannot be viewed in isolation, to treat the incentives as production incentives, as held by the Tribunal, for the measure so taken, appears to have been intended to ensure that the incentives were made available only to the bonafide Industrial Units so that larger Public Interest of dealing with unemployment in the State, as intended, in terms of the Office Memorandum, was achieved. 29) The other factors, which had weighed with the Tribunal in determining the incentives as Production Incentives may not be decisive to determine the character of the incentive subsidies, when it is found, as demonstrated in the Office Memorandum, amendment introduced thereto and the statutory notification too that the incentives were provided with the object of creating avenues for Perpetual Employment, to eradicate the social problem of unemployment in the State by accelerated industrial development. 30) For all what has been said above, the finding of the Tribu ..... 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