The DCIT, Circle-1, V. M/s. Royal Impex (India),

ITA 189/RJT/2007

• Counselvise Citation: 18924914 RSA 2007
• Duration Of Justice: 4 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 06-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N R SONI
• Section: 80IB; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.189/RJT/2007 (ASSESSMENT YEAR 2003-04) DY.CIT, CIR.1 VS M/S ROYAL IMPEX (INDIA) RAJKOT NATIONAL HIGHWAY 8-B, PEDHALA, JETPUR, DIST:RAJKOT PAN :AAEFR5521M (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI NR SONI RESPONDENT BY : NONE O R D E R PER AL GEHLOT, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, RAJKOT DATED 09-12-2006 FOR THE ASSESSMENT YEAR 200 3-04. 2. THIS IS A RECALLED MATTER. THE ORDER DATED 07-0 7-2008 WAS RECALLED VIDE ORDER DATED 31-12-2010 IN DEPARTMENTS MA NO.33/RJT /2010 ON THE GROUND THAT WHILE DECIDING THE ISSUE AS TO WHETHER DEPB INCOME WOULD CONSTITUTE ELIGIBLE PROFIT FOR COMPUTATION OF DEDUCTION U/S 80IB OF THE ACT, THE TRIBUNAL FOLLOWED THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF INDIAN GELATIN & CHEMICAL UNIT 275 ITR 284 (GUJ) AND HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHEREAS SUBSEQUENTLY, THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA LTD VS XCIT 317 ITR 218 (SC) HAS HELD THAT DEPB / D UTY DRAW BACK ARE INCENTIVE WHICH FLOWS FROM THE SCHEME FRAMED BY THE CENTRAL G OVERNMENT THROUGH INCENTIVE PROFITS AND ARE NOT PROFIT DERIVED FROM T HE ELIGIBLE BUSINESS AND THEREFORE, DEPB / DUTY DRAW BACK RECEIVED BY THE A SSESSEE DO NOT FORM PART OF NET PROFIT OF THE INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF DEDUCTION U/S 80IA / 80IB OF THE ACT. ITA NO.189/RJT/2007 2 3. AT THE TIME OF HEARING, NONE WAS PRESENT ON BEHA LF OF THE ASSESSEE. HOWEVER, AN ADJOURNMENT APPLICATION WAS FILED STATI NG THAT THE ASSESSEE WANT TO TAKE ADVICE FROM ADVOCATE BASED AT AHMEDABAD. SINC E THE GROUND RAISED IN THE APPEAL IS COVERED BY THE HONBLE APEX COURT JUDGMEN T IN THE CASE OF LIBERTY INDIA LTD VS CIT 317 ITR 218 (SC), WE DID NOT FIND ANY MERIT IN THE ADJOURNMENT APPLICATION AND THEREFORE, THE SAME WAS REJECTED AN D THE LD.DR WAS HEARD. 4. THE EFFECTIVE GROUND IN THE APPEAL READS AS BELO W: 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING TO RECOMPUTE THE DEDUCTION U/S 80IB TO THE EXTENT OF A LLOWING DEDUCTION U/S 80IB ON DEPB INCOME. 5. AFTER HEARING THE LD. DR AND ON PERUSAL OF THE J UDGMENT OF THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA LTD VS CIT (SUPRA) WE FIND THAT THE ISSUE STANDS SETTLED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE HONBLE APEX COURT HELD THAT DUTY DRAW BACK AND DEPB ARE IN CENTIVES WHICH ARE GIVEN UNDER DUTY EXEMPTION REMISSION SCHEME AND ESSENTIAL LY IT IS AN EXPORT INCENTIVE WHICH FLOWS FROM THE SCHEME FRAMED BY THE CENTRAL G OVERNMENT OR FROM SECTION 75 OF THE CUSTOMS ACT, 1962; HENCE INCENTIVE PROFI TS ARE NOT PROFITS DERIVED FROM THE ELIGIBLE BUSINESS U/S 80IB OF THE ACT AND THAT THEY BELONG TO CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. RESPECTFULL Y FOLLOWING THE APEX COURT JUDGMENT, WE ALLOW THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-05-2011. SD/- SD/- (N.R.S. GANESAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : 27 TH MAY, 2011 PK/- ITA NO.189/RJT/2007 3 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT(A)-I, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT