M/s. Vishal Tools & Forgings P.Ltd., Jalandhar V. The Deputy Commissioner of Income tax, Jalandhar

ITA 256/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5818 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 02-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 80IB; 147; 148; 37; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH ; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMEBR I.T.A. NO. 256(ASR)/2010. (ASSESSMENT YEAR : 2001-02) M/S. VISHAL TOOLS & FORGINGS P. LTD. VS. THE DEPUTY . COMMR. OF B-9, FOCAL POINT, INCOME TAX, JALANDHAR. RANGE-2, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANDEEP VIJH, CA RESPONDENT BY: SHRI TARSEM LAL, DR ORDER. PER H.L. KARWA, VICE PRESIDENT. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), JALANDHAR DATED 23-3-2009, RELATING TO THE ASSESSMENT YEAR 2001-02. 2. GROUND NO.1 READS AS UNDER:- THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE AS SUMPTION OF JURISDICTION FOR RE-ASSESSMENT AND ALSO THE VALIDIT Y OF THE ASSESSMENT ORDER. THE SUBMISSIONS MADE HAVE NOT BE EN PROPERLY APPRECIATED. 3. AT THE VERY OUTSET, SHRI SANDEEP VIJH, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THIS GROUND OF APPEAL IS COVERED AGAINST THE ASSESSEWE BY THE DECISION OF THIS BENCH OF THE TRIB UNAL DATED 9-10-2009 PASSED IN ASSESSEES OWN CASE IN ITA NOS.155, 156 & 157(ASR)/2009, RELATING TO THE ASSESSMENT YEARS 2002-03, 2003-04 A ND 2004-05. 2 4. WHILE DECIDING A SIMILAR ISSUE IN ITA NOS.155, 1 56 & 157(ASR)/2009, THIS BENCH OF THE TRIBUNAL HELD AS U NDER:- 6.2. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE CURRENT SUBMISSIONS MADE BY THE ASSESSEE AND THE SUBMISSION S MADE BEFORE THE CIT(A), INCLUDING THE CASE LAWS CITED THEREIN AND FOUND THAT THE ASSUMPTION OF JURISDICTION BY THE AO IS WITHIN THE PARAMETERS OF THE PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A), ON THE ISSUE IN QUESTION. CONSEQUENTLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 5. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 9-10-2009 PASSED IN ASSESSEES OWN CASE, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE. 6. GROUND NO.2 READS AS UNDER:- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE A.O., THAT DEDUCTION U/S.80IB IS NOT AVAILABLE ON DUTY DR AWBACK AND DEPB RECEIPTS. DEDUCTION U/S.80IB WAS AVAILABLE ON THE ENTIRE DEPB RECEIPT AND ALSO THE DUTY DRAW BACK AT RS.80,7 1,030/-. 7. SHRI SANDEEP VIJH, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THIS ISSUE IS ALSO COVERED AGAINST T HE ASSESSEE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL DATED 9-10-2009 PASSE D IN ASSESSEES OWN CASE IN I.T.A. NOS.155, 156 & 157(ASR)/2009, RELATING TO THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05. IT IS OBSERVED THAT WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER:- 7.3. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIO NS, ORDERS OF THE LOWER AUTHORITIES BELOW AND THE DECISIONS QUOTED A ND RELIED BEFORE THE LD. CIT(A), INCLUDING THE DECISION OF THE HONB LE APEX COURT IN THE CASE OF M/S. LIBERTY INDIA VS. CIT IN CIVIL APP EAL NO. OF 2009 (ARISING OUT OF S.L.P. (C) NO.5827/07), DATED 31 ST AUGUST, 2009. THE HONBLE APEX COURT OF THE LAND HAS FINALLY SET AT R EST, THE CONTROVERSY, ON THE ELIGIBILITY OF DEDUCTION U/S 80IB OF THE ACT , IN RESPECT OF RECEIPTS OF DEPB AND DUTY DRAWBACK UNDER THE RELEV ANT SCHEMES.IN 3 THE CASE BEFORE THE HONBLE APEX COURT, THE APPELLA NT, A PARTNERSHIP FIRM ENGAGED IN MANUFACTURING OF FABRICS OUT OF YAR NS AND ALSO VARIOUS TEXTILE ITEMS, CLAIMED DEDUCTION U/S 80IB OF THE AC T, ON THE INCREASED PROFITS OF RS. 22,70,056/- AS PROFIT OF THE INDUSTR IAL UNDERTAKING, ON ACCOUNT OF DEPB AND DUTY DRAWBACK, CREDITED TO THE PROFIT & LOSS ACCOUNT, FOR THE ASSESSMENT YEAR 2001-02.THE ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE JURISDICTIONAL HIGH COU RT, IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA). THE HONBLE SUPREME COURT, AFTER DISCUSSIONS OF THE RIVAL SUBMISSIONS, ADJUDICATED T HE ISSUE, IN QUESTION, IN CLEAR TERMS AGAINST THE ASSESSEE AND I N FAVOUR OF THE REVENUE, VIDE PARA 24 OF THE IMPUGNED DECISION. HOW EVER, FOR THE PURPOSE OF PROPER APPRECIATION OF THE DECISION, TH E RELEVANT AND OPERATIVE PART OF THE IMPUGNED DECISION IS REPRODUC ED HEREUNDER: DISCUSSIONS AND FINDINGS: 12. IN THIS BATCH OF CIVIL APPEALS WE ARE CONCERNE D WITH ADMISSIBILITY OF THE AMOUNTS OF DUTY DRAWBACK AND DEPB FOR DEDUCTION UNDER SECTION 80-IB. 13. BEFORE ANALYZING SECTION 80-IB, AS A PREFACTOR Y NOTE, IT NEEDS TO BE MENTIONED THAT THE 1961 ACT BROADLY PRO VIDES FOR TWO TYPES OF TAX INCENTIVES, NAMELY, INVESTMENT LIN KED INCENTIVES AND PROFIT LINKED INCENTIVES. CHAPTER VI -A WHICH PROVIDES FOR INCENTIVES IN THE FORM OF TAX DEDUCTIO NS ESSENTIALLY BELONG TO THE CATEGORY OF PROFIT LINKED INCENTIVES . THEREFORE, WHEN SECTION 80-IA/80-IB REFERS TO PROFITS DERIVED FROM ELIGIBLE BUSINESS, IT IS NOT THE OWNERSHIP OF THAT BUSINESS WHICH ATTRACTS THE INCENTIVES UNDER SECTION 80-IA/80-IB I S THE GENERATION OF PROFITS (OPERATIONAL PROFITS). FOR EX AMPLE, AN ASSESSEE COMPANY LOCATED IN MUMBAI MAY HAVE A BUSIN ESS OF BUILDING HOUSING PROJECTS OR A SHOP IN NAVA SHEVA. ONWERSHIP OF A SHIP PER SE WILL NOT ATTRACT SECTION 80-IB(6). IT IS THE PROFITS ARISING FROM THE BUSINESS OF A SHIP WHICH ATTRACTS SUB-SECTION (6). IT IS THE PROFITS ARISING FROM THE BUSINESS OF A SHIP WHICH ATTRACTS SUB-SECTION (6). IN OTHER WORDS, DEDUCTION UNDER SUB- SECTION (6) AT THE SPECIFIED RATE HAS LINKAGE TO TH E PROFITS DERIVED FROM THE SHIPPING OPERATIONS. THIS IS WHAT WE MEAN IN DRAWING THE DISTINCTION BETWEEN PROFIT LINKED TAX INCENTIVE S AND INVESTMENT LINKED INCENTIVES. IT IS FOR THIS REASON THAT PARLIAMENT HAS CONFINED DEDUCTION TO PROFITS DERIVE D FROM ELIGIBLE BUSINESS MENTIONED IN SUB-SECTIONS (3) TO (11A) [ AS 4 THEY STOOD AT THE RELEVANT TIME]. ON MORE ASPECT TO BE HIGHLIGHTED. EACH OF THE ELIGIBLE BUSINESS IN SUB-S ECTIONS (3) TO (11A) CONSTITUTES A STAND-ALONE ITEM IN THE MATTER OF COMPUTATION OF PROFITS. THAT IS THE REASON WHY THE CONCEPT OF SEGMENT REPORTING STANDS INTRODUCED IN THE INDIAN ACCOUNTING STANDARDS (IAS) BY THE INSTITUTE OF CHAR TERED ACCOUNTANTS OF INDIA (ICAI). 14. ANALYSING CHAPTER VI-A, WE FIND THAT SECTIONS 80-IA/80- IA ARE THE CODE OF THEMSELVES AS THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THEREFORE, WE NEE D TO EXAMINE WHAT THESE PROVISIONS PRESCRIBE FOR COMPUT ATION OF PROFITS OF THE ELIGIBLE BUSINESS.' IT IS EVIDENT TH AT SECTION 80-IB PROVIDES FOR ALLOWING OF DEDUCTION IN RESPECT OF PR OFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. THE WORDS DERIVED FROM IS NARROWER IN CONNOTATION AS COMPARED TO THE WORDS ATTRIBUTABLE TO. IN OTHER WORDS, BY USING THE EXP RESSION DERIVED FROM, PARLIAMENT INTENDED TO COVER SOURCE S NOT BEYOND THE FIRST DEGREE. IN THE PRESENT BATCH OF CA SES, THE CONTROVERSY WHICH ARISES FOR DETERMINATION IS : WHE THER THE DEPB CREDIT/DUTY DRAWBACK RECEIPT COMES WITHIN THE FIRST DEGREE SOURCES ? ACCORDING TO THE ASSESSEE(S), DEPB CREDIT/DUTY DRAWBACK RECEIPT REDUCES THE VALUE OF P URCHASES (COST NEUTRALIZATION), HENCE, IT COMES WITHIN FIRST DEGREE SOURCE AS IT INCREASES THE NET PROFIT PROPORTIONATELY. ON THE OTHER HAND, ACCORDING TO THE DEPARTMENT, DEPB CREDIT/DUTY DRAWB ACK RECEIPT DO NOT COME WITHIN FIRST DEGREE SOURCE AS T HE SAID INCENTIVES FLOW FROM INCENTIVE SCHEMES ENACTED BY T HE GOVERNMENT OF INDIA OR FROM SECTION 75 OF THE CUSTO MS ACT, 1962. HENCE, ACCORDING TO THE DEPARTMENT, IN THE P RESENT CASES, THE FIRST DEGREE SOURCE IS THE INCENTIVE SCHEME/PRO VISIONS OF THE CUSTOMS ACT. IN THIS CONNECTION, DEPARTMENT PLACES HEAVY RELIANCE ON THE JUDGMENT OF THIS COURT IN STERLING FOOD (SUPRA).THEREFORE, IN THE PRESENT CASES, IN WHICH W E ARE REQUIRED TO EXAMINE THE ELIGIBLE BUSINESS OF AN INDUSTRIAL U NDERTAKING, WE NEED TO TRACE THE SOURCE OF THE PROFITS TO MANUF ACTURE (SEE CIT VS. KIRLOSKAR OIL ENGINES LTD. REPORTED IN (198 6) 157 ITR 762. 15. CONTINUING OUR ANALYSIS OF SECTIONS 80-IA/80-I B IT MAY BE MENTIONED THAT SUB-SECTION (13) OF SECTION 80IB PROVIDES FOR APPLICABILITY OF PROVISIONS OF SUB-SECTION (5) AND SUB-SECTIONS 5 (7) TO (12) OF SECTION 80-IA, SO FAR AS MAY BE, APP LICABLE TO THE ELIGIBLE BUSINESS UNDER SECTION 80-IB. THEREFORE, A T THE OUTSET, WE STATED THAT ONE NEEDS TO READ SECTIONS 80-I, 80- IA AND 80-IB AS HAVING A COMMON SCHEME. ON PERUSAL OF SUB-SECTIO NS (5) OF SECTION 80-IA, IT IS NOTICED THAT IT PROVIDES FOR M ANNER OF COMPUTATION OF PROFITS OF AN ELIGIBLE BUSINESS. ACC ORDINGLY, SUCH PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. THEREFOR E, THE DEVICES ADOPTED TO REDUCE OR INFLATE THE PROFITS O F ELIGIBLE BUSINESS HAS GOT TO BE REJECTED IN VIEW OF THE OVER RIDING PROVISIONS OF SUB-SECTION (5) OF SECTION 80-IA, WHI CH ARE ALSO REQUIRED TO BE READ INTO SECTION 80-IB [SEE SECTION 80-IB(13)]. WE MAY REITERATE THAT SECTIONS 80I, 80IA AND 80-IB HAVE A COMMON SCHEME AND IF SO READ IT IS CLEAR THAT THE S AID SECTIONS PROVIDE FOR INCENTIVES IN THE FORM OF DEDUCTION(S), WHICH ARE LINKED TO PROFITS AND NOT TO INVESTMENT. ON ANALYSI S OF SECTIONS 80-IA AND 80-IB IT BECOMES CLEAR THAT ANY INDUSTRIA L UNDERTAKING, WHICH BECOMES ELIGIBLE ON SATISFYING S UB-SECTION (2), WOULD BE ENTITLED TO DEDUCTION UNDER SUB-SECTI ON (1) ONLY TO THE EXTENT OF PROFITS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING AFTER SPECIFIED DATE)S-. HENCE, APART FROM ELIGIBIL ITY, SUB- SECTION(1) PURPORTS TO RESTRICT THE QUANTUM OF DEDU CTION TO A SPECIFIED PERCENTAGE OF PROFITS. THIS IS THE IMPORT ANCE OF THE WORDS DERIVED FROM INDUSTRIAL UNDERTAKING AS AGAI NST PROFITS ATTRIBUTABLE TO INDUSTRIAL UNDERTAKING. 16. DEPB IS AN INCENTIVE. IT IS GIVEN UNDER DUTY E XEMPTION REMISSION SCHEME. ESSENTIALLY, IT IS AN EXPORT INCE NTIVE. NO DOUBT, THE OBJECT BEHIND DEPB IS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT CONTENT OF EXPOR T PRODUCT. THIS NEUTRALIZATION IS PROVIDED FOR BY CREDIT TO CU STOMS DUTY AGAINST EXPORT PRODUCT. UNDER DEPB, AN EXPORTER MA Y APPLY FOR CREDIT AS PERCENTAGE OF FOB VALUE OF EXPORTS MA DE IN FREELY CONVERTIBLE CURRENCY. CREDIT IS AVAILABLE ONLY AGAI NST THE EXPORT PRODUCT AND AT RATES SPECIFIED BY DGFT FOR IMPORT O F RAW MATERIALS, COMPONENTS ETC.. DEPB CREDIT UNDER THE S CHEME HAS TO BE CALCULATED BY TAKING INTO ACCOUNT THE DEMAND IMPORT CONTENT OF THE EXPORT PRODUCT AS PER BASIC CUSTOMS DUTY AND SPECIAL ADDITIONAL DUTY PAYABLE ON SUCH DEEMED IMPO RTS. THEREFORE, IN OUR VIEW DEPB/DUTY DRAWBACK ARE INCEN TIVES WHICH FLOW FROM THE SCHEMES FRAMED BY CENTRAL GOVER NMENT 6 OR FROM SECTION 75 OF THE CUSTOMS ACT, 1962, HENCE, INCENTIVES PROFITS ARE NOT PROFITS DERIVED FROM THE ELIGIBLE B USINESS UNDER SECTION 80-IB. THEY BELONG TO THE CATEGORY TO ANCIL LARY PROFITS OF SUCH UNDERTAKINGS. 17. THE NEXT QUESTION IS WHAT IS DUTY DRAWBACK ? SECTION 75 OF THE CUSTOMS ACT, 1961 AND SECTION 37 OF THE C ENTRAL EXCISE ACT, 1944 EMPOWER GOVERNMENT OF INDIA TO PRO VIDE FOR REPAYMENT OF CUSTOMS AND EXCISE DUTY PAID BY AN ASS ESSEE. THE REFUND IS OF THE AVERAGE AMOUNT OF DUTY PAID ON MAT ERIALS OF ANY PARTICULAR CLASS OR DESCRIPTION OF GOODS USED IN TH E MANUFACTURE OF EXPORT GOODS OF SPECIFIED CLASS. THE RULES DO N OT ENVISAGE AS REFUND OF AN AMOUNT ARITHMETICALLY EQUAL TO CUST OMS DUTY OR CENTRAL EXCISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER-CUM- MANUFACTURER. SECTION SECTION(2) OF SECTION 75 OF THE CUSTOMS ACT REQUIRES THE AMOUNT OF DRAWBACK TO BE D ETERMINED ON A CONSIDERATION OF ALL THE CIRCUMSTANCES PREVALE NT IN A PARTICULARS TRADE AND ALSO BASED ON THE FACTS SITUA TION RELEVANT IN RESPECT OF EACH OF VARIOUS CLASSES OF GOODS IMPORT ED. BASICALLY, THE SOURCE OF DUTY DRAWBACK RECEIPT LIES IN SECTION 75 OF THE CUSTOMS ACT AND SECTION 37 OF THE CENTRAL EXCISE AC T. 18. ANALYSING THE CONCEPT OF REMISSION OF DUTY DRA WBACK AND DEPB, WE ARE SATISFIED THAT THE REMISSION OF DUTY I S ON ACCOUNT OF THE STATUTORY/POLICY PROVISIONS IN THE CUSTOMS A CT/SCHEME(S) FRAMED BY GOVERNMENT OF INDIA. IN THE CIRCUMSTANCES , WE HOLD THAT PROFITS DERIVED BY WAY OF SUCH INCENTIVES DO N OT FALL WITHIN THE EXPRESSION PROFITS DERIVED FROM INDUSTRIAL UND ERTAKING IN SECTION 80-IB. 19. SINCE RELIANCE WAS PLACED ON BEHALF OF THE ASS ESSEE(S) AS AS-2 WE NEED TO ANALYSE THE SAID STANDARD. 20. AS-2 DEALS WITH VALUATION OF INVENTORIES. INVE NTORIES ARE ASSETS HELD FOR SALE IN THE COURSE OF BUSINESS; IN THE PRODUCTION FOR SUCH SALE OR IN FORM OF MATERIALS OR SUPPLIES T O BE CONSUMED IN THE PRODUCTION. 21. INVENTORY SHOULD BE VALUED AT THE LOWER OF C OST AND NET REALIZABLE VALUE (NRV).THE COST OF INVENTORY SHOU LD COMPRISE ALL COSTS OF PURCHASE, COSTS OF CONVERSION AND OTHER COSTS INCLUDING COSTS INCURRED IN BRINGING THE INV ENTORY TO THEIR PRESENT LOCATION AND CONDITION. 22. THE COST OF PURCHASE INCLUDES DUTIES AND TAXES (OTHER THAN THOSE SUBSEQUENTLY RECOVERABLE BY THE ENTERPRISE FR OM TAXING 7 AUTHORITIES), FREIGHT INWARDS AND OTHER EXPENDITURE DIRECTLY ATTRIBUTABLE TO THE ACQUISITION. HENCE, TRADE DISCO UNTS, REBATE, DUTY DRAW BACK AND SUCH SIMILAR TERMS ARE DEDUCTED IN DETERMINING THE COSTS OF PURCHASE. THEREFORE, DUTY DRAWBACK, REBATE ETC. SHOULD NOT BE TREATED AS ADJUSTMENT (CR EDITED) TO COST OF PURCHASE OR MANUFACTURE OF GOODS. THEY SHOULD BE TREATED AS SEPARATE ITEMS OF REVENUE OR INCOME AND ACCOUNTED F OR ACCORDINGLY (SEE PAGE 44 OF INDIAN ACCOUNTING STAND ARDS & GAAP BY DOLPHY DSOUZA).THEREFORE, FOR THE PURPOSE S OF AS- 2, CENVAT CREDITS SHOULD NOT BE INCLUDED IN THE COS T OF PURCHASE OF INVENTORIES. EVEN INSTITUTE OF CHARTERED ACCOUNT ANTS OF INDIA (ICAI) HAS ISSUED GUIDANCE NOTE ON ACCOUNTING TREAT MENT FOR CENVAT/MODVAT UNDER WHICH THE INPUTS CONSUMED AND T HE INVENTORY OF INPUTS SHOULD BE VALUED ON THE BASIS OF PURCHASE COST NET OF SPECIFIED DUTY ON INPUTS( I.E. DUTY REC OVERABLE FROM THE DEPARTMENT AT LATER STAGE) ARISING ON ACCOUNT O F REBATES, DUTY DRAWBACK, DEPB BENEFIT ETC. PROFIT GENERATION COULD BE ON ACCOUNT OF COST CUTTING, COST RATIONALIZATION, BU SINESS RESTRUCTURING, TAX PLANNING ON SUNDRY BALANCES BEIN G WRITTEN BACK, LIQUIDATION OF CURRENT ASSETS ETC. THEREFORE, WE ARE OF THE VIEW THAT DUTY DRAWBACK, DEPB BENEFITS, REBATES ETC . CANNOT BE CREDITED AGAINST THE COST OF MANUFACTURE OF GOODS D EBITED IN THE PROFIT & LOSS ACCOUNT FOR PURPOSES OF SECTION 80-IA /80-IB AS SUCH REMISSIONS (CREDITS) WOULD CONSTITUTE INDEPEND ENT SOURCE OF INCOME BEYOND THE FIRST DEGREE NEXUS BETWEEN PRO FITS AND THE INDUSTRIAL UNDERTAKING. 23. WE ARE OF THE VIEW THAT DEPARTMENT HAS CORREC TLY APPLIED AS-2 AS COULD BE SEEN FROM THE FOLLOWING IL LUSTRATION: EXPENDITURE AMOUNT INCOME AMOUNT (RS.) (RS.) OPENING STOCK 100 SALES 1,000 PURCHASES (INCLUDING CUSTOMS 500 DUTY DRAWBACK 10 0 DUTY PAID) RECEIVED MANUFACTURING OVERHEADS 300 CLOSING STOCK 200 ADMINISTRATIVE, SELLING 200 DISTRIBUTION EXP. 8 NET PROFIT 200 1,300 1,300 NOTE: IN ABOVE EXAMPLE, DEPARTMENT IS ALLOWING DEDU CTION ON PROFIT OF RS.100 UNDER SECTION 80IB OF THE 1961 ACT. 24. IN THE CIRCUMSTANCES, WE HOLD THAT DUTY DRAWBAC K RECEIPT/DEPB BENEFITS DO NOT FORM PART OF THE NET P ROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKING FOR THE PURPOSES O F SECTIONS 80I/80IA/80IB OF THE 1961 ACT. 25. THE APPEALS ARE, ACCORDINGLY, DISMISSED WITH NO ORDER AS TO COSTS. 7.4 IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF THE CON SIDERED OPINION THAT THE ISSUE IN QUESTION IS SQUARELY COVE RED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF M/S. LIBE RTY INDIA VS. CIT, DATED 31 ST AUGUST, 2009 (SUPRA), AS REPRODUCED ABOVE. IT IS E SSENTIAL TO POINT OUT HERE THAT THE BINDING NATURE OF THE JUD ICIAL MANDATE OF THE HONBLE SUPREME COURT OF INDIA, AS CONTAINED IN THE DECISION OF M/S. LIBERTY INDIA VS. CIT (SUPRA), CANNOT BE OBLITERAT ED BY WAY OF SHIFTING THE LOCUS AND FOCUS, FROM THE CORE ISSUE W HICH STANDS ADJUDICATED BY THE HONBLE SUPREME COURT, IN FAVOUR OF THE REVENUE. THEREFORE, RESPECTFULLY FOLLOWING THE BINDING DECIS ION OF THE HONBLE SUPREME COURT, AS CONTEMPLATED UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA, IN THE CASE OF M/S. LIBERTY INDIA VS. CIT (SUPRA), WE DECIDE THE ISSUE, AS RAISED IN GROUND NO.2 OF THE PRESENT APPEAL, ON THE ISSUE OF ELIGIBILITY OF DEDUCTION OF THE RECEIPT OF DEPB /DUTY DRAWBACK BENEFIT U/S 80IB OF THE ACT, IN FAVOUR OF THE REVE NUE AND AGAINST THE ASSESSEE. CONSEQUENTLY, THIS GROUND OF APPEAL OF T HE ASSESSEE IS DISMISSED. 7.1 THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THE FA CTS OF THE ASSESSEES OWN CASE FOR THE EARLIER YEARS AND, THEREFORE, RESP ECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 9-10-2009 (SUPRA), WE DISMISS THIS GROUND OF APPEAL. 8. GROUND NO.3 OF APPEAL READS AS UNDER:- 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A), HAS ERRED IN HOLDING THAT DEDUCTION U/S.80I B IS TO BE 9 REDUCED FROM THE PROFITS OF BUSINESS FOR COMPUTING DEDUCTION ALLOWED U/S.80HHC. DEDUCTION U/S.80HHC IS AN INDEP ENDENT DEDUCTION AND IS AVAILABLE INDEPENDENT OF THE DEDUC TION ALLOWABLE U/S.80IB. 9. AFTER HEARING THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, WE FIND THAT THIS ISSUE IS ALSO COVERED AGAINST THE ASSESSE E BY THE DECISION OF THIS BENCH OF THE TRIBUNAL DATED 9-10-2009 PASSED IN ASS ESSEES OWN CASE IN ITA NOS.155, 156 & 157(ASR)/2009, RELATING TO ASSESSMEN T YEARS 2002-03, 2003-04 AND 2004-05. WHILE DECIDING A SIMILAR ISS UE, THE TRIBUNAL HAS HELD AS UNDER:- 9.4.. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSI ONS, FACTS OF THE CASE, ORDERS OF THE AUTHORITIES BELOW, THE RELEVANT PAPER BOOK AND SUBMISSIONS DATED 12.09.2009, INCLUDING THE CASE LA WS CITED THEREIN AND THE DECISION OF THE HONBLE SPECIAL BENCH IN TH E CASE OF ACIT, R.II, MORADABAD VS. M/S. HINDUSTAN MINT & AGRO PROD UCTS PVT. LTD. (SUPRA). ON CAREFUL PERUSAL AND CONSIDERATION OF TH E DECISION OF THE SPECIAL BENCH, IN QUESTION, WE ARE OF THE CONSIDERE D OPINION THAT THE ISSUE RAISED IN GROUND NO.3 BY THE ASSESSEE IS DIRE CTLY COVERED BY THE DECISION OF THE SPECIAL BENCH, AS IS EVIDENT FROM T HE ABOVE DISCUSSIONS ON THE DECISION OF THE SPECIAL BENCH (S UPRA). THEREFORE, RESPECTFULLY FOLLOWING THE BINDING DECISION IN THE CASE OF ACIT, R.II, MORADABAD VS. M/S. HINDUSTAN MINT & AGRO PRODUCTS P VT. LTD. (SUPRA) OF THE HONBLE SPECIAL BENCH, THE GROUND N O.3 RAISED BY THE ASSESSEE IS ADJUDICATED IN FAVOUR OF THE REVENUE AN D AGAINST THE ASSESSEE. THUS, GROUND NO.3 OF THE ASSESSEE IS DISM ISSED. 9.1 THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO TH AT OF EARLIER YEARS AND, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL(SUPRA), WE DISMISS THIS GROUND OF APPEAL. 10 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2011. SD/- SD/- (MEHAR SINGH) (H.L KARWA) ACCOUNTANT MEMBER) VICE PRESIDENT. DATED:15 TH JUNE, 2011. KC/- COPY OF THE ORDER FORWARDED TO:- (1) THE APPELLANT: M/S.VISHAL TOOLS & FORGINGS PVT. LTD .,B-89, FOCAL POINT EXTENSION, JAL. (2) THE DCIT, RANGE 2, JAL. (3) THE CIT, JAL. (4) THE CIT(A), JAL. (5) THE SR. D.R., ITAT, ASR. TRUE COPY BY ORDER ASSTT. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, AMRITSAR. 11