DCIT, Moradabad V. M/s Vallabh Metal Inc., Moradabad

ITA 2565/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9923 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 13-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Section: 80HHC; 80IB; 80IA; 274; 80HH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI RAJPAL YADAV, JM AND SHRI R.C.SHARMA, A M ITA NOS.2563/DEL/2009 & 2565/DEL/2009 ASSESSMENT YEARS : 2003-04 & 2005-06 DY.COMMISSIONER OF INCOME TAX, RANGE-1, MORADABAD. VS. M/S VALLABH METAL INC., DELHI ROAD, MORADABAD. PAN NO.AAAAN0814F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH GUPTA, SR.DR. RESPONDENT BY : SHRI PIYUSH KAUSHIK, CA. ORDER PER R.C.SHARMA, AM : THESE ARE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR AY 2003-04 & 2005-06. 2. FIRST COMMON GRIEVANCE OF THE REVENUE IN BOTH TH E YEARS RELATES TO ALLOWING CLAIM OF DEDUCTION U/S 80HHC AND 80IB ON T HE GROSS TOTAL INCOME, BY DISREGARDING THE PROVISIONS OF SECTION 80IA(9) AND 80IB(13). 3. THE ISSUE IS NO RES-INTEGRA IN VIEW OF THE DECISION OF LARGER BENCH IN THE CASE OF HINDUSTAN MINT & AGRO PRODUCTS IN ITA NOS.1 537, 1538 & 1539/DEL/2007 WHEREIN VIDE ORDER DATED 23.6.2009, T HE DECISION OF SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS 108 ITD 495 WAS UP HELD AFTER DISCUSSING THE VARIOUS JUDGMENTS OF HIGH COURTS AND HON'BLE SUPREM E COURT AND IT WAS FINALLY HELD THAT IN VIEW OF THE PROVISIONS OF SECTION 80IA (9) AND 80IA(13), THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80HHC ON THE ELIGIBLE PROFIT WHICH IS WORKED OUT AFTER REDUCING THE AMOUNT OF DEDUCTION ALLOWED U/S 80IB. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT THE ASS ESSEE IS NOT ENTITLED TO CLAIM ITA-2563 & 2565/D/2009 2 DEDUCTION ON THE VERY SAME AMOUNT OF ELIGIBLE PROFI T U/S 80HHC AND 80IB. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IN B OTH THE YEARS ARE ALLOWED. 4. NEXT COMMON GRIEVANCE RELATES TO ALLOWING DEDUCT ION U/S 80IB ON THE AMOUNT OF EXPORT INCENTIVES. 5. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE ISSUE WITH REGARD TO ALLOWING CLAIM OF DEDUCTION U/S 80IB ON D UTY DRAWBACK AND EXPORT INCENTIVES IS COVERED BY THE DECISION OF HON'BLE DE LHI HIGH COURT IN THE CASE OF ELTEK SGS (P) LTD. 3 DTR 241, WHEREIN IT WAS HELD THAT ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80IB ON THE DUTY DRAWBACK AND O THER EXPORT INCENTIVES. IT WAS OBSERVED THAT THERE IS A MATERIAL DIFFERENCE BE TWEEN LANGUAGE USED IN SECTION 80HH AND SECTION 80IB WHICH LEADS TO THE CONCLUSION THAT DUTY DRAWBACK IS PROFIT OR GAINS DERIVED FROM THE BUSINESS OF AN INDUSTRIAL UNDERTAKING. THE LANGUAGE USED IN SECTION 80IB IS NOT AS BROAD AS THE EXPRESS ION ATTRIBUTABLE TO NOR IT IS AS NARROW AS THE EXPRESSION DERIVED FROM. THE EXPRE SSION DERIVED FROM THE BUSINESS OF AN INDUSTRIAL UNDERTAKING IS SOMEWHERE IN BETWEEN. THE SOURCE OF THE DUTY DRAWBACK IS THE BUSINESS OF INDUSTRIAL UNDERTA KING WHICH IS TO MANUFACTURE AND EXPORT GOODS OUT OF RAW MATERIAL I.E. IMPORTED AND ON WHICH CUSTOMS DUTY IS PAID. THEREAFTER, CONSIDERING THE DECISION OF HON' BLE SUPREME COURT IN THE CASE OF STERLING FOODS 153 CTR 39, PANDIAN CHEMICALS 26 2 ITR 278 AND THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF RITESH I NDUSTRIES 274 ITR 324, THE HIGH COURT ALLOWED THE ISSUE IN FAVOUR OF THE ASSES SEE. SIMILARLY, HON'BLE RAJASTHAN HIGH COURT IN THE CASE REPORTED AT 13 DTR 109 HELD THAT SALE OF DEPB LICENSE IS PROFIT AND GAINS FROM INDUSTRIAL UNDERTA KING, THEREFORE ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IB. IN VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF ELTEK SGS (P) LTD. (SUPRA), THE ISSUE WITH REGARD TO ALLOWABILITY OF CLAIM OF DEDUCTION IN RESPECT OF INCOME BY WAY OF EXPORT INC ENTIVE IS NO MORE RES-INTEGRA WHEREIN FOLLOWING WAS THE OBSERVATION OF THE HONBL E COURT:- ITA-2563 & 2565/D/2009 3 DEDUCTION U/S 80IB PROFITS AND GAINS DERIVED FRO M INDUSTRIAL UNDERTAKING DUTY DRAW BACK CUSTOMS DUTY DRAWBAC K IS PROFIT DERIVED FROM BUSINESS OF INDUSTRIAL UNDERTAKING, HE NCE ELIGIBLE FOR DEDUCTION UNDER SEC. 80IB EXPRESSION DERIVED FROM THE BUSINESS OF AN INDUSTRIAL UNDERTAKING USED IN SECTION 80IB IS NEITHER AS BROAD AS ATTRIBUTABLE TO NOT AS NARROW AS DERIVED FROM B UT IS SOMEWHERE IN BETWEEN SOURCE OF THE DUTY DRAW BACK IS THE BU SINESS OF THE INDUSTRIAL UNDERTAKING WHICH TO MANUFACTURE AND EXP ORT GOODS OUT OF RAW MATERIAL THAT IS IMPORTED AND ON WHICH CUSTOMS DUTY IS PAID. 6. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB IN RESPECT OF EXPORT INCENTIVES. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED IN PART, IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2009. SD/- SD/- (RAJPAL YADAV) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.08.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR