Appeal details
Counselvise Citation
[2023] 102 COUNSELVISE.COM (IT) 8763 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 9 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-05-2023
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
G
Next Hearing Date
21-02-2023
Assessment Year
2010-2011
Appeal Filed On
24-07-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 5114/Del/2018 : Asstt. Year : 2010-11 ITA No. 5640/Del/2018 : Asstt. Year : 2011-12 ITA No. 5641/Del/2018 : Asstt. Year : 2012-13 Sharda Exports, C/o Mr. Jitendra Kumar Gupta, Partner of M/s Sharda Exports, 219, Railway Road, Meerut, Uttar Pradesh-250002 Vs DCIT, Circle-2, Meerut (APPELLANT) (RESPONDENT) PAN No. ABOFS0079G ITA No. 6568/Del/2018 : Asstt. Year : 2010-11 ITA No. 6569/Del/2018 : Asstt. Year : 2011-12 ITA No. 6570/Del/2018 : Asstt. Year : 2012-13 ITA No. 6571/Del/2018 : Asstt. Year : 2013-14 ITA No. 6572/Del/2018 : Asstt. Year : 2015-16 DCIT, Circle-2, Meerut Vs Sharda Exports, B-96, Eastern Avenue, Sainik Vihar, New Delhi (APPELLANT) (RESPONDENT) PAN No. ABOFS0079G Assessee by : Sh. Rajkumar Gupta, CA Revenue by : Sh. H. K. Choudhary, CIT DR Date of Hearing: 22.02.2023 Date of Pronouncement: 12.05.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: T he pr e se nt a p p e al s ha ve be e n f i le d b y t he as se ssee an d the R e ve n ue ag a in s t t he o r de r s o f t he l d . C IT ( A) , Me e r u t d ate d 0 9 .0 7 .2 0 1 8 , 1 0 .0 7 .2 0 1 8 , 1 1 .0 7 .2 0 1 8 an d 1 3 .0 7 .2 0 1 8 . ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 2 2 . Si n ce , t he i ss ue s i nv o l ve d i n a s se sse e an d R e v e nue t he ap pe a ls ar e si mi l ar , t he y w e r e he ar d to ge t h e r an d be i n g ad ju d ic ate d b y a co m mo n o r de r . 3 . In IT A N o . 5 1 1 4 /De l/2 0 1 8 , f o l l o w i ng gr o un ds h ave be e n r ai se d b y t he a ss e sse e : “1. That the Authority below had erred in Law and facts of the case in disallowance the deduction as claimed by the appellant under section 80-IC of the Income Tax Act, 1961 on the Duty Drawback of Rs 7,44,38,944/- for the relevant year under consideration. 2. That the Authorities below had erred in facts and law of the case to make various observations in their respective orders. 3. That the Authorities below had either ignored or had not appreciated the submissions made by the appellant on the duty draw back claim made by the Assessee firm. 4. That the Interest charged under section 234B and 234C being wholly ill- legal deserve to be deleted, at any rate without prejudice the interest has charged was very excessive.” 4 . In IT A N o . 6 5 6 8 /De l/2 0 1 8 , f o l l o w i ng gr o un ds h ave be e n r ai se d b y t he R e v e nue : “1. Whether in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) has erred in law and fact in allowing deduction u/s 80IC of the I.T. Act, 1961 @100% on the total business income ignoring the principle of natural justice as neither any remand report was called for from the A.O. nor any opportunity of hearing was provided to the A.O. inspite of the fact that the A.O. had made request for hearing to the CIT(A) through ITNS-51. ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 3 2. Whether in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) has erred in law and fact in allowing deduction u/s 80IC of the I.T. Act, 1961 @100% on the total business income without taking into consideration the very fact that the primary condition of availing benefit u/s 80IC of the Act remains to be fulfilled which is that the undertaking is not found by splitting up or reconstruction of a business already in existence as all the necessary factors of production like land, labour, capital, entrepreneurship and goodwill continued from the old M/s Sharda Exports, Hardwar to New M/s Sharda Exports, Delhi, and hence the act of creating a new firm through execution of a new instrument viz. a new partnership deed does not actually create a new entity if almost all the assets and partners do remain the same. 3. Whether in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) has erred in law and fact in treating the old M/s Sharda Exports, Hardwar and new M/s Sharda Exports, Delhi to be two separate entities ignoring the fact that the very act of creating of a new firm through execution of a new partnership deed was a colorable ploy devised by the assessee to avail deduction u/s 801c of the Act @100% beyond the legitimate time limit allowed by the law notwithstanding the fact that no explanation was given by the partners of the old firm as to why they abruptly chose to dissolve their firm that was successfully running its business and had a turnover of about 100 Crores for A.Y. 2009-10 and how the new firm instantly achieved a turnover of Rs. 75 Crores in the very first year of its existence if the entire business operations had been started afresh from scratch. 4. Whether in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) has erred in law and fact in giving his finding that the A.O. got confused in assuming that the new firm came into existence on 01.04.2009 instead of taking the date of creation of new firm to be 01.01.2009 whereas the A.O. in his assessment order has mentioned that the new firm started its commercial activity from ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 4 01.04.2009 and there is further infirmity in the order of the CIT(A) wherein it is held that no finished goods were taken over by Ms Meenakshi Gupta from old M/s Sharda Exports, Hardwar, whereas the audit report of the old M/s Sharda Exports for the year ending 31/03/2009 and the submissions made by the assessee firm in this respect clearly reflect that finished goods worth Rs. 12,196,47,491/- were transferred to Ms. Meenakshi Gupta. 5. That in the facts and circumstances of the case, the order of the Id. Commissioner of Income Tax(A), Meerut may be set aside and that of the A.O. be restored.” Brief facts: 5 . M/ s S har da Ex po r ts ( P AN : AAC F S 8 4 6 6 H) st ar te d bu si ne s s in 1 9 8 3 fr o m Me e r ut h av i ng par tne r s na me l y, Shr i J i te n dr a Ku mar G u pt a Sm t Me e na ks hi G up ta W /o S h. J. K . G up ta Shr i A d it ya G u p t a S/o Sh . J . K. G u pt a Shr i A sh i sh G u p t a S/o Sh . J . K. G u pt a 6 . M/ s Sh ar d a Ex po r t s (P AN : A AY F S1 6 9 4 N ) c a me i n to e xi ste nce in t he F .Y .2 0 0 4 -0 5 a n d th is f ir m w as d i sso lve d i n t he F .Y .2 0 0 9 -1 0 . 7 . T he as se s se e M /s S har da Ex po r ts ( PAN : AB O F S0 0 7 9 G) came in to e x is te nce fr o m 0 1 .0 4 .2 0 0 9 ha v in g par t n e r s n ame l y, Shr i J i te n dr a Ku mar G u pt a Shr i A d it ya G u p t a S/o Sh . J . K. G u pt a Shr i A sh i sh G u p t a S/o Sh . J . K. G u pt a ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 5 8 . T he as se sse e cl ai me d de d uc t io n u/ s 8 0 IC o f t h e Inco me T ax A ct , 1 9 6 1 fr o m t he A.Y . 2 0 1 0 -1 1 o nw ar ds . T he ins t an t asse sse e ha d t ur no ve r o f R s .7 5 C r . i n t he fir s t ye ar o f bus i ne s s. T he mo o t al le g at io n o f t he As se ss i ng O f f ice r w as t ha t t he asse sse e w e nt o n c ha ng i ng t he fir m s tr uc tur e o nl y to c la i m de d uc t io n u/ s 8 0 IC an d t he as se sse e co ul d no t ha ve ha d a tur no ve r o f R s .7 5 C r . a t t he be g i nn i ng o f t he b us ine ss a n d t he e nt ir e ne w b us i n e ss is the c ha nge d fo r m o f the o l d b us i ne ss . A.Y. 2010-11 to 2013-14 and A.Y. 2015-16 Allowability of Deduction u/s 80-IC: 9 . T he AO he l d t ha t a bu si ne s s u ni t can ’t w o r k i n iso l at io n. I n fac t a b us i ne ss un i t i s an o r g an i c e nt i ty , i t mo v e s in a w a ve . T he r e ar e so m an y e x te r n al r e l at io ns w h ic h ke e p o n w o r k in g w he n a b us ine ss u ni t co n d uc t i t’ s b us i ne s s a c ti v i t ie s . T he r e i s ma na ge me nt , w o r ke r s , b us i ne ss pr e m ise s, se l le r s , p ur c ha se r s , jo b w o r ke r s, co mm is s io n a ge n ts e tc . i n f ac t w h e n a ll o f t he m pe r fo r m the ir d ut ie s in sy n chr o niz at io n t he n fr ui t f ul l r e su l ts co me s . A ll t he se fac to r s m ake the bu s ine s s un i que . T he AO he l d th a t t he c ha n ge in t he fo r m o f t h e fir m o f t he o ld “M /s Sh ar d a Ex po r ts” a n d N e w “M/ s S har da Ex po r ts” is o n l y to cir cu mve n t the l i m it at io ns p r o vi de d fo r c la i m o f e xe mp t io n u /s 8 0 IC . T o pr o ve so , t he AO po i n te d o u t ap par e n tl y c o nv i nc ib le an d su bs ta n ti a l fac t s w h ic h ar e a s u nd e r : 1 . T he na me o f the ne w fir m r e ma i ne d s ame i .e . M / s Sh ar d a Ex po r ts . 2 . T he par t ne r s o f the fir m ar e o f s ame f am i ly me m be r s a n d the o n l y d i ffe r e n ce i s t ha t Sm t . M e e nak sh i G u pt a c ame o u t o f the ne w f ir m . ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 6 3 . T he bu si ne s s pr e mi se s i n Har i dw a r , w as t he sa me . 4 . T he na tur e o f b u si ne s s is the sa m e . 5 . T he ne w f ir m M/ s S har da Ex po r t us i ng s ame b an k acco u nt s. 6 . T he l is t o f se l le r s , pur c hase r s, jo b w o r ke r s ar e s am e . 7 . T he 4 2 s a le p ar t ie s o f e ar l ie r f ir m ar e sa me fo r the ne w fir m . 8 . T he jo b w o r k i n g age nc y , co m mi ss io n a ge n ts w e r e also same . 1 0 . T he r e fo r e , the A O he ld t ha t as f ar as a bo ve fa ct o r s ar e co n ce r ne d t he r e is no s ub st an t ia l di ffe r e nce in ne w M/ s S har da Ex po r ts i n co mp ar i so n to o l d M / s Sh ar d a E xpo r ts . T he AO he l d th a t o w i ng the c o mmo na l i tie s, th e asse sse e is a “ goi n g co n ce r n ” an d co n t i nue d to do the o pe r a t io ns w hi ch h it he r t o we r e be in g do ne . T he AO h as al so he ld th at t he l an d an d s to c k o f the e ar l ie r f ir m ha s b e e n d ul y tr a nsfe r r e d to the ne w fi r m a nd he n ce the r e w a s no c ha nge o f b us i ne ss . Q uo t i ng the pr o vi sio n s o f Se c t io n 8 0 I C o f the Ac t , the AO he l d th at af te r u nde r st an d in g the co r r e c t i n te n sio n o f the le gi s l at ur e a nd o n i n te r pr e t at io n o f var io u s pr in c ip le s, t he as se s se e w as u si n g t he to o l o f fo r mi n g a ne w f ir m i n t he same na me a t the s ame pr e m ise s to cl ai m de d uc t io n u / s 8 0 IC @ 1 0 0 % be y o nd t he t ime li m i t pe rm is s ib le as pe r t he law . Ho l d in g th u s, t h e As se ss i ng O f fi ce r d is a llo w e d the de d uc t io n c la ime d b y the a sse sse e u /s 8 0 IC . 1 1 . Ag gr ie ve d, t he a sse s se e f i le d ap p e al be fo r e t he l d . C IT ( A ) w ho de le te d t he ad di t io n ma de by the AO . Er go , t he r e ve nue fi le d a p pe a l be fo r e us . ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 7 1 2 . Dur in g t he ar g u me n ts be fo r e u s, t he l d. DR s ucci nc t ly br o u g ht to o ur no t ice , t he s i mi l ar i t ie s o f th e bus ine ss a s me n t io ne d in t h e As se ss me nt O r de r w hi ch h av e be e n dul y quo te d i n t he a b o ve p ar t o f the o r de r , pr o vi s io n s of t he Ac t a n d e xp la i ne d a t le n gt h w i t h r e g ar d to r e co ns tr uc t io n an d sp l i tt i ng o f t he e nt i ty . T h e ld . DR h as a ls o ar g ue d t ha t t h e ma ch i ne r y w h ic h h as be e n use d e ar l ie r is s t il l be in g use d i n the e xi s ti n g e nt i ty a nd he n ce no de d uc t io n is a l lo w a b le . 1 3 . O n t he o t he r ha nd , t he l d . AR a r gue d t ha t the fi r m ca me in to e x is te nce w .e . f . 0 1 .0 1 .2 0 0 9 an d i t be ga n t o man uf ac tur e ar t ic le s fr o m 0 1 . 0 4 .2 0 0 9 an d he n ce t he As se s sme nt Ye ar 2 0 1 0 - 1 1 is t he in i t ia l As se ss me n t Y e ar fo r cla i mi n g o f de d uc t io n u/ s 8 0 IC @ 1 0 0 % w hi ch ha s be e n w r o ng l y a llo w e d b y t he AO @ 2 5 % tr e a t in g i t a s 6 t h ye ar o f the o ld f ir m . 1 4 . He ar d t he ar g u m e nt s o f bo t h t he par tie s an d pe ruse d t he ma te r i a l ava i la b l e o n r e co r d. 1 5 . W e f in d th a t de e d o f p ar t ne r s h i p da te d 0 1 .0 1 .2 00 9 w as du l y r e g is te r e d w i th R e g i str ar o f fi r m s, N e w D e lh i a nd V AT r e gi s tr a tio n ce r t if ic a te w as da t e d 0 1 .0 3 .2 0 0 9 . T he Im po r t Ex po r t co de ( IE C ) r e g is tr a t io n c e r ti f ic ate d ate d 0 2.0 4 .2 0 0 9 o f the a sse s se e ha s be e n pe r use d. T he as se sse e h ad Se rvi ce ta x r e gi s tr a tio n ce r t i fi ca te d ate d 2 1 . 1 0 .2 0 0 9 alo ng w i th PA N an d T AN . T he a sse s s e e o bta i ne d r e g i str at io n ce r ti f ic a te b y car pe t e xpo r t pr o mo tio n co u nse l o n 1 2 .0 6 .2 0 0 9 a nd VA T asses sme n t o r de r ha s be e n co m ple te d fo r A. Y . 2 0 1 0 -2 0 1 1 o f the a sse sse e fir m o n 1 0 .0 8 .2 0 1 1 . ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 8 1 6 . T he asse sse e h ad p ur c ha se d n e w pla n t & m ach i ne ry ne e de d fo r the ma nu fa ct ur in g ac t iv i ty as a ga i ns t the co n te n t io n o f t he R e ve nue th a t the o ld ma ch ine r y i s be in g use d. T he AO has a lso a l lo w e d de pr e c ia t io n o n t he ne w m ach i ne r y . T he de pr e ci at io n s ch e du le has be e n e xam i ne d b y u s w i th r e gar d to the a d d it io n to t he f ixe d as se t s. Su ch ad d it io n to fi xe d a sse ts has no t be e n d is pu te d by t he AO . W e fi nd , no le g al in f ir m i ty in co n du c ti n g b us i n e ss b y the fi r m co n si st i n g o f fa mi ly me mbe r s as par t ne r s . W h i le t he al le ga ti o n o f the r e ve n ue w as t ha t t he same ba n k ac co u nt o f the o l d f ir m h as be e n use d , t he fac t s o n r e co r d s ho w s t h at the o ld f ir m acco un t N o . 0 3 6 8 0 5 0 00 7 57 w he r e as t he ass e sse e ’s ba n k a cc o un t N o . 0 3 6 8 0 5 0 0 2 3 03 w hi ch is co n tr ar y to the al le g at io n o f the r e ve nue . T he na me o f t he o l d fir m a n d the ne w f ir m be in g th e same i s no t a de te rm in at i ve fac to r to ho l d th at i t i s a ca se o f same f ir m . T he a sse s se e be in g in t he sa me l i ne o f b us i ne s s w as aw ar e o f the bu si ne s s co n ta ct s , par t ie s , co m m iss io n ag e nt s an d he n ce t he tur no ve r in the in i t ia l ye ar i tse lf is r e m ar k a ble . S h . J ite n dr a Kum ar G up t a w as g ive n la n d an d bu i l di n g a t Har idw ar w he r e the bus i ne s s ac ti v it y w as c ar r i e d o n to w ar d s r e tur n / sh ar e o n h is c ap i ta l . T he same ha s be e n i ntr o d uce d a s h is co n tr ib u tio n i n the ne w fir m . N o a dve r se v ie w ca n be ta ke n o n th i s iss ue . S im i larl y, S m t. Me e na ks h i G u p ta w as g ive n the s t o ck o f r aw m ate r ia l an d se m i- fi n is h g o o d s o f t he o l d fir m to w a r ds r e tur n / s har e o f he r ca p it a l o n d i sso l ut io n. She w as a lso a par t ne r i n T ir u pa th i C ar pe t s, w h ic h she br o u gh t in th i s se m i -f in i she d s to c ks in Tir u pa t h i C ar pe ts , w h ic h f i r m c ar r ie d o u t f ur t he r w o r k fo r value a dd i t io n o f abo u t R s.2 C r . t he r e o n , a fte r w h ic h i t w a s p ur cha se d by the asse sse e fr o m M /s T ir u pa t h i C ar p e ts . T he se fac t s have no t be e n in di s pu te . T he p ur c ha se s b y t he asse sse e fr o m T i r up at i C ar pe ts, ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 9 Me e r u t ca n no t b e vie w e d ad ve r s e ly fo r the in fe r e nce t ha t o l d an d ne w fir m ar e o ne an d t he s a me . I t is al so to be su b mi t te d th a t T ir up a th i C ar pe ts is as s e sse d to in co me t ax . Th is tr a ns ac t io n s ta n d s de c lar e d i n t he bo o k s o f T ir u pa th i C ar pe t s fo r A. Y . 2 0 1 0 -2 0 1 1 w h ic h w a s a cce p te d in i ts In co me T ax asse ss me n t . 1 7 . T he o ld F ir m w a s d i sso lve d vi de de e d o f d iss o l uti o n da te d an d e f fe c t ive fr o m 0 1 .0 4 .2 0 0 9 , a s pe r t he co py o f di sso lu t io n de e d T he as se s se e fir m ca me in to e x is te nce o n 0 1 .0 1.2 0 0 9 w h ic h i s e v i de n t fr o m the co p y o f de e d o f par tne r shi p d t d. 0 1 .0 1 .2 0 0 9 a s p e r r e co r ds w h i ch the A .O . w r o n g l y note d i n the asse ss me n t o r de r as 0 1 .0 4 .2 0 0 9 . T he sa id p ar t ne r s hi p de e d has a l so be e n go t r e g is te r e d w i th the "R e g is tr ar o f F ir m s" v i de ce r t if i ca te i n " F o r m- A" d a te d 1 2 .0 4 .1 0 . In t h is r e gis tr a t io n ce r t if i ca te , t he da te o f jo in in g ha s be e n spe c i fie d a s "0 1 .0 1 .2 0 0 9 " . I t sho w s th at d u r in g the pe r io d 0 1 .0 1.0 9 t il l 3 1 .0 3 .0 9 , t he o l d as w e l l as the appe l la n t f ir m , simu l ta ne o us ly e xi ste d . T h is co n str uc t io n o f t he da te s pe r s ua de d hi m to r e ac h to a d i abo l ic c o nc lu s io n th a t t he o l d f ir m go t c lo se d a nd im me di ate l y ne w f ir m go t s tar te d. 1 8 . It is a fac t o n r e co r d t ha t 1 s t e x p o r t di sp a tc h h as ta ke n o n 0 5 .0 5 .2 0 0 9 . T he o ld mac h ine r y h as no t be e n u se d as in d ic ate d by the in vo ice s o f t he ne w m ac h in e r y w h ic h w a s p u r cha se d fr o m the th ir d par t y. T he e vi de n ce s p r o ve s t ha t i t is a case w he r e ne w pl an t & m ach i ne r y h as b e e n ac q u ir e d w hi ch w a s no t pr e v io us ly use d. He nce , the co n d i t io n s fo r the e l igi bi l i ty o f c la i m u/ s 8 0 IC in the case o f a ne w in du s tr i a l u nde r ta ki ng s ta nd s ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 10 sa ti sf ie d. He nce , w e de cl i ne to t he in te r fe r e w i t h t he r e as o ne d o r de r o f the ld . C IT ( A ). 1 9 . In t he r e su l t , the a ppe a l s o f t he r e ve n ue ar e di sm i sse d . ITA No. 5114/Del/2018 : Asstt. Year : 2010-11 ITA No. 5640/Del/2018 : Asstt. Year : 2011-12 ITA No. 5641/Del/2018 : Asstt. Year : 2012-13 80-IC on Duty Draw Back: 2 0 . In as se s sme nt o r de r , t he A .O . h as st a te d t ha t de du ct io n u/ s 8 0 IC is no t al lo w ab le o n t he in ce n t ive s r e ce i ved /r e ce iv ab le in t he fo r m o f d u ty dr aw ba ck be c ause t he se i nce n t ive s ar e pa i d to the e xpo r te r s by t he go ve r n me nt u nde r e xpo r t po li cy . As pe r the A.O . , t he se i nce nt i ve s m ay b e at tr i b ut ab le to the b us i ne s s ac ti v it y , b u t the y ar e no t t he pr o fi ts de r i ve d by an i nd us tr ia l un de r tak i n g fr o m a n e l i g ib le b us ine ss t he r e fo r e no de du c tio n u/ s 8 0 IC w as a l lo w ab le o n d u ty dr aw b ac k. 2 1 . T he l d . C IT ( A ) d is al lo w e d the de du ct io n u/ s 8 0 IC o n the du t y dr a w b ac k. R e ly in g o n t he o r de r o f the IT AT in t he ca se o f M/ s S har da E xpo r ts ( PA N : AAY F S1 6 9 4 N ) i n IT A N o . 3 5 9 7 /De l /2 0 1 2 vi de o r de r da te d 1 4 .0 6 .2 0 1 3 w hi ch r e ad s as un de r : “In the computation for deduction u/s 80IC, assessee has included a sum which represents the DEPB receipts. The learned counsel for the assessee has placed on record a note as to how deduction on DEPB receipts u/s 80IC are admissible. However, we find that this issue is squarely covered against the assessee by the decision of Hon'ble Supreme Court in the case of Liberty India Vs. CIT reported in 317 ITR 218. Hon'ble Court has held that DEPB receipts are not derived from an industrial undertaking rather their genesis is from the beneficiary scheme formulated under Central ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 11 Excise Act etc. They are the ancillary profit The learned counsel for the assessee submitted that the Hon'ble Supreme Court has not taken into consideration the amendment in sec.28 which has been given effect from 1 st of April 1998. This amendment suggests that on sate of DEPB receipts, if there is any profit then it will be a revenue receipts. We find that this amendment urns, brought by Act of 2005, w.e.f. 01.04.1998. The decisions of the Hon'ble Supreme Court is dated 31.09.09. Thus, the decision of Hon’ble Supreme Court is subsequent to the amendment hence, the decision cannot be distinguished on this argument. In view of the above discussion, we direct the assessing officer to allow the deduction u/s 80IC of the Act as per law excluded on the DEPB receipts.” 2 2 . Fur t he r , w e f in d t ha t t he ma t te r h as be e n a d j udic a te d r e ce n tl y b y the H o n’b le Ape x C o u r t i n the c ase Sar af E xp o r t s V s. C IT in C A N o . 4 8 2 2 o f 2 0 2 2 . I n vi e w o f the de c is io n i n t he ca se o f Me gh al ay a S t e e l w he r e t he tr ans po r t a n d i n te r e st s u bs i die s w e r e he l d to be e li g i ble fo r de d uc t io n as t he y w e r e he l d to have be e n de r i ve d fr o m t he bu si ne s s o f t he u n de r t ak i n g and t hu s a n ar g ume n t w a s ma de th at t he sa id de ci s io n ha s w ide ned t he sco pe o f de du c ti o n. T he ca se o f Me g ha la ya S te e l s L im i te d de a l t w i th tr an spo r t s u bs i dy , in te r e s t s ub si d y a nd po w e r su bs i dy an d the Ho n’ ble A pe x C o ur t he l d t ha t si n ce t he se s ub si die s d ir e c t ly affe ct the co s t o f m an u fac t ur in g , t he y ha ve a dir e ct ne x u s w i th the pr o fi t s a nd ga i ns o f t he un de r tak i n g a nd si nce t he se su bs i die s h ave a dir e ct ne x us , th e y ca n be sa id t o be de r ive d fr o m t he i nd us tr i al u n de r t ak i ng . W h ile de a li n g w i t h the de c is io n in t he ca se o f L i be r t y I n di a , t he Ho n’ ble Ape x C o urt di s ti n gu is he d D u ty E n ti t le me n t P ass B o o k an d D ut y Dr aw ba ck Sc he me s a nd spe c i fi ca l ly o bs e r ve d th at t h e DPEB /D u ty Dr aw bac k Sc he m e is no t r e la te d t o t he b us i ne ss o f an i nd us tr ia l un de r tak i n g fo r ma nu fa ct ur in g o r se l l i ng i ts pr o du ct s an d the ITA No. 5114, 5640, 5641, 6568 to 6572/Del/2018 Sharda Exports 12 DE PB e n t i tle me n t a r i se s o n ly w h e n the u nde r ta k i ng go e s o n to e xpo r t t he sa id p r o du ct . 2 3 . T he sa me vie w has be e n r e ite r a te d i n the ca se of S ar a f Ex po r ts Vs C IT . He nce , r e s pe c t fu l ly fo l lo w i ng t he ju d gme nt o f Ho n’ b le S u pr e me C o ur t in var io us case s a s me n ti o ne d abo ve , w e he r e b y aff ir m t he de c i si o n o f t he l d. C IT ( A ). 2 4 . It w as al so br o u gh t to o u r no t ic e th at t he a sses se e ha s o pte d fo r V S V fo r the ye ar s be fo r e us . I n the r e su lt , the ap pe a ls o f the a sse s se e a r e d is m is se d . O r de r Pr o no u nce d i n the O pe n C o ur t o n 1 2 /0 5 /2 0 2 3 . Sd / - Sd / - (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 12/05/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR
AI Insights
The case involves multiple appeals by Sharda Exports and the Deputy Commissioner of Income Tax (DCIT), Meerut, concerning the eligibility for deductions under section 80IC of the Income Tax Act, 1961, for the assessment years 2010-11 to 2015-16. The primary contention was whether the assessee, having restructured its business, qualified as a new industrial undertaking eligible for 100% deductions under section 80IC. The ITAT examined the continuity of business operations, the nature of assets transferred, and the legal framework governing such deductions. The Tribunal found that the assessee met the criteria for a new industrial undertaking and thus was entitled to the deductions claimed.
