M/s Shakri Impex, Sangrur V. ITO, Malerkotla

ITA 610/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80880 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMARVEER SINGH
• Keywords: Opportunity of being heard; Reason to believe
• Section: 143(3); 80IB; 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 610/CHD/2011 ASSESSMENT YEAR : 2006-07 M/S SHAKTI IMPEX, VS THE INCOME TAX OFF ICER, JAGERA ROAD, WARD IV(4), AHMEDGARH, MALERKOTLA. SANGRUR. PAN : AAVFS0301B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI AMARVEER SINGH DATE OF HEARING : 26.08.2014 DATE OF PRONOUNCEMENT : 10.09.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX II, LUDHIAN A DATED 25.03.2011 RELATING TO ASSESSMENT YEAR 2006-07 AGAI NST THE ORDER PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT ORDER PASSED U/S 263 OF THE INCOME-TAX ACT, 1 961 BY THE LD. C1T-11, LUDHIANA IS AGAINST LAW AND FACTS ON THE FI LE IN AS MUCH AS THE ASSESSMENT FRAMED BY THE LD. ASSESSING OFFICER CANN OT BE SAID TO BE ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE. 2. THAT THE LD. CIT-II WAS NOT JUSTIFIED TO ARBITRARIL Y ENHANCE THE INCOME BY DISALLOWING DEDUCTION U/S 80-IC ON THE AM OUNT OF INTEREST, DUTY DRAW BACK, RECEIPT UNDER 'VISHESH KRISHI UPAJ YOJNA' AND MISCELLANEOUS INCOME. 2 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE UNDER SECTION 263 OF T HE ACT WHICH READS AS UNDER : 'WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSING OFFI CER ERRED IN ALLOWING DEDUCTION U/S 80IC ON INTEREST OF RS. 3192/-, DUTY DRAW BACK RECEIVED RS. 4,18,306 AND RS.23,27,306/-, MISCELLANEOUS INCOME OF RS. 1,193/- AND PROCESSING CHARGES OF RS. 17,85,667/- WHICH ARE NOT INCOMES DERIVED BY THE UN DERTAKING FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2) OF 80IC. THUS THESE PROFITS ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC. THE A.O HAS ALSO FAIL ED TO FOLLOW THE DECISION OF HON'BLE SUPREME COURT IN CIT V STERLING FOODS 237IT R 579 AND HON'BLE PUNJAB & HARYANA HC IN LIBERTY INDIA V COMMISSIONER OF INCOM E TAX 293 ITR 520. THE ASSESSING OFFICER HAS PASSED THE ORDER IN A PERFUNC TORY MANNER AND WITHOUT APPLICATION OF MIND. IN VIEW OF THESE FACTS I HAVE REASON TO BELIEVE THAT THE ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 8OIC ON THESE INCOMES. THEREFORE I HAVE REASONS TO BELIEVE THAT THE ASSESS MENT ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE, ON THE GROUNDS STATED ABOVE. YOU ARE GIVEN OPPORTUNITY OF BEING HEARD AND SHOW C AUSE WHY THE IMPUGNED ORDER BE NOT ENHANCED/MODIFIED/CANCELLED OR SET ASIDE FOR FR ESH ASSESSMENT UNDER SECTION 263 OF THE ACT IN THIS OFFICE ON 25.06.2009 AT 11AM. 4. IN REPLY, THE ASSESSEE SUBMITTED THAT IT WAS FUL LY QUALIFIED FOR CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE AC T AND THE ASSESSMENT ORDER ORIGINALLY PASSED BY THE ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F REVENUE. HOWEVER, THE COMMISSIONER OF INCOME TAX IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN LIBERTY IN DIA VS CIT 317 ITR 218 (S.C) HELD THAT THE ASSESSEE WAS NOT EN TITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE AMOUNT RECEIVED UNDER THE VISHESH KRISHI UPAJ YOJNA. IT W AS FURTHER OBSERVED BY THE COMMISSIONER OF INCOME TAX THAT THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF LIBERT Y INDIA HAS BEEN CONFIRMED BY THE HON'BLE SUPREME COURT IN THE CASE REPORTED AT 317 ITR 218 (S.C). 3 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX. 6. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE RE IS NO MERIT IN THE ORDER OF COMMISSIONER OF INCOME TAX BE CAUSE AT THE TIME OF ISSUE OF SHOW CAUSE NOTICE, THE DECISION OF HON'BLE SUPREME COURT IN LIBERTY INDIA VS CIT (SUPRA) WAS N OT AVAILABLE AND AS SUCH THE SAID RATIO COULD NOT BE APPLIED FOR HOLDING THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF THE REVENUE. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN IN CIT VS MAX INDIA LTD. 295 ITR 282 (S.C). 7. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ISS UE STANDS COVERED BY THE EARLIER DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF CIT VS STERLING FOODS 237 ITR 579 (S.C. ) AND THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT I N LIBERTY INDIA VS CIT (SUPRA). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE INVOKING OF JURISDICTION BY THE COMMISSIONER OF INCOME TAX UNDE R SECTION 263 OF THE ACT. THE ORIGINAL ASSESSMENT IN THE CAS E WAS COMPLETED UNDER SECTION 143(3) OF THE ACT UNDER WHI CH THE ASSESSEE WAS ALLOWED DEDUCTION UNDER SECTION 80IC O F THE ACT ON THE MANUFACTURING ACTIVITIES CARRIED ON BY THE ASSE SSEE AND FURTHER EVEN ON THE RECEIPTS OF RS. 23,27,306/- RECEIVED UN DER THE ACCOUNT VISHESH KRISHI UPAJ YOJNA. THE CONTENTION OF THE A SSESSEE WAS THAT THE SAID RECEIPTS FORM PART OF THE PROFITS OF THE BUSINESS ON WHICH ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECT ION 80IC OF 4 THE T ACT WHEREAS THE COMMISSIONER OF INCOME TAX, I N VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS STERLING FOODS 237 ITR 579 AND BY THE JURISDICTIONAL HIGH C OURT IN LIBERTY INDIA VS CIT 293 ITR 520 WHICH HAS BEEN AFF IRMED BY THE HON'BLE SUPREME COURT IN 317 ITR 218 (S.C.) HELD TH AT THE ASSESSEE WAS NOT ENTITLED TO THE SAID DEDUCTION UND ER SECTION 80IC OF THE ACT ON THE AMOUNT RECEIVED UNDER THE VISHESH KRISHI UPAJ YOJNA. 9. WE FIND THAT SIMILAR ISSUE OF INVOKING OF JURISD ICTION UNDER SECTION 263 OF THE ACT AROSE IN THE CASE OF LITTLE BEE IMPEX VS DCIT. THE TRIBUNAL IN ITA NO.153/CHD/2013 RELATING TO ASSESSMENT YEAR 2009-10 VIDE ORDER DATED 28.08.2014 IN THE CASE OF THE SAID CONCERN WHICH WAS ENGAGED IN THE SIMILA R LINE OF BUSINESS AS THE ASSESSEE BEFORE US I.E. PRODUCTION OF HONEY AND HAD ALSO RECEIVED THE AMOUNT UNDER THE VISHESH KRIS HI UPAJ YOJNA HAD HELD THAT THE REVISION ORDER PASSED BY THE COMM ISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT WAS VALID I N HOLDING THAT THE SAID RECEIPTS RECEIVED BY THE ASSESSEE WERE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. THE SAID RATIO OF HOLDING THE RECEIPTS TO BE NOT ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80IC OF THE ACT HAS BEEN APPLIED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO. 153/CHD/2913 RELATING TO ASSESS MENT YEAR 2009-10 IN TURN FOLLOWING THE RATIO LAID DOWN IN M/ S LITTLE BEE IMPEX VS ACIT AND VIDE ORDER DATED 28.08.2014 IT WA S HELD AS UNDER : 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDE RATION WAS ENGAGED IN THE PROCESSING AND EXPORT OF HONEY, TRAD ING OF ZINC AND MUSTARD OIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAD 5 DECLARED RECEIPT OF RS. 25,88,032/- ON ACCOUNT OF D UTY DRAW BACK AND UNDER THE HEAD VISHESH KRISHI UPAJ YOJNA A T RS. 1.20 CRORES. THE ASSESSING OFFICER NOTED THAT SIMI LAR RECEIPT OF DUTY DRAW BACK AND VISHESH KRISHI UPAJ YOJNA WER E RECEIVED IN THE EARLIER YEAR AND DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT WAS WITHDRAWN BY PASSING OR DER UNDER SECTION 263 OF THE INCOME TAX ACT. THE ASSESSEE WA S SHOW CAUSED TO EXPLAIN WHY DEDUCTION UNDER SECTION 80IC OF THE ACT SHOULD NOT BE WITHDRAWN ON THE SAID RECEIPTS. IN R EPLY, THE ASSESSEE CLAIMED THAT THE SAID INCENTIVES WERE RECE IVED AFTER PROCESS OF HONEY AND WERE ISSUED BY THE GOVERNMENT OF INDIA AND THE STATE GOVERNMENT TO PROMOTE THE EXPORT OF I NDIAN GOODS/ARTICLES. THE ASSESSEE, THUS SUBMITTED THAT THE SAID DEDUCTION UNDER SECTION 80IC OF THE ACT WAS ALLOWAB LE TO THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER IN VIEW O F VARIOUS DECISIONS OF THE APEX COURT HELD THAT THE ASSESSEE WAS NOT ENTITLED TO THE DEDUCTION CLAIMED UNDER SECTION 80I C OF THE ACT AND THE INCOME IN THE HANDS OF THE ASSESSEE WAS THUS, RECOMPUTED. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER IN VIEW OF T HE JUDGEMENT OF THE HON'BLE SUPREME COURT IN CIT VS ST ERLING FOODS LTD.237 ITR 579 (S.C) AND LIBERTY INDIA VS CI T 317 ITR 218 (S.C). 7. ON THE PERUSAL OF THE RECORD, WE FIND THAT SIMIL AR ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE RECEIPTS FROM VISHESH KRISHI UPAJ YOJNA AROSE B EFORE THE TRIBUNAL IN THE CASE OF M/S LITTLE BEE IMPEX VS DCI T (SUPRA) WHEREIN VIDE ORDER DATED 03.01.2014, THE TRIBUNAL H ELD AS UNDER : 50. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RECEIVED INCENTIVES FROM MINISTRY OF COMMERCE, GOVERNMENT OF INDIA UNDER VISHESH KRISHI UPAJ YOJNA @ 5% OF FOB VALUE OF EXPORTS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS BOOKE D INCENTIVES FOR THE FINANCIAL YEAR 2005-06 AND 2004- 05 ON ACCRUAL BASIS. THE DETAILS OF THE INCENTIVES ACCRUED/RECEIVED WERE FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS IS APPARENT FROM THE LETTER DATED 28.11.2008 PLA CED AT PAGES 65 TO 72 OF THE PAPER BOOK TO WHICH THE DETAILS WERE ANNEXED AS ANNEXURE-I. THE SAID LICEN CES ARE GRANTED BY THE DGFT, MINISTRY OF COMMERCE AND IS EQUIVALENT TO 5% OF FOB VALUE OF THE EXPORTS MAD E BY THE ASSESSEE, WHICH IN TURN IS CALCULATED ON THE BASIS OF SHIPPING BILLS/BRCS FILED WITH DGFT. THE VALUE OF LICENCES WORKED TO RS.2.23 CRORES ON EXPOR T SALES OF RS.46.46 CRORES FOR FINANCIAL YEAR 2005-06 AND RS.76.33 LACS ON EXPORT SALES OF 16.17 CRORES RELATING TO FINANCIAL YEAR 2004-05. THE SAID LIC ENCES WERE SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR RS.2.16 CRORES AND RS.61 LACS RESPECTIVELY TOTALING RS.2.78 CRORES. FURTHER AMOU NT OF RS.30 LACS WAS PROVIDED ON ESTIMATE BASIS FOR 6 PENDING LICENSES AND THE INCOME OF RS.2.80 CRORES W AS SHOWN IN THE BOOKS OF ACCOUNT ON THE BASIS OF ACTUA L SALE PRICE OF THE LICENCES/PROVISION. THE DEDUCTIO N UNDER SECTION 10B OF THE ACT ON THE SAME HAD BEEN CLAIMED AT RS.2,57,88,457/-. IN THE FIRST INSTANC E WHERE THE QUERIES HAD BEEN RAISED BY THE ASSESSING OFFICER, WHICH IN TURN HAD BEEN REPLIED TO BY THE ASSESSEE AND THE ISSUE HAVING BEEN CONSIDERED BY TH E ASSESSING OFFICER AND ONE POSSIBLE VIEW OF ALLOWING THE DEDUCTION UNDER SECTION 10B OF THE ACT HAVING BEEN PASSED, THE ISSUE ARISES, WHETHER THE SAME IS OPEN TO REVISION UNDER SECTION 263 OF THE ACT. THE HON'BLE COURTS HAVE HELD THAT THE COMMISSIONER OF INCOME TAX BY WAY OF THE PROCEEDINGS INITIATED UNDE R SECTION 263 OF THE ACT IS NOT EMPOWERED TO SUBSTITU TE ONE VIEW ADOPTED BY THE ASSESSING OFFICER BY ANOTHE R VIEW IN THIS REGARD. IN VIEW THEREOF, THE ORDER OF REVISION ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER OF INCOME TAX IS WITHOUT JURISDICTION OR NOT IS TO BE SEEN IN LINE WITH THE ALLOWABILITY OF THE SAID CLAIM IN THE HANDS OF THE ASSESSEE. 51. UNDER THE SAID SECTION 10B OF THE ACT IT IS PROVIDED THAT DEDUCTION OF SUCH PROFITS AND GAINS A S ARE DERIVED BY A HUNDRED PER CENT EXPORTS ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS F ROM THE YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE THE ARTICLES OR THINGS, DEDUCTION IS TO BE ALLOWED ON THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE IS ADMITTEDLY ENGAGED INTO HUNDRED PER CEN T EXPORTS AND IS A HUNDRED PER CENT EOU UNIT. WE HAV E ALREADY HELD THE ASSESSEE TO BE ENTITLED TO THE CLA IM OF DEDUCTION UNDER SECTION 10B OF THE ACT IN THE ABOVE SAID PARAS. NOW THE ONLY ISSUE TO BE SEEN IS WHETH ER THE RECEIPTS AS SUCH I.E. THE INCENTIVES RECEIVED U NDER VISHESH KRISHI UPAJ YOJNA, WHICH IN TURN IS DETERMINED @ 5% AND THE FOB VALUE OF THE EXPORT SALES MADE BY THE ASSESSEE, IS DERIVED FROM THE UNDERTAKING. BOTH THE COMMISSIONER OF INCOME TAX AND THE LEARNED D.R. FOR THE REVENUE HAVE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA VS. CIT (SUPRA) TO HOLD THAT THE ASSESSEE IS NOT ENTITLED TO THE SAID DEDUCTION. 52. THE PERUSAL OF THE SAID DECISION REFLECTS THAT THE ISSUE BEFORE THE HON'BLE SUPREME COURT IN LIBERTY INDIA VS. CIT (SUPRA) WAS THE CLAIM OF DEDUCTION U/ SS 80I/80IA AND 80IB OF THE ACT WHICH ALSO PROVIDES FO R DEDUCTION WITH REFERENCE TO THE PROFITS DERIVED FRO M ELIGIBLE BUSINESS. THE HON'BLE APEX COURT IN LIBER TY INDIA VS. CIT (SUPRA) OBSERVED AS UNDER : THE INCOME-TAX ACT, 1961, BROADLY PROVIDES FOR TWO TYPES OF TAX INCENTIVES, VIZ., INVESTMENT-LINKED INCENTIVES AND PROFIT-LINKED INCENTIVES. CHAPTER V I-A 7 OF THE ACT WHICH PROVIDES FOR INCENTIVES IN THE FOR M OF DEDUCTIONS ESSENTIALLY BELONGS TO THE CATEGORY OF PROFIT-LINKED INCENTIVES. THEREFORE, WHEN SECTIO N 80-IA/80-IB REFERS TO PROFITS DERIVED FROM ELIGIBLE BUSINESS, IT IS NOT THE OWNERSHIP OF THAT BUSINESS WHICH ATTRACTS THE INCENTIVES: WHAT ATTRACTS THE INCENTIVES UNDER SECTION 80-IA/80IB IS THE GENERATI ON OF PROFITS (OPERATIONAL PROFITS). IT IS FOR THIS R EASON THAT PARLIAMENT HAS CONFINED DEDUCTION OF PROFITS DERIVED FROM ELIGIBLE BUSINESS MENTIONED IN SUB- SECTIONS (3) TO (11A). EACH OF THE BUSINESSES MENTIONED IN SUB-SECTIONS (3) TO (11A) CONSTITUTES A STAND-ALONE ITEM IN THE MATTER OF COMPUTATION OF PROFITS. SECTIONS 80-IB AND 80-IA ARE A CODE BY THEMSELVES AS THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. SECTION 80-IB PROVIDES FOR THE ALLOWING OF DEDUCTIO N IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. THE CONNOTATION OF THE WORDS DERIVED FROM IS NARROWER AS COMPARED TO THAT OF T HE WORDS ATTRIBUTABLE TO. BY USING THE EXPRESSION DERIVED FROM PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. SECTIONS 80-I, 80-IA AND 80-IB PROVIDE FOR INCENTIV ES IN THE FORM OF DEDUCTIONS WHICH ARE LINKED TO PROFI TS AND NOT INVESTMENT. ON ANALYSIS OF SECTIONS 880-IA AND 80-IB IT BECOMES CLEAR THAT ANY INDUSTRIAL UNDERTAKING WHICH BECOMES ELIGIBLE ON SATISFYING SU B- SECTION (2) WOULD BE ENTITLED TO DEDUCTION UNDER SU B- SECTION (1) ONLY TO THE EXTENT OF PROFITS DERIVED F ROM SUCH INDUSTRIAL UNDERTAKING AFTER THE SPECIFIED DAT E. APART FROM ELIGIBILITY, SUB-SECTION (1) PURPORTS TO RESTRICT THE QUANTUM OF DEDUCTION TO A SPECIFIED PERCENTAGE OF THE PROFITS. THIS IS THE IMPORTANCE OF THE WORDS DERIVED FROM AN INDUSTRIAL UNDERTAKING AS AGAINST PROFITS ATTRIBUTABLE TO AN INDUSTRIAL UNDERTAKING. 53. THE HON'BLE APEX COURT FURTHER OBSERVED AS UNDER: THE WORD DERIVED FROM ARE NARROWER IN CONNOTATION AS COMPARED TO THE WORDS ATTRIBUTABLE TO. IN OTHER WORDS, BY USING THE EXPRESSION DERI VED FROM, PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. ON AN ANALYSIS OF SECTIONS 80-IA AND 80-IB IT BECOM ES CLEAR THAT ANY INDUSTRIAL UNDERTAKING, WHICH BECOME S ELIGIBLE ON SATISFYING SUB-SECTION (2) WOULD BE ENT ITLED TO DEDUCTION UNDER SUB-SECTION (1) ONLY TO THE EXTE NT OF PROFITS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING 8 AFTER SPECIFIED DATE(S). HENCE, APART FROM ELIGIBI LITY, SUB-SECTION (1) PURPORTS TO RESTRICT THE QUANTUM OF DEDUCTION TO A SPECIFIED PERCENTAGE OF PROFITS. TH IS IS THE IMPORTANCE OF THE WORDS DERIVED FROM INDUSTRIA L UNDERTAKING AS AGAINST PROFITS ATTRIBUTABLE TO INDUSTRIAL UNDERTAKING. 54. THE APEX HON'BLE COURT THUS HELD AS UNDER : DEPB IS AN INCENTIVE. IT IS GIVEN UNDER THE DUTY EXEMPTION REMISSION SCHEME. ESSENTIALLY, IT IS AN EXPORT INCENTIVE. NO DOUBT, THE OBJECT BEHIND DEPB IS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT CONTENT OF EXPORT PRODUCT. THIS NEUTRALIZATION IS PROVIDED FOR BY CREDIT TO CUSTOMS DUTY AGAINST EXPORT PRODUCT. UNDER DEPB, AN EXPORTER MAY APPLY FOR CREDIT AS A PERCENTAGE OF TH E FOB VALUE OF EXPORTS MADE IN FREELY CONVERTIBLE CURRENCY. CREDIT IS AVAILABLE ONLY AGAINST THE EXP ORT PRODUCT AND AT RATES SPECIFIED BY THE DGFT FOR IMPO RT OF RAW MATERIALS, COMPONENTS, ETC., DEPB CREDIT UND ER THE SCHEME HAS TO BE CALCULATED BY TAKING INTO ACCO UNT THE DEEMED IMPORT CONTENT OF THE EXPORT PRODUCT AS PER BASIC CUSTOMS DUTY AND SPECIAL ADDITIONAL DUTY PAYABLE ON SUCH DEEMED IMPORTS. THEREFORE, IN OUR VIEW, DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY CENTRAL GOVERNMENT OR FROM SECTION 75 OF THE CUSTOMS ACT, 1962, HENCE, INCENTIVES PROFITS ARE NOT PROFITS DERIVED FROM THE ELIGIBLE BUSINESS UNDER SECTION 80-IB. THEY BELONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKINGS. 55. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA VS. CIT (SUPRA) THE ISSUE TO BE CONSIDERED IS WHETHER THE INCENTIVES RECEIPTS UNDER THE VISHESH KRISHI UPAJ YOJNA ARE THE RECEIPTS ON FIRST DEGREE AND ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. WHILE DENY ING THE BENEFIT OF DEDUCTION U/SS 80I/80IA AND 80IB OF THE ACT ON DEPB RECEIPTS, IT WAS OBSERVED BY THE HON'BL E SUPREME COURT IN LIBERTY INDIA VS. CIT(SUPRA) THAT THE OBJECT BEHIND DEPB IS TO NEUTRALIZE THE INCIDEN CE OF CUSTOMS DUTY PAYMENT ON THE IMPORT CONTENT OF EXPORT PRODUCT, WHICH WAS PROVIDED FOR BY WAY OF CREDIT TO CUSTOMS DUTY AGAINST EXPORT PRODUCT. THE EXPORTER WAS ENTITLED TO APPLY FOR CREDIT AS A PERCENTAGE OF THE FOB VALUE OF EXPORT UNDER THE INCENTIVE SCHEME OF GRANT OF DEPB. THE SAID CREDIT WAS AVAILABLE AT RATES SPECIFIED BY THE DGFT FOR IMPORT OF RAW MATERIAL/COMPONENTS ETC. THE HON'BLE SUPREME COURT FURTHER HELD THAT DEPB/DUTY DRAWBACK WERE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY CENTRAL GOVERNMENT. 9 56. IN THE PRESENT CASE BEFORE US THE COPY OF THE SCHEME OF VISHESH KRISHI UPAJ YOJNA IS PLACED AT PAGES 20 AND 21 OF THE PAPER BOOK. THE OBJECTIVE O F THE SAID SCHEME WAS TO PROMOTE THE EXPORTS OF AGRICULTURAL PRODUCE AND THEIR VALUE ADDED PRODUCTS , MINOR FOREST PRODUCE, GRAM UDYOG PRODUCTS, FOREST BASED PRODUCTS AND OTHER PRODUCTS WHICH MAY BE NOTIFIED FROM TIME TO TIME. THE ENTITLEMENT TO THE SCHEME AS PER CLAUSE 3.13.2 IS AS UNDER: 3.13.2 DUTY CREDIT SCRIP BENEFITS AS GRANTED WITH AN AIM TO COMPENSATE HIGH TRANSPORT COSTS AND TO OFFSET OTHER DISADVANTAGES. EXPORTERS OF PRODUCTS NOTIFIED IN APPENDIX 37A OF HBPVL, SHALL BE ENTITLED FOR DUTY CREDIT SCRIP EQUIVALENT TO 5% OF FOB VALUE OF EXPORTS (IN FREE FOREIGN EXCHANGE) FOR EXPORTS MADE FROM 27.8.2009 ONWARDS. 57. UNDER CLAUSE 3.13.3 IT IS PROVIDED THAT DUTY CREDIT SCRIP BENEFITS UNDER THE SCHEME WOULD BE GRANTED ONLY AT THE REDUCED RATE OF 3% OF FOB VALUE OF EXPORTS IN CASES WHERE EXPORTER HAS AVAILED THE BENEFIT OF: (I) DRAWBACK AT RATES HIGHER THAN 1% AND/OR (II) SPECIFIC DEPB RATE (I.E. OTHER THAN MISCELLANEOUS CATEGORY SR.NOS.22C & 22D OF PRODUCT GROUP 90%); AND/OR (III) ADVANCE AUTHORIZATION OR DUTY FREE IMPORT AUTHORIZATION IMPORT OF INPUTS (OTHER THAN CATALYST, CONSUMABLE AND PACKING MATERIALS)FOR THE EXPORTED PRODUCT FOR WHICH DUTY CREDIT SCRIP UNDER VKGUY IS BEING CLAIMED. 58. FURTHER BENEFITS ARE ALSO GIVEN UNDER THE SCHEME, BUT THE RELEVANT BENEFITS OF THE SCHEME VIS -- VIS ASSESSEE ARE AS REFERRED TO BY US IN THE ABOVE PARA. IN VIEW OF THE SCHEME UNDER WHICH THE ASSESS EE IS ENTITLED TO THE INCENTIVES WHICH IN TURN ARE TO COMPENSATE HIGH TRANSPORT COST AND TO OFFSET OTHER ADVANTAGES TO THE EXPORTERS, AND ALSO IN VIEW OF TH E FACT THAT THE INCENTIVES ARE TO BE ALLOWED AT REDUC ED RATES WHERE THE ASSESSEE IS IN RECEIPT OF DUTY DRAWBACK, DEPB, WE ARE OF THE VIEW THAT THE INCENTIVES RECEIVED BY THE ASSESSEE UNDER THE VISH ESH 10 KRISHI UPAJ YOJNA AS AN EXPORT INCENTIVE WERE GIVE N TO THE ASSESSEE TO NEUTRALIZE THE INCIDENCE OF HIGH TRANSPORT COST AND ALSO TO OFFSET OTHER DISADVANTAG ES. THE SAID NEUTRALIZATION AS IN THE CASE OF HON'BLE SUPREME COURT IN THE CASE LIBERTY INDIA VS. CIT (SUPRA) IS LINKED TO THE FOB VALUE OF EXPORTS BY WA Y OF DUTY CREDIT SCRIP. THE SAID BENEFITS ARE PROVID ED BY DGFT IN THE CASE OF THE ASSESSEE AND THE SAID SCHEME BEING SIMILAR TO THE SCHEME OF GRANT OF DUTY DRAWBACK/DEPB AND IN TURN APPLYING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT ON THE SAID INCENTIVES . IN VIEW THEREOF, WE UPHOLD THE ORDER OF ENHANCEMENT PASSED BY THE COMMISSIONER OF INCOME TAX IN EXERCIS E OF ITS JURISDICTION UNDER SECTION 263 OF THE ACT. THE GROUND NO.5 RAISED BY THE ASSESSEE IS THUS DISMISSE D. 8. THEREAFTER, THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION AGAINST THE ORDER OF THE TRIBUNAL AND T HE TRIBUNAL IN CONSOLIDATED ORDER IN MA NOS. 3 TO 6/CHD/2014 RE LATING TO ASSESSMENT YEARS 2006-7 TO 2009-10 VIDE ORDER DATED 19.06.2014 HELD AS UNDER : 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IN ITA NO. NO. 553/CHD/2011 HAD RAISED THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT VIS--VIS TH E PROFITS ON SALE OF INCENTIVES RECEIVED UNDER THE SCHEME VISHESH KRISHI UPAJ YOJNA @ 5% OF FOB VALUE OF EXPORTS, RECEIVED FROM MINISTRY OF COMMERCE, GOVT. OF INDIA. THE TRIBUNAL VIDE PARAS 47 TO 59 AT PAGES 40 TO 48 HAD CONSIDERED THE PLEA OF THE ASSESSEE AND THE SCHEME UNDER WHICH INCENTIVES WERE RECEIVED AND ALSO THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA V CIT (SUPRA). AFTER HOLDING THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT ON ITS PROFITS FROM BUSINESS, THE OTHER ISS UE CONSIDERED BY THE TRIBUNAL WAS WHETHER THE INCENTIVES RECEIVED UNDER VISHESH KRISHI UPAJ YOJNA WERE DERIVED FROM THE UNDERTAKING AND WERE THUS, ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT . THE TRIBUNAL VIDE PARAS 56 AND 57 CONSIDERED THE SCHEME UNDER WHICH THE ASSESSEE HAD RECEIVED THE INCENTIVES AND IT HAS BEEN HELD THAT THE INCENTIVES RECEIVED BY THE ASSESSEE UNDER THE SAID SCHEME WERE GIVEN TO THE ASSESSEE TO NEUTRALIZE THE INCIDENCE O F HIGH TRANSPORT COST AND ALSO TO OFFSET OTHER DISADVANTAGE. THE TRIBUNAL FURTHER HELD THAT THE SAID NEUTRALIZATION AS IN THE CASE OF HON'BLE SUPREME COURT IN THE CASE LIBERTY INDIA VS. CIT (SUPRA) IS LINKED TO THE FOB VALUE OF EXPORTS BY WA Y OF DUTY CREDIT SCRIP. THE SAID BENEFITS ARE PROVIDE D BY DGFT IN THE CASE OF THE ASSESSEE AND THE SAID SCHEME BEING SIMILAR TO THE SCHEME OF GRANT OF DUTY 11 DRAWBACK/DEPB AND IN TURN APPLYING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT ON THE SAID INCENTIVES . 6. IN VIEW OF THE SAID FINDINGS, WE FIND NO MERIT IN THE STAND OF THE ASSESSEE THAT THE SPECIAL BENCH OF TRIBUNAL IN MARAL OVERSEAS VS ADDL. CIT (SUPRA) AND MUMBAI BENCH OF TRIBUNAL IN ARTS & CRAFTS EXPORTS V ITO (SUPRA) HAD ALLOWED SIMILAR BENEFIT O F EXEMPTION UNDER SECTION 10B OF THE ACT IN RESPECT O F EXPORT BENEFITS. THE SAID DECISIONS WERE REFERRED TO BY THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF ARGUING THE APPEAL. HOWEVER, SINCE THE ISSUE WAS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AND THE SCHEME BEING SIMILAR AS TO THE SCHEME CONSIDERED BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA V CIT (SUPRA) AND FURTHER TH E SCHEME CONSIDERED BY THE DIFFERENT BENCHES OF TRIBUNAL BEING AT VARIANCE, NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRIBUNAL AND WE FIND NO MERIT IN THE PRESENT MISCELLANEOUS APPLICATION MOVED BY THE ASSESSEE IN THIS REGARD AND THE SAME IS DISMISSED . 9. THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENTI CAL TO THE ISSUE BEFORE THE TRIBUNAL AND FOLLOWING THE SAME PA RITY OF REASONING AS IN M/S LITTLE BEE IMPEX, WE HOLD THAT ASSESSEE IS NOT ENTITLED TO THE DEDUCTION UNDER SECTION 80IC OF THE ACT ON RECEIPTS FROM VISHESH KRISHI UPAJ YOJNA. 10. ANOTHER ISSUE RAISED BY THE ASSESSEE IS WITH RE GARD TO THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE AC T ON DUTY DRAW BACK. THE SAID ISSUE IS SQUARELY COVERED BY T HE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY I NDIA LTD. VS CIT (SUPRA) WHEREIN IT IS HELD THAT THE ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION UNDER SECTION 80IC ON DUT Y DRAW BACK. THE RECEIPTS BEING SIMILAR AND THE PROVISION S OF SECTION 80IA AND 80IC BEING PERIMATERIA, WE HOLD THAT THE A SSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTIO N 80IC ON DUTY DRAW BACK. REJECTING THE PLEA OF THE ASSESSEE , WE DISMISS THE GROUND OF APPEAL RAISED BY THE ASSESSEE . 10. THE ISSUE RAISED BEFORE US IS IDENTICAL TO THE ISSUE BEFORE TRIBUNAL IN ASSESSEE'S OWN CASE AND SAME PARITY OF REASONING IS TO BE APPLIED. NOW COMING TO THE CONTENTION OF THE LD. AR FOR THE ASSESSEE AND THE RELIANCE ON THE RATIO OF HON'BLE S UPREME COURT IN THE CASE OF CIT VS MAX INDIA LTD. 295 ITR 282 (S.C) , WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE AS ON THE DATE WH EN THE 12 COMMISSIONER OF INCOME TAX HAD ISSUED THE SHOW CAUS E NOTICE, UNDER SECTION 263 OF THE ACT, THE RATIO WAS SETTLED BY THE JURISDICTIONAL HIGH COURT IN LIBERTY INDIA VS CIT (SUPRA) WHICH WAS BINDING ON THE ASSESSEE AND THE CLAIM MADE BY T HE ASSESSEE WAS CONTRARY TO THE RATIO LAID DOWN BY THE JURISDIC TIONAL HIGH COURT WAS OPEN FOR REVISION UNDER SECTION 263 OF TH E ACT. IN VIEW THEREOF, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX PASSED UNDER SECTION 263 OF THE ACT IN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION U/S80IC OF THE ACT ON THE RECEIPTS RECEIVED UNDER THE SCHEME VISHESH KRIS HI UPAJ YOJNA. THE GROUNDS OF APPEAL RAISED BY THE ASSESSE E ARE THUS, DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER,2014. SD/- SD/- ( T.R.SOOD) (S USHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED:.10 TH SEPTEMBER,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT/CHD