M/S SARAF EXPORT V. THE COMMISSIONER OF INCOME TAX

ITA/211/2018

AI Insights

The case involves multiple appeals by M/s Saraf Export against the decisions of the Income Tax Appellate Tribunal (ITAT), which had allowed the appeal of the revenue concerning deductions claimed under DEPB and Drawback duty for the assessment year 2008-09. The ITAT had initially referred to the Supreme Court's judgment in Liberty India vs. CIT but deemed it 'per incuriam' and followed other judgments that favored the assessee. However, the division bench of the High Court reversed the ITAT's decision, restoring the Assessing Officer's order. The main legal contention revolves around whether the amounts received under DEPB and Drawback duty are eligible for deductions under Section 80-IB of the Income Tax Act, 1961.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 682987 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 09-08-2019
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Jaipur-III vs. M/s. Saraf Exports-2016 (3) WLC 660, Liberty India vs. CIT-2009 (317) ITR 218 (SC), Chokshi Contracts (P) Ltd.-251 ITR 587 (Raj.), Saraf Seasoning Udyog-2009 (317) ITR 202 (Raj.), M/s. Bothra International, Jodhpur in ITA No.37/JU/2011 dated 21.9.2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SAMEER JAIN
• Assessee Lawyers: P K KASLIWAL; C M SHARMA
• Keywords: Assessment Year; DEPB; Drawback Duty; Export sales; Income Tax; Manufacturing; Wooden Handicraft Items
• Section: 80-IB

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 180/2018 M/s Saraf Export, RIICO Industrial Area, Sardarshar, Churu, Through Its Partner Brij Mohan Saraf ----Appellant Versus 1. The Commissioner Of Income Tax, N.C.R.B. Building Statue Circle, Jaipur 2. Assistant Commissioner Of Income Tax Circle, Jhunjhunu ----Respondents Connected With D.B. Income Tax Appeal No. 211/2018 M/s Saraf Export, Riico Industrial Area, Sardarshar, Churu, Through Its Partner Arisudan Saraf ----Appellant Versus 1. The Commissioner Of Income Tax, N.C.R.B. Building, Statue Circle, Jaipur 2. Assistant Commissioner Of Income Tax, Circle Jhunjhunu. ----Respondents D.B. Income Tax Appeal No. 219/2018 M/s Saraf Export, Riico Industrial Area, Sardarshar, Churu, Through Its Partner Arisudan Saraf ----Appellant Versus 1. The Commissioner Of Income Tax, N.C.R.B. Building Statue Circle, Jaipur 2. Assistant Commissioner Of Income Tax Circle, Jhunjhunu ----Respondents D.B. Income Tax Appeal No. 40/2019 M/s Saraf Export, Riico Industrial Area, Sardarshahar, Churu. Through Its Partner Arisudan Saraf. ----Appellant Versus 1. The Commisioner Of Income Tax, N.C.R.B. Building Statue (2 of 3) [ITA-180/2018] Circle, Jaipur. 2. Assistant Commissioner Of Income Tax Circle, Jhunjhunu. ----Respondents For Appellant(s) : Shri P.K. Kasliwal with Shri C.M. Sharma For Respondent(s) : Shri Sameer Jain HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE NARENDRA SINGH DHADDHA Judgment 09/08/2019 These appeals are directed against the judgement of the Income Tax Appellate Tribunal, which has while relying on the division bench judgement of this Court in Commissioner of Income Tax, Jaipur-III vs. M/s. Saraf Exports-2016 (3) WLC 660 has allowed the appeal of the revenue. The assessee in the aforesaid case was engaged in the business of manufacturing of wooden handicraft items. He has shown income by way of export sales and claimed deduction under DEPB and Drawback duty for the assessment year 2008-09. The assessee in addition to normal profits of the business also claimed deduction under Section 80-IB of the Income Tax Act, 1961. However, the Assessing officer was not satisfied and held that these were merely incentives to the assessee and served a show cause notice on him in the light of judgement of the Supreme Court in Liberty India vs. CIT-2009 (317) ITR 218 (SC) as to why the amount of DEPB and Drawback duty be not disallowed. The Assessing Officer eventually decided the matter against the assessee. The appeal filed by the assessee was dismissed by the CIT(A). The assessee, however, preferred (3 of 3) [ITA-180/2018] the appeal before the ITAT, who although referred the judgement of the Supreme Court in Liberty India, supra, but held the aforesaid judgement to be “per incuriam” and chose to follow the judgement rendered by this Court in the case of Chokshi Contracts (P) Ltd.-251 ITR 587 (Raj.), Saraf Seasoning Udyog-2009 (317) ITR 202 (Raj.) and the order of Jodhpur Bench of the Tribunal in the case of M/s. Bothra International, Jodhpur in ITA No.37/JU/2011 dated 21.9.2012. The division bench thus reversed the judgement of the ITAT and restored the order of the Assessing Officer. Learned counsel for the revenue has submitted that the matters are squarely covered by the aforesaid judgement of this court in Saraf Exports, supra. Learned counsel for the assessee however submits that the appellant has filed the Petition for Special Leave to Appeal No.12142/2016, in which delay has been condoned and notice has been issued by the Supreme Court on 11.7.2016. Considering that as far as this Court is concerned, the issue has been finally concluded against the asseee, the appeals are dismissed, making them subject to final outcome of the SLP pending before the Supreme Court on the question involved in the matters. Office to place a copy of this order in each connected matter. (NARENDRA SINGH DHADDHA),J (MOHAMMAD RAFIQ),J RAVI SHARMA /54-57 "