MONA DEWAN V. INCOME TAX APPELLATE TRIBUNAL and ORS

ITA/110/2016

AI Insights

The case involves Mona Dewan, the appellant, who challenged the decision of the Income Tax Appellate Tribunal and others regarding the eligibility of Duty Drawback amounts for deduction under Section 80IB of the Income Tax Act. The primary legal questions revolved around the interpretation of 'profit and gains' in Section 80IB and whether such amounts, considered incentives, could be included for deductions. The Tribunal and CIT(A) had previously ruled against the appellant, leading to this appeal. The High Court referenced several precedents, including the Supreme Court's decision in Liberty India, which clarified the non-eligibility of such incentives for deductions under the specified section.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 684541 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 24-04-2017
• Assessment Year: misc
• Other Referred Cases: M/s Topman Exports, Saraf Seasoning Udhyog, Liberty India, B. Desraj
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: SAMIT BISHNOI
• Keywords: Business activity; Deduction; Duty Drawback; Income Tax; Profit and Gain
• Section: 80IB; 28 (iiid)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 110 / 2016 Mona Dewan ----Appellant Versus Income Tax Appellate Tribunal & Ors ----Respondent _____________________________________________________ For Appellant(s) : Mr. Samit Bishnoi for Mr. A.K. Bajpai _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 24/04/2017 1. By way of this appeal, the appellant has assailed the judgment and order of the learned Tribunal whereby the Tribunal has dismissed the appeal preferred by the assessee and confirmed the order of the CIT(A). 2. Counsel for the appellant has framed the following questions of law:- “a) Whether the use of word “any” before “profit and gains” in Section 80IB of the Income Tax construe that any profit or gain which is linked with business activity and included in the gross total income make the assessee eligible for deduction under Section 80IB. b) Whether the Duty Drawback amount falls under the category of “profit and gain” and not excludes itself on the ground of being incentive? c) Whether the plurality of the words “profits and gains” make it clear that whatever gain and profit arising out of business has to be considered for granting the deduction under Section 80IB? d) Whether the words used “derived from the (2 of 3) [ITA-110/2016] business” include the incentive of Duty Drawback amount?” 3. However, in view of the observations made by the Tribunal in para 2.3, 2.4 & 2.5 which reads as under:- “2.3 As far as the subsequent decision of the Hon’ble Supreme Court in case of M/s Topman Exports which the Ld AR has heavily relied upon, the ld. CIT(A) has rightly held that the said decision was on difference issues and facts and hence not applicable in the instant case as can be seen from the substantial questions of law raised before the Supreme Court reproduced as under: (a) Whether the Tribunal is justified in holding that the entire amount received on the sale of the Duty Entitlement Passbook does not represent profits chargeable under section 28(iiid) of the I.T. Act, 1961 and that the face value of the Duty Entitlement Passbook shall be deducted from the sale proceeds. (b) Whether the Tribunal is justified in holding that the face value of the Duty Entitlement Passbook is chargeable to tax under section 28(iiid) at the time of accrual of income i.e. when the application for Duty Entitlement Passbook is filed with the competent authority pursuant to the exports made and that the profits on the sale of Duty Entitlement Passbook representing the excess of the sale proceeds over the face value is liable to be considered under section 28(iiid) at the time of sale.” 2.4 Regarding the decision of Hon’ble Rajasthan High Court in case of Saraf Seasoning Udhyog, it is noted that the said decision relates to receipts on account of sale of DEPB licences and in view of specific amendment to section 28(iiid), where such receipts have been brought to tax as business receipts, whether the same will qualify for deduction under section 80IB of the Act. It is noted that the said decision was rendered by Hon’ble Rajasthan High Court on 21 August 2008 much before the decision of Hon’ble Supreme Court in case of Liberty India which was rendered on 31 August 2009. Secondly, the said decision was rendered following the decision of Hon’ble Supreme Court in case of B. Desraj 310 ITR 439 without noticing the distinction between the relief u/s 80HHC (where duty drawback receipts to be considered subject to certain conditions) and relief under section 80IB of the Act. 2.5 In light of above, we do not feel persuaded to accept the submission made by the ld. Counsel in (3 of 3) [ITA-110/2016] view of the settled legal position as held by the Hon’ble Supreme Court in case of Liberty India. The arguments raised by the ld. Counsel do not require detailed examination in view of the said settled position. Therefore, we do not see any reason to deviate from the view taken by the ld. CIT(A) hence the ground taken by the assessee is dismissed. 4. In view of the subsequent judgment in the case of Liberty India (317 ITR 218), no substantial question arises in this appeal. 5. Hence, the appeal being devoid of merit deserves to be dismissed. The same is dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/102 "