IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
I.T.A.s No. 628 & 630 of 2009
DATE OF DECISION : 18.11.2009
Harisons Overseas, Panipat
.... APPELLANT
Versus
Commissioner of Income Tax, Karnal
..... RESPONDENT
CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL
HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR
Present: Mr. Pankaj Jain and Mr. D.K. Goyal, Advocates,
for the appellant-assessee.
***
SATISH KUMAR MITTAL , J.
This order shall dispose of Income Tax Appeals No. 628 and
630 of 2009, filed by the assessee under Section 260-A of the Income Tax
Act, 1961 (hereinafter referred to as `the Act’), directed against the order
dated 14.5.2009, passed by the Income Tax Appellate Tribunal, Delhi
Bench “C”, New Delhi (hereinafter referred to as `the ITAT’) in ITA Nos.
3429 and 3430/(Del)/2008, pertaining to the assessment years 2004-05 and
2006-07, raising the following substantial questions of law :-
(i) Whether the Duty draw back received is an amount
derived and eligible for claim u/s 80-IB of the Act?
(ii) Whether the Duty Entitlement Pass Book Scheme
received is an amount derived and eligible for claim u/s
80-IB of the Act?
ITA No. 628 of 2009 -2-
In these cases, the assessee, who derived income from
manufacturing of handloom goods and its export, claimed deduction on the
business profit, which included the amount of export incentives received on
account of the Duty Draw Back and the Duty Entitlement Pass Book
Scheme (hereinafter referred to as `DEPB’) under Section 80-IB of the Act.
The Assessing Officer, vide his order dated 31.3.2008, while following the
decision of the Supreme Court in CIT v. Sterling Foods (1999) 237 ITR
579 and a decision of the Delhi High Court in CIT v. Ritesh Industries Ltd.
192 CTR 81, denied the deduction of the aforesaid export incentives, on the
ground that the Duty Draw Back and DEPB are not the income derived from
industrial undertaking, which is eligible for deduction under Section 80-IB
of the Act. The order of the Assessing Officer was confirmed by the
Commissioner of Income Tax (Appeals), Karnal, by following the aforesaid
decisions as well as the decision of this Court in Liberty India v.
Commissioner of Income-Tax (2007) 293 ITR 520, wherein it was held
that the assessee is not eligible to get deduction on export incentives i.e.
Duty Draw Back and DEPB under Section 80-IB of the Act. The order of
the CIT (Appeals) has further been affirmed by the ITAT vide its order
dated 14.5.2009, which is under challenge in these two appeals.
During the course of hearing, it revealed that the decision
of this Court in the case of Liberty India (supra) has been affirmed by
the Hon’ble Supreme Court in Liberty India v. Commissioner of Income-
Tax, (2009) 317 Income Tax Reports 218 (SC), wherein while dismissing
ITA No. 628 of 2009 -3-
the appeal of the assessee, it has been concluded that Duty Draw Back and
DEPB are incentives, which flow from the schemes framed by the Central
Govt. or under Section 75 of the Customs Act, 1962 and these incentive
profits do not fall within expression “profits derived from industrial
undertaking in Section 80-IB of the Act. Therefore, Duty Draw Back and
DEPB do not form part of net profits of the industrial undertaking for the
purposes of Section 80-IB of the Act.
In view of the aforesaid decisions, we are of the opinion that no
substantial question of law is arising from the order of the ITAT. Thus, both
the appeals stand dismissed.
( SATISH KUMAR MITTAL )
JUDGE
November 18, 2009 ( MEHINDER SINGH SULLAR )
ndj JUDGE