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TAXAP/2478/2010 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2478 of 2010
=========================================================
MICRO
INKS LIMITED - Appellant(s)
Versus
ASSISTANT
COMMISSIONER OF INCOME TAX OR HIS SUCCESSOR - Opponent(s)
=========================================================
Appearance
:
MR
RK PATEL for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 08/11/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Leave
to amend.
Assessee
is in appeal against the judgment of the Tribunal dated 30th
June, 2010 raising following questions for our consideration:
Whether
on the facts and in law the Tribunal is justified in denying
deduction under Section 80IA of the Act on export benefits
receivable by the appellant by replying upon the Hon’ble Apex Court
in the case of Liberty India at 317 ITR 218?
Whether
on the facts and in law the Tribunal is right in interpretation of
section 80IA and section 80HHC of the Income-Tax Act, 1961 while
denying deduction towards interest income amounting to
Rs.11,52,074/-?
Whether
in the facts and circumstances of the case, the Tribunal erred in
law in disallowing claim of the assessee as regard to netting of
interest on the allowance of deduction under Section 80IA and 80HHC
of the Act?
Insofar
as question No.1 is concerned, the same pertains to deduction
claimed by the assessee under section 80IA of the Income Tax Act,
1961 on certain export benefits received by the assessee. The
Tribunal relying on the decision of the Apex Court in case of
Liberty India V/s. Commissioner of Income Tax reported in 317
ITR 218 held against the assessee.
Counsel
for the assessee submitted that Tribunal erred in applying the
decision of Apex Court in case of Liberty India (supra). He
submitted that in the present case, there was no instance of sale of
any license granted on the basis of exports made. It was pointed out
that the amount receivable was towards advance license benefits.
However,
we are of the opinion that the Tribunal correctly applied the
decision of Apex Court in case of Liberty India (supra). It is true
that in Liberty India, the Apex Court was examining whether profit
from Duty Entitlement of Passbook Scheme (DEPB) and Duty Drawback
Scheme could be said to be profit derived from the business of the
industrial undertaking eligible for deduction under Section 80-IB of
the Act. It may also be true that in the present case, the amount in
question may not be profit derived from DEPB scheme or duty draw
back scheme. Nevertheless, as contended by the assessee itself, the
amount receivable was in relation to advance license benefit on
account of exports made by the assessee. The Apex Court in case of
Liberty India held that the benefits derived from DEPB scheme or
duty draw back scheme cannot be stated to be income derived from an
industrial undertaking. It was on this basis that such benefits were
not held eligible for deduction for the purpose of Sections 80IB and
80IA of the Act which pertain to deduction in respect of profits and
gains from industrial undertakings. The Apex Court concluded that
duty draw back receipts or DEPB receipts do not form part of net
profit for eligible industrial undertaking for the purpose of
sections 80IA and 80IB of the Act.
In
the present case, the assessee claims deduction under Section 80IA
of the Act with respect to the amount received or receivable from
the license issued on account of exports made by the assessee.
Insofar as all material facts are concerned since there is no
distinction, we have no hesitation to hold that the Tribunal rightly
applied ratio in case of Liberty India (supra). Question No.1 is,
therefore, not required to be considered.
Question
No.2 represents the deduction denied to the assessee to the total of
Rs.11.52 lacs under Section 80IA and 80HHC of the Act which has
three different limbs.
The
first pertains to the question whether for the purpose of Sections
80IA and 80HHC of the Act the net or the gross interest can be
disallowed. This question is separately re-framed in the amended
form as question No.3, such issue is, therefore, not decided.
Second
aspect of question No.2 is with respect to interest income received
from customers on delayed payments. Tribunal while allowing such
claim following this Court’s decision reported in 328 ITR 40,
however, clarified that such deduction shall be subject to provision
of sub-section (9) of Section 80IA of the Act since deduction is
already allowed. This question is not required to be considered.
Tribunal only provided that such deduction shall be subject to the
provisions of Sub-Section (9) of Section 80IA of the Act. We see no
infirmity in such a view. We are sure that the Assessing Officer
while giving effect to, shall examine the same. The third aspect of
this issue is with respect to interest on margin money. The assessee
claimed deduction for the same under Section 80IA of the Act.
However, the Tribunal relying on the case of this very assessee,
ruled against the assessee.
Counsel
for the appellant candidly stated that such decision of the Tribunal
has not carried further in appeal. We find that amount is not
substantial. In that view of the matter, this issue is not
considered in the present appeal.
Adverting
into the sole surviving question No.3, counsel for the appellant
pointed out that such an issue was decided by Delhi High Court in
favour of the assessee reported in 289 ITR 475; whereas,
subsequently Bombay High Court ruled in favour of the revenue in
case of Asian Star Co. Ltd. However, there is no decision of this
court and several tax appeals on this issue are pending. Under the
circumstances, this tax appeal is admitted only for question No.3.
(AKIL
KURESHI, J.)
(Ms.SONIA
GOKANI, J.)
(ashish)
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