Harisons Overseas, Panipat v. Commissioner Of Income Tax, Karnal

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A.s No. 628 & 630 of 2009DATE OF DECISION : 18.11.2009 Harisons Overseas, Panipat .... APPELLANT Versus Commissioner of Income Tax, Karnal ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE MEHINDER SINGH SULLARHON'BLE MR. JUSTICE MEHINDER SINGH SULLAR Present:Mr. Pankaj Jain and Mr. D.K. Goyal, Advocates,for the appellant-assessee.for the appellant-assessee. * * * SATISH KUMAR MITTAL , J. This order shall dispose of Income Tax Appeals No. 628 and630 of 2009, filed by the assessee under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as `the Act'), directed against the orderdated 14.5.2009, passed by the Income Tax Appellate Tribunal, DelhiBench “C”, New Delhi (hereinafter referred to as `the ITAT') in ITA Nos.3429 and 3430/(Del)/2008, pertaining to the assessment years 2004-05 and2006-07, raising the following substantial questions of law :- (i)Whether the Duty draw back received is an amountderived and eligible for claim u/s 80-IB of the Act?derived and eligible for claim u/s 80-IB of the Act? (ii)Whether the Duty Entitlement Pass Book Schemereceived is an amount derived and eligible for claim u/s80-IB of the Act?received is an amount derived and eligible for claim u/s80-IB of the Act? In these cases, the assessee, who derived income frommanufacturing of handloom goods and its export, claimed deduction on thebusiness profit, which included the amount of export incentives received onaccount of the Duty Draw Back and the Duty Entitlement Pass BookScheme (hereinafter referred to as `DEPB') under Section 80-IB of the Act.The Assessing Officer, vide his order dated 31.3.2008, while following thedecision of the Supreme Court in CITv.Sterling Foods (1999) 237 ITR579 and a decision of the Delhi High Court inCITv. Ritesh Industries Ltd.192 CTR 81, denied the deduction of the aforesaid export incentives, on theground that the Duty Draw Back and DEPB are not the income derived fromindustrial undertaking, which is eligible for deduction under Section 80-IBof the Act. The order of the Assessing Officer was confirmed by theCommissioner of Income Tax (Appeals), Karnal, by following the aforesaiddecisions as well as the decision of this Court in Liberty Indiav.Commissioner of Income-Tax(2007) 293 ITR 520, wherein it was heldthat 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 ofthe CIT (Appeals) has further been affirmed by the ITAT vide its orderdated 14.5.2009, which is under challenge in these two appeals. During the course of hearing, it revealed that the decisionof this Court in the case ofLiberty India(supra) has been affirmed bythe Hon'ble Supreme Court inLiberty Indiav.Commissioner of Income-Tax,(2009) 317 Income Tax Reports 218 (SC), wherein while dismissing the appeal of the assessee, it has been concluded that Duty Draw Back andDEPB are incentives, which flow from the schemes framed by the CentralGovt. or under Section 75 of the Customs Act, 1962 and these incentiveprofits do not fall within expression “profits derived from industrialundertaking in Section 80-IB of the Act. Therefore, Duty Draw Back andDEPB do not form part of net profits of the industrial undertaking for thepurposes of Section 80-IB of the Act. In view of the aforesaid decisions, we are of the opinion that nosubstantial question of law is arising from the order of the ITAT. Thus, boththe appeals stand dismissed. ( SATISH KUMAR MITTAL )JUDGEJUDGE November 18, 2009 ndj ( MEHINDER SINGH SULLAR )JUDGE