Nahar Exports Limited, Ludhiana v. Commissioner Of Income Tax (Central), Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No. 95 of 2004DATE OF DECISION : 14.12.2009 Nahar Exports Limited, Ludhiana .... APPELLANT Versus Commissioner of Income Tax (Central), Ludhiana ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE MEHINDER SINGH SULLAR Present:Mr. Sanjay Bansal, Senior Advocate, with Ms. Shweta Malhotra, Ms. Harpreet Kaur andMr. Prashant Bansal, Advocates,for the appellant-assessee. Mr. K.K. Mehta, Advocate,for the respondent-revenue. * * * SATISH KUMAR MITTAL , J. The assessee has filed this appeal under Section 260-A of theIncome Tax Act, 1961 (hereinafter referred to as `the Act'), against the orderdated 24.9.2003, passed by the Income Tax Appellate Tribunal, ChandigarhBench (A), Chandigarh (hereinafter referred to as `the ITAT') in ITA No.440/Chandi/1996, pertaining to the assessment year 1992-93, raising thefollowing substantial questions of law :- (i)Whether on a correct and proper interpretation of theprovisions of Section 80-I of the Act, the ITAT was rightprovisions of Section 80-I of the Act, the ITAT was right in law in holding that the cash compensatory allowancereceived by the appellant was not profits and gainsderived from its Industrial Undertaking ? (ii)Whether on the facts and in the circumstances of thecase, the ITAT has misdirected itself in law as well as onfacts in holding that the appellant was not entitled todeduction under Section 80-I of the Act in respect of theclaim on which deduction have been claimed by theassessee there under ?case, the ITAT has misdirected itself in law as well as onfacts in holding that the appellant was not entitled todeduction under Section 80-I of the Act in respect of theclaim on which deduction have been claimed by theassessee there under ? (iii)Whether the findings returned and recorded by the ITATwhile holding that the appellant was not entitled todeductions under Section 80-I of the Act are arbitraryand perverse ? while holding that the appellant was not entitled todeductions under Section 80-I of the Act are arbitraryand perverse ? Learned counsel for the appellant states that in this appeal, he ispressing only the first question. We have heard the learned counsel for the parties. The assessee has raised the aforesaid first question with regardto the amount received by it on exports as Cash Compensatory Allowance.It is the case of the assessee that it has received the said Cash CompensatoryAllowance from the Central Government against its export of goodsmanufactured by industrial undertaking during the year, therefore, the saidAllowance is an additional price received from Government for the exportsmade and thus is profits and gains derived from the industrial undertaking.The ITAT has disallowed the said deduction while coming to the conclusionthat there is no direct nexus between receipt of Cash CompensatoryAllowance and the industrial undertaking. The source of Cash Compensatory Allowance received by the assessee was only a receipt onaccount of export promotion scheme of the Central Government. But thesaid receipt has no nexus between profits and gains derived from anindustrial undertaking, therefore, the said benefits cannot be permitted to bededucted under Section 80-I of the Act. The similar benefits received by theassessee i.e. DEPB, have been disallowed by this Court inLiberty Indiav.Commissioner of Income-Tax(2007) 293 ITR 520, which has beenaffirmed by the Hon'ble Supreme Court inLiberty Indiav.Commissioner-of IncomeTax,(2009) 317 Income Tax Reports 218 (SC). Learned counsel for the appellant could not controvert that theCash Compensatory Allowance is similar to DEPB, therefore, he could notmake out a case for deducting the said amount as eligible deduction underSection 80-I of the Act. Since the controversy is no longer res integra,therefore, no substantial question of law arises in this appeal from the orderof the ITAT. Learned counsel for the appellant could not controvert that theCash Compensatory Allowance is similar to DEPB, therefore, he could notmake out a case for deducting the said amount as eligible deduction underSection 80-I of the Act. Since the controversy is no longer res integra,therefore, no substantial question of law arises in this appeal from the orderof the ITAT. Dismissed. ( SATISH KUMAR MITTAL )JUDGE December 14, 2009 seema/ndj ( MEHINDER SINGH SULLAR )JUDGE