The Commissioner Of Income Tax-Iii, Ludhiana v. M/S Jaswand Sons

ITA No. 91 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 91 of 2010 Date of Decision: 29.9.2010 The Commissioner of Income Tax-III, Ludhiana ....Appellant. Versus M/s Jaswand Sons ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Denesh Goyal, Advocate for the appellant.Mr. Pankaj Jain, Advocate for the respondent. ADARSH KUMAR GOEL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order of the Income Tax Appellate Tribunal, Chandigarh Bench “A”,Chandigarh (hereinafter referred to as “the Tribunal”) passed in ITA No.622/CHANDI/2008 dated 27.2.2009 for the assessment year 2005-06,proposing following substantial questions of law:- “1.Whether on the facts and circumstances of thecase, the Hon'ble ITAT was right in holding thatCIT (A) was justified in deduction under section80IB of I.T. Act, 1961 on a sum ofRs.2,30,85,177/- received by assessee fromcase, the Hon'ble ITAT was right in holding thatCIT (A) was justified in deduction under section80IB of I.T. Act, 1961 on a sum ofRs.2,30,85,177/- received by assessee from export house as DEPB considering it to be apart of sales made by assessee? Whether on the facts and circumstances of thecases Hon'ble ITAT erred in not holding theDEPB of Rs.2,30,85,117/- received from theexport house as not derived from the industrialundertaking eligible for deduction under section80IB of I.T.Act, 1961? Whether on the facts and circumstances of thecase Hon'ble ITAT has erred in law in notholding DEPB benefits do not form part of thenet profits of eligible industrial undertaking forthe purpose of section 80IB? Whether on the facts and circumstances of thecases Hon'ble ITAT has erred in not followingthe decision of Hon'ble Punjab & Haryana HighCourt in the case of M/s Liberty India Vs. CITKarnal reported in 293 ITR 520 which has beenupheld by the Hon'ble Supreme Court?” 2.The assessee is manufacturer and exporter of hosierygoods. During the assessment, claim for deduction under Section 80IBwas made in respect of income derived from sale of export incentives.The said claim was rejected as not falling under Section 80IB not beingincome derived from industrial undertaking. On appeal, the CIT (A)upheld the plea of the assessee on the ground that part of sales of theassessee were to an export house. The said view has been affirmed by the Tribunal. 3.We have heard learned counsel for the parties. 4.Learned counsel for the revenue submits that the Tribunalerred in allowing the claim under Section 80IB only on the ground thatpart of sales of the assessee were to an export house which has norelevance to the question of deduction under Section 80IB. The incomederived from export incentive was not eligible for deduction underSection 80IB, not being income derived from the industrial undertakingas held by the Hon'ble Supreme Court in CIT v. Sterling Foods, [1999]237 ITR 579 (SC) and this Court in Liberty India v. CIT, [2007] 293 ITR520. The same view has been taken by this Court in the casesof the assessee in ITA No. 301 of 2007 (M/s Jaswand Sons v. CITLudhiana)decided on 17.9.2007 andJaswand Sons v.Commissioner of Income tax (Appeals), [2010] 326 ITR 39. 5.In view of above, questions raised by the revenue have tobe decided in its favour. 6.Accordingly, the appeal is allowed. (ADARSH KUMAR GOEL) JUDGE September 29, 2010gbs (AJAY KUMAR MITTAL)JUDGE