2005 (6) TMI 551 - AT - Income Tax

Duty drawback amount qualifies for deduction under section 80-IB: Tribunal decision

The Tribunal dismissed the revenue's appeal against the CIT(A) order allowing deduction u/s 80-IB on duty drawback amount. The Tribunal held that duty ... Deduction under section 80-IB - Duty drawback as profit or gain of an industrial undertaking - Direct link between duty drawback and business activity - Precedential rule: follow decision favourable to assessee where High Court conflict existsDeduction under section 80-IB - Duty drawback as profit or gain of an industrial undertaking - Direct link between duty drawback and business activity - Precedential rule: follow decision favourable to assessee where High Court conflict exists - Allowance of deduction under section 80-IB in respect of duty drawback of Rs. 84,802. - HELD THAT: - The Tribunal examined conflicting authorities on whether duty drawback constitutes profit or gain derived from an industrial undertaking for the purpose of deduction under section 80-IB. Having noted a decision of the Delhi Bench of the Tribunal in Asstt. CIT v. Anand International, Panipat holding that duty drawback has a direct link with the business activity of an industrial undertaking and is therefore allowable, the Bench respectfully followed that decision. The Tribunal also applied the settled principle that where High Court decisions are in conflict and there is no contrary decision of the jurisdictional High Court (here the assessee falls under the Punjab & Haryana High Court), the view favourable to the assessee should be followed (CIT v. Vegetable Products Ltd. relied). On this basis the Bench rejected the departmental contention based on a Delhi High Court decision in Ritesh Industries Ltd. and held that duty drawback qualifies for deduction under section 80-IB. [Paras 5, 6]Deduction under section 80-IB is allowable on the duty drawback of Rs. 84,802; the revenue's appeal is dismissed.Final Conclusion: The Tribunal dismissed the revenue appeal and allowed the deduction under section 80-IB in respect of the duty drawback, following the Tribunal's Panipat bench decision and the principle of following the view favourable to the assessee in the absence of a contrary decision of the jurisdictional High Court. Issues involved: Appeal against CIT(A) order allowing deduction u/s 80-IB on duty drawback amount.Summary:The revenue filed an appeal against the CIT(A) order allowing deduction u/s 80-IB on duty drawback amount. The revenue contended that duty drawback cannot be considered as profit from an industrial undertaking. The assessee relied on a Tribunal decision and argued that conflicting judgments should favor the assessee. The Tribunal upheld the CIT(A) order, citing a direct link between duty drawback and business activity, following the decision of the Hon'ble Gujarat High Court. The Tribunal dismissed the revenue's appeal based on these grounds.