Tribunal upholds re-assessment jurisdiction, disallows deductions on Duty Drawback & DEPB.

The Tribunal dismissed the appeal of the assessee on all grounds, upholding the assumption of jurisdiction for re-assessment and the validity of the assessment order. It ruled that the deduction under Section 80IB does not apply to Duty Drawback and DEPB receipts, as per a prior decision and a Supreme Court ruling. Additionally, it held that the deduction under Section 80HHC is not independent and must consider the deduction under Section 80IB, following a Special Bench decision. The order was pronounced on 15th June, 2011.

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Issues Involved:
1. Assumption of jurisdiction for re-assessment and validity of the assessment order.
2. Deduction under Section 80IB on Duty Drawback and DEPB receipts.
3. Computation of deduction under Section 80HHC independent of deduction under Section 80IB.

Detailed Analysis:

1. Assumption of Jurisdiction for Re-assessment and Validity of the Assessment Order:
The first issue pertains to whether the CIT(A) erred in upholding the assumption of jurisdiction for re-assessment and the validity of the assessment order. The learned counsel for the assessee acknowledged that this ground of appeal is covered against the assessee by a prior decision of the Tribunal dated 9-10-2009 in the assessee's own case for the assessment years 2002-03, 2003-04, and 2004-05. The Tribunal had previously held that "the assumption of jurisdiction by the AO is within the parameters of the provisions of section 147 read with section 148 of the Act." Consequently, the Tribunal found no justification to interfere with the CIT(A)'s findings on this issue. Respectfully following this prior order, the Tribunal decided this issue against the assessee.

2. Deduction under Section 80IB on Duty Drawback and DEPB Receipts:
The second issue involved whether the deduction under Section 80IB is available on Duty Drawback and DEPB receipts. The learned counsel for the assessee submitted that this issue is also covered against the assessee by the Tribunal's decision dated 9-10-2009 in the assessee's own case for the assessment years 2002-03, 2003-04, and 2004-05. The Tribunal had previously referred to the Hon'ble Supreme Court's decision in the case of M/s. Liberty India Vs. CIT, which held that "DEPB/Duty Drawback are incentives which flow from the Schemes framed by Central Government or from Section 75 of the Customs Act, 1962, hence, incentive profits are not profits derived from the eligible business under section 80-IB." Therefore, these incentives do not fall within the expression "Profits derived from industrial undertaking" in Section 80-IB. Respectfully following the Supreme Court's binding decision, the Tribunal decided this issue in favor of the Revenue and against the assessee.

3. Computation of Deduction under Section 80HHC Independent of Deduction under Section 80IB:
The third issue was whether the deduction under Section 80HHC should be computed independently of the deduction allowed under Section 80IB. The Tribunal noted that this issue is also covered against the assessee by its prior decision dated 9-10-2009 in the assessee's own case for the assessment years 2002-03, 2003-04, and 2004-05. The Tribunal had previously relied on the decision of the Hon'ble Special Bench in the case of ACIT, R.II, Moradabad Vs. M/s. Hindustan Mint & Agro Products Pvt. Ltd., which held that the deduction under Section 80HHC is not independent and must consider the deduction under Section 80IB. Respectfully following the binding decision of the Special Bench, the Tribunal dismissed this ground of appeal.

Conclusion:
In conclusion, the Tribunal dismissed the appeal of the assessee on all grounds. The issues were decided against the assessee by following prior decisions of the Tribunal and the binding judgment of the Hon'ble Supreme Court. The order was pronounced in the Open Court on 15th June, 2011.

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