Duty drawback included in deductions under section 10B

The Tribunal allowed the assessee's appeal, holding that duty drawback should be considered in determining the claim for deduction under section 10B of the Income Tax Act, 1961. The Tribunal emphasized the importance of adhering to binding precedents and ruled in favor of the assessee on December 9, 2016.

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Issues:
Appeal against Commissioner's order denying deduction under section 10B on duty drawback amount.

Analysis:
The case involved an appeal by the assessee against the Commissioner's order denying deduction under section 10B of the Income Tax Act, 1961, concerning the assessment year 2010-11. The assessee, engaged in the export business, had claimed exemption under section 10B based on the duty drawback received. The Assessing Officer disallowed the claim, citing a Supreme Court decision regarding duty drawback not being eligible for deductions under other sections. The assessee relied on a Delhi High Court decision and argued that duty drawback should be considered as profits chargeable under section 28 of the Act. The Commissioner (Appeals) upheld the disallowance, leading to the appeal before the Tribunal.

The Tribunal considered various precedents and held that duty drawback should be included in the calculation of eligible profits for deduction under section 10B. It referred to a Special Bench decision and the jurisdictional High Court's ruling, emphasizing that duty drawback is deemed as profits and gains of business. The Tribunal noted that the Commissioner had misinterpreted the Supreme Court decision and that section 10B provides a specific formula for computing profits from export business. Consequently, the Tribunal allowed the assessee's claim based on the binding nature of the Special Bench decision until a different view is presented by a higher authority.

In conclusion, the Tribunal allowed the assessee's appeal, following the Special Bench decision and holding that duty drawback should be considered in determining the claim for deduction under section 10B. The Tribunal emphasized the importance of adhering to binding precedents unless overruled by a higher court. The decision was pronounced in favor of the assessee on December 9, 2016.

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