TaxTMI 
TaxTMI 
2009 (9) TMI 616
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....ved by an industrial undertaking from the export out of India of eligible articles or things. The AO denied exemption under s. 10BA of IT Act on the ground that the said two benefits constitute export incentives and that they did not represent profits derived from industrial undertaking of export of eligible articles or things. 3. Learned CIT(A) relying on the judgment in the case of CIT vs. Sharda Gum & Chemicals (2007) 209 CTR (Raj) 143 : (2007) 288 ITR 116 (Raj) and considering the insertion of cls. (iiia), (iiib) and (iiic) in s. 28 of IT Act with retrospective effect, entertained the view that duty drawback is to be taken as part of business income. Accordingly it was held that amounts of DEPB/duty drawback are to be considered for allowing deduction under s. 10BA of IT Act. 4. In some of the cases, the learned CIT(A) followed the decision taken by Jodhpur Bench of Tribunal in the case of ITO vs. Bothra International (2008) 117 TTJ (Jd) 672 : (2008) 11 DTR (Jd)(Trib) 393 wherein the Tribunal by its order dt. 27th June, 2008 considering that the expression "profits" appearing in sub-s. (4) of s. 10BA of IT Act has been used in plural and the word "of" is to be read in con....
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.... Reliance has been placed on the judgment rendered by Hon'ble Allahabad High Court in the case of K.N. Agarwal vs. CIT (1991) 100 CTR (All) 170 : (1991) 189 1TR 769 (All). It was also contended that the Tribunal having entertained a view that the amounts of DEPB/duty drawback are profits and gains of the industrial undertaking which are eligible for deduction under s. 10BA of IT Act, need to follow its own view for the sake of consistency. In any event, if the Tribunal doubts the correctness of its earlier decision and considers that the decision earlier rendered is erroneous, reference to Special Bench in that regard may be made. 8. We have heard the parties and have carefully perused the material on record with reference to written submissions and the case laws relied on by the parties. Special provision bestowing exemption under s. 10BA of IT Act in respect of profits and gains derived from export of certain articles or things is reproduced as under: "See. 10BA. Special provisions in respect of export of certain articles or things-(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export out of Ind....
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....articles or things shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things bears to the total turnover of the business carried on by the undertaking. (5) The deduction under sub-s. (1) shall not be admissible, unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation below sub-s. (2) of s. 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section. (6) Notwithstanding anything contained in any other provision of this Act, where a deduction is allowed under this section in computing the total income of the assessee, no deduction shall be allowed under any other section in respect of its export profits. (7) The provisions of sub-s. (8) and sub-s. (10) of s. 80-IA shall, so far as may be, apply in relation to the undertaking referred to in this section as they apply for the purposes of the undertaking referred to in s. 80-IA. Explanation-For the purposes of this section- (a) 'convertible foreign exchange' means foreign exchan....
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....ideration are reproduced as under: "From para 14 The words 'derived from' is narrower in connotation as compared to the words 'attributable to'. In other words, by using the expression 'derived from', Parliament intended to cover sources not beyond the first degree. In the present batch of cases, the controversy which arises for determination is: whether the DEPB credit/duty drawback receipt comes within the first degree sources? According to the assessee(s), DEPB credit/duty drawback receipt reduces the value of purchases (cost neutralization), hence it comes within first degree source as it increases the net profit proportionately. On the other hand, according to the Department, DEPB credit/duty drawback receipt do not come within first degree source as the said incentives flow from Incentive Schemes enacted by the Government of India or from s. 75 of the Customs Act, 1962. Hence, according to the Department in the present cases, the first degree source is the incentive scheme/provisions of the Customs Act. In this connection, Department places heavy reliance on the judgment of this Court in Sterling Foods. Therefore, in the present cases in which we are required to examine....
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.... integra. Accordingly the amount of DEPB credit and duty drawback receipts being an incentive bestowed under the scheme framed by Central Government or from s. 75 pf Customs Act, 1962, are not to be taken as profits and gains derived by an industrial undertaking from the export out of India of eligible articles or things. The amount of DEPB credit/duty drawback receipts as such would not, therefore, enter into profits and gains derived by an industrial undertaking from the export out of India of eligible articles or things for the purpose of sub-s. (1) r/w sub-s. (4) of s. 10BA of IT Act, even though the same are ancillary profits to such undertaking assessable under the head "Income from business". 12. Article 141 of Constitution of India lays down that the law declared by Hon'ble Supreme Court shall be binding on all Courts within the territory of India. We, therefore, having regard to the judicial discipline instead being bound by the judgment in the case of Saraf Seasoning Udyog by the High Court of judicature of Rajasthan at Jodhpur are bound to follow the law declared by the Hon'ble Supreme Court in the case of Liberty India. 13. The decision of this Tribunal in the cas....
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....ion under s. 10BA of IT Act. 17. We have heard the parties and have also considered the material with reference to precedents cited at Bar and find no justification in the action of learned CIT(A) in treating the excess of receipt of insurance charges as profits and gains derived by an industrial undertaking from the export out of India of eligible articles or things. In fact the charges as such are not on account of export of goods outside India but are the reimbursement of expenses incurred within India. The same do not partake the receipt of sale of eligible articles or things as are described under s. 10BA and as such exemption under s. 10BA of IT Act cannot be granted in the light of ratio laid down by Hon'ble apex Court in Liberty India vs. CIT. We, therefore, set aside the decision taken by the learned CIT(A) and restore the decision taken by the assessing authority. 18. The next ground in ITA Nos. 291, 215, 216 and 544 with respect to trading addition made for want of availability of quantitative details by the AO. The learned CIT(A) deleted the addition as he found no justification in the action of assessing authority in making addition as such without bringing any v....