TaxTMI 
TaxTMI 
2010 (12) TMI 885
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....grounds it would be clear that the only grievance of the assessee relates to the proceedings under Section 147 of the I.T. Act, which have been held by the ld. CIT(A) to have been initiated validly. 4. The facts of the case, in brief, are that the assessee was engaged in the business of tanning of raw hides, export of tanned hides, manufacturing and export of shoe upper. The assessee filed the return of income on 30.10.2005 declaring an income of Rs.1,03,71,200. The said return was processed under Section 143(1) of the I.T. Act on the returned figure. Later on, the AO found that during the course of assessment proceedings for the preceding assessment year it was noticed that deduction under Section 80IB claimed on Banthar Unit was disallowed after recording detailed reasons and since the assessee had claimed deduction under Section 80IB on Banthar Unit for this year also, the AO issued notice under Section 148 by recording the reasons under Section 147 and forming belief that the income claimed to the extent of Rs.1,70,72,190 had escaped from assessment proceedings. The reasons recorded by the AO were as under: "The assessee has claimed deduction u/s 80IB at Ban....
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....d. Regarding interest of Rs.4,37,551 on unsecured loans debited in Jajmau unit only, it has been submitted that no adverse view should be taken as one unit could advance money to other unit." 4.2 The AO disposed of the objection of the assessee in the following manner: "Reference is invited to the detailed reasons recorded and duly communicated to you. The reliance on the ratio of decisions given by the Hon'ble Supreme Court and Hon'ble High Court as mentioned in para 11.3 was made. It has been noticed that Hon'ble Madras High and Hon'ble Delhi High Court has held that the duty draw back can not be treated profits derived from the industrial undertaking and therefore, deduction u/s 80IB is not admissible on such export incentive. You have contended that on the basis of decision of Hon'ble Gujrat High Court in the case of CIT vs. India Gelatine Chemicals Ltd., 2005 (275 ITR 284) and certain other decisions given by the Tribunal, deduction u/s 80IB is allowable on such duty draw back. Your contention is not acceptable in view of the decision of Madras High Court and Delhi High Court which were also based on the ratio of decision given in various cases. It is also ....
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....ection 80IB. Thus, as far as the assessee was concerned, complete details/information with respect to claim of deduction under Section 80IB was provided alongwith the return of income and the AO nowhere mentioned in the entire reasons recorded that the assessee had not furnished complete details or the report prepared by the auditors was untrue, false, incomplete or incorrect. It was submitted that there was no escapement of income nor failure on the part of the assessee to disclose fully and truly all material facts relevant for the purpose of assessment. It was further submitted that contrary to the decisions relied by the AO, there are certain decisions which favour the case of the assessee wherein it has been held that duty drawback is eligible for deduction under Section 80IB. The decisions quoted by the ld. Counsel for the assessee are following: 1. Dy. CIT vs. Eltek SGS(P.) Ltd.(2006)10 SOT 178 (ITAT Delhi), 2. CIT vs. India Gelatine and Chemical Ltd. (2005) 275 ITR 284(Guj.), 3. ITO vs. Paramount Industrial Corporation Ltd. (2007) 97 Tax Reference 148 (ITAT Chandigarh), 4. Padhrod vs. ITO(ITA No.419(M.)/2004 dated 17.8.2007), ....
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....ection 147 of the I.T. Act and that when the assessment for assessment year 2004-05 was pending assessment under Section 143(3), the assessment for assessment year 2005-06 should also ought to have been taken up for scrutiny and assessment under Section 143(3) instead of reopening assessment under section 147 of the I.T. Act. It was also stated that assessment for assessment year 2004-05 has been completed on 30.11.2006 and action under Section 147 has been taken for the assessment year 2005- 06 on 28.3.2007 i.e. after a lapse of four months. It was submitted that the return for assessment year 2005-06 was filed on 30.10.2005 and notice could have been issued before 31.10.2006 by which time the AO has already made up is mind to deny deduction under Section 80-IB The notice under Section 143(2) could have been well issued within time. There was no need and necessity to initiate action under Section 147 of the Act. 9. In his rival submissions, the ld. CIT(DR) strongly supported the orders of the authorities below and further submitted that the ld. Counsel for the assessee has submitted that an act which could be done through rectification, there was no necessity that action....
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....e was engaged in the business of banking. It was being allowed exemption for about 40 years. For the assessment year 1999-2000, the assessee filed its return under section 139(1) of the Income tax Act, 1961, claiming that its entire income was exempt under section 80P(2)(a)(i) of the Act. The return was accepted under section 143(1) of the Act and refund was also issued. Thereafter, a notice was issued for reopening the assessment. It was mentioned that during the course of assessment proceedings for the assessment year 2002-03, it came to light that the claim of the assessee for deduction under section 80P(2)(a)(i) of the Act was erroneous as the assessee was not registered under the Banking Regulation Act, 1949, and did not have a banking licence from the RBI. It was also not a member of the clearing house and did not provide cheque book facilities to the public. In the judgment of the Supreme Court in U. P. Co-operative Cane Union Federation Ltd. v. CIT [1999] 237 ITR 574, it was held that exemption under section 80P(2)(a)(i) of the Act was not available to societies providing facilities to non-members. On a writ petition to quash the notice: Held, dismissing the petit....
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.... 2. That in his order Ld. Commissioner of Incometax (Appeals)-I, Kanpur has not considered the judgment of Hon'ble Supreme Court in Liberty India vs. CIT in SLP No.5827/07 wherein Hon'ble Supreme Court has held that DEPB and Duty Drawback are merely linked to incentives and not to the profits of the industrial undertaking. 3. That the order of the Ld. Commissioner of Income Tax (Appeals)-I, Kanpur being erroneous in law and on facts be vacated and the order dated 20.12.2007 passed u/s.147/143(3) of the I.T. Act 1961 by the Assessing Officer be restored. 4. That the appellant craves leave to modify any of the grounds of appeal mentioned above and/or to add any fresh grounds as and when it is required to do so." 13. From the above grounds it would be clear that the only grievance of the Department relates to the deletion of addition of Rs.1,70,71,190 made by the AO out of deduction under Section 80IB on duty draw back claimed by the assessee. 14. The facts of the case, in brief, are that the assessee claimed deduction under section 80IB of the I.T. Act, which according to the A.O., was not allowable. Since the assessee claimed the deduction on t....
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.... profit or gain derived from the business of an industrial undertaking. The language used in s. 80-IB of the Act is not as broad as the expression "attributable to" referred to by the Supreme Court in Sterling Foods (Supra) and Cambay Electric (supra) nor is it as narrow as the expression "derived from ". The expression "derived from the business of an industrial undertaking" is somewhere in between. Consequently, we are of the view that the source of the duty drawback is the business of the industrial undertaking which is to manufacture and export goods out of raw material that is imported and on which customs duty is paid. The entitlement for duty drawback arises from s.75(1) of the Customs Act, 1962 read with the relevant notification issued by the Central Government in that regard". 14. Finally, Court held that- "Deduction u/s 80-IB- profits and gains derived from industrial undertaking - Duty drawback - Customs duty drawback is profit derived from business of industrial undertaking, hence eligible for deduction under s. 80-IB is neither as broad as " attributable to" nor as narrow as "derived from" but is somewhere in between Source of the duty dr....