2014 (8) TMI 566

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2014 (8) TMI 566

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....e ITAT, by the impugned order inter alia held that the amount of deemed credit of Rs. 89,34,887/- under the CENVAT incentive scheme was part of the business profits of the Assessee, eligible for deduction under section 80HHC of the Act. The ITAT therefore allowed the Appeal filed by the Assessee and reversed the order of the CIT (Appeals) on this issue. 2. Mr Ahuja, the learned counsel appearing on behalf of the Appellant, submitted that the ITAT had gravely misdirected itself in construing the provisions of section 80HHC of the Act and correspondingly allowing the deemed credit of Rs. 89,34,887/- under the CENVAT Incentive Scheme as part of business profits of the Assessee eligible for a deduction under the said section. In a nutshell Mr.....

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....n law the Hon'ble Tribunal was correct in holding that in case CENVAT incentives are considered on part with duty drawback then 10 % of the drawback will be included in the business profits and the balance 90 % will be entitled to relief under proviso to section 80HHC(3) and if it is not any of the incentives under section 28(iii), then no part of it can be excluded and the entire amount will be taken into account for computing relief under section 80HHC ?" 3. The brief facts are that the Assessee filed it's return of income on 28th February, 2003 declaring a total income of Rs. 88,16,140/-. The case of the Assessee was selected for scrutiny and thereafter, the Assessing Officer completed the assessment and passed his order on 29th Mar....

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....ice of the exporter either to obtain CENVAT or duty drawback. Since in the present case, the Assessee has chosen the refund of the CENVAT which was not covered under section 28(iiia) to (iiic), the benefit of proportionate increase in business profits for allowing deduction under section 80HHC could not be allowed to the Assessee. He therefore submitted that the Tribunal had gravely misdirected itself by holding that the amount of Rs. 89,34,887/- was a part of the business profits of the Assessee eligible for a deduction under section 80HHC. 5. On the other hand, Ms Vissanjee, the learned counsel appearing on behalf of the Respondent, submitted that in computing the admissible deduction under section 80HHC, the CENVAT incentive of Rs. 89,3....

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....sions of the said section, the Assessee whilst computing it's total income, was allowed a deduction to the extent of profits, referred to in sub-section (1-B) thereof derived by the assessee from the export of such goods or merchandise. 7. In the present case, it can hardly be argued that the deemed credit under the CENVAT Incentive Scheme would not reduce the material / manufacturing cost of the goods exported by the Assessee. This was not the case of the Revenue also. That being the case, under the provisions of section 80HHC, the Assessee would be entitled to a deduction to the extent of the profits referred to in sub-section (1-B) thereof derived by the Assessee from the export of such goods or merchandise. No other provision was broug....

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2014 (8) TMI 566