2005 (12) TMI 74

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....n for the assessment year 1991-92 declaring an income of Rs. 8,71,055 and claiming deductions including a deduction on the duty drawback amount of Rs. 46,66,113 under section 80-I of the Act. The Assessing Officer denied the deduction on the said amount of duty drawback on the ground that the same did not constitute income of the assessee derived from industrial undertaking. Aggrieved the assessee appealed to the Commissioner of Income-tax (Appeals) who upheld the view taken by the Assessing Officer. The assessee then filed a further appeal before the Income-tax Appellate Tribunal which, relying upon its earlier order passed in the case of the assessee for the assessment years 1992-93 to 1995-96, allowed the deduction claimed by the assesse....

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....ion was formulated by this court for determination. The assessee, in that case also, had received duty drawback on the export of garments. The question was whether the amount so received by the assessee could be considered to be profits and gains derived from an industrial undertaking within the contemplation of section 80-I of the Act. Relying upon a Division Bench's decisions of the Madras High Court in CIT v. Jameel Leathers and Uppers [2000] 246 ITR 97 and CIT v. Viswanathan and Co. [2003] 261 ITR 737 and the decision of the Supreme Court in CIT v. Sterling Foods [1999] 237 ITR 579, the court found that duty drawback received by the assessee could not be regarded as profits or gains derived from the industrial undertaking. The court obs....

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....ile any such receipt in the hands of the assessee would certainly constitute profits or gains of the business in terms of section 28 of the Act the same would not amount to profits or gains "derived from the industrial undertaking". That is because the gain that arises to the assessee is not directly out of the industrial undertaking but on account of the scheme for refund of duty drawback paid on the raw material utilized as inputs by the assessee. Our attention was drawn by learned counsel for the respondent to a Division Bench's decision of the High Court of Gujarat in CIT v. India Gelatine and Chemicals Ltd. [2005] 275 ITR 284. A reading of the said decision would show that the Gujarat High Court has taken a contrary view and held th....