TaxTMI 
TaxTMI 
2019 (4) TMI 1490
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....from Income Tax Appeal No. 142 of 2017. 2. In this appeal, the assessee had challenged the judgment of the Income Tax Appellate Tribunal, Mumbai ("the Tribunal" for short) dated 20.7.2016. The appellant - assessee is a partnership firm engaged in the business of manufacturing and exporting honey. The assessee had filed return of income for the assessment year 2009-10. In relation to the export of the said product, the assessee had claimed deduction under Section 80IB(11A) of the Income Tax Act, 1961 ("the Act" for short) in relation to following receipts:- (i) The benefit received by the assessee for the export under Vishesh Krishi and Gram Udyog Yojana ("VKGUY" for short); (ii) In relation to additional receipt of such....
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....ufacture of Steel and Ferro Silicon. The assessee was paid following subsidies: (Rs.) Transport subsidy 2,64,94,817 Interest subsidy 2,14,569 Power subsidy 7,00,000 --------------- Total 2,74,09,386 ========= 6. The assessee had claimed deduction under Section 80IB(4) of the Act in relation to such subsidies. The Assessing Officer disallowed the claim. The issue reached the Supreme Court. The Supreme Court noted the speech of Finance Minister while presenting the budget for the assessment year 1999-2000 in relation to Government of India's Industrial Development Policy for the North-Eastern region. It was noticed that ten years' tax holiday was granted for the industries ....
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....ss book entitlement, and therefore its relation to manufacture of a product and or sale within India is not proximate or direct but is one step removed. Also, the object behind the duty entitlement pass book entitlement, as has been held by this Court, is to neutralize the incidence of customs duty payment on the import content of the export product which is provided for by credit to customs duty against the export product. In such a scenario, it cannot be said that such duty exemption scheme is derived from profits and gains made by the industrial undertaking or business itself." 7. The Supreme Court noted with approval the observations in case of Jai Bhagwan Oil and Flour Mills Vs. Union of India [2009] 14 SCC 63 which are as under:- ....
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....he industry could become competitive and economically viable." (Paras 14 and 15) 8. With this background, we may refer to VKGUY Scheme. This scheme is part of Foreign Trade Policy 2009-2014 framed by the Government of India, Ministry of Commerce and Industry. Relevant portion of this policy reads as under:- 3.13 VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) (SPECIAL AGRICULTURE AND VILLAGE INDUSTRY SCHEME) Objective 3.13.1 Objective of VKGUY is to promote exports of : (i) Agricultural Produce and their value added products; (ii) Minor Forest Produce and their value added variants; (iii) Gram Udyog Products; (iv) Forest Based Products; and (v) Other Products, as notified from time to time. Such pr....
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.... forest produce and their value added variants, Gram Udyog products, forest based products and other produces as may be notified. In relation to exports of such products, benefits in the form of incentives would be granted at the prescribed rate. The objective behind granting such benefit was in order to compensate high transport cost and to offset other disadvantages. In clear terms, thus, the Government of India realized that the products such as agricultural produce, minor forest produce and Gram Udyog products as also forest based products would have high transport cost and would be accompanied by various other disadvantages. In order to make the export of such products viable, the Government of India decided to grant certain incentives....