2023 (11) TMI 235

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al [in short, "Tribunal"]. 3. Mr Shailendera Singh, learned senior standing counsel, who appears on behalf of the appellant/revenue, says that there are two issues which have been raised in the instant appeal filed before this court. 4. First, the sustainability of the deletion of addition made under Section 68 of the Income Tax Act, 1961 [in short, "Act"] with regard to the investment made in shares issued at premium by the respondent/assessee. 4.1 It is pointed out that the shares which bore a face value of Rs.10/- per share carried a premium of Rs.190/- per share. 4.2 The amount invested in the share capital of the respondent/assessee was Rs.20 crores. 5. Second, the erroneous inclusion of CENVAT Credit in the profits of t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al undertaking so as to entitle the respondent/assessee to claim a deduction under Section 80IB of the Act. 8.1 The submission was that the expression "derived from" in the said provision includes that income which has a direct nexus with the profits and gains of an industrial entity. 8.2 In other words, according to Mr Singh, although the self-CENVAT credit availed by the respondent/assessee would otherwise be income of the respondent/assessee, it was not a profit which was derived from the industrial undertaking. 8.3 In support of his plea, Mr Singh sought to place reliance on the judgment of the Supreme Court rendered in Liberty India vs. Commissioner of Income Tax (2009) 9 SCC 328. 9. Mr M.P. Rastogi, who appears on behalf o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....5. The issue, as noticed above, emphasised by Mr Singh was with regard to the credit balance available in the bank account qua Adhyay, before and after the investment. 16. That said, what has come through on perusal of the record is that the respondent/assessee has furnished the details of the cheque payments and therefore, there was enough and more material available with the AO to make further inquiry into the matter. 17. The AO, instead of making further inquiries, seems to have been burdened by the fact that the premium charged was high, which, according to us, was not the correct test for making an addition under Section 68 of the Act. 18. This aspect has been repeatedly emphasised by the courts including a coordinate bench of....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the second issue, in our view, the record shows that the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"] ruled in favour of the respondent/assessee; a finding which was affirmed by the Tribunal. 22.1 The CIT(A) went into a detailed analysis of the issue at hand and correctly drew a distinction between the CENVAT credit, which is made available to a manufacturer against the duty drawback, and the Duty Entitlement Pass Book (DEPB) certificates issued to an exporter. DEPB are "incentive profits" which are made available to an exporter who may not necessarily be a manufacturer and therefore, possibly, being ineligible for deduction under Section 80IB of the Act. 23. Both CIT(A) as well as the Tribunal have taken note of the jud....