2007 (11) TMI 299

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....ing that the appellant is not entitled to deduction under section 80-I in respect of duty drawback ?. (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the appellant is not entitled to deduction under section 80-I in respect of interest earned on amounts retained by the bank ?" 2. The appellant-firm is engaged in the business of shoe uppers. For the assessment year 2001-02, the appellant filed its return admitting an income of Rs. 2,40,000. The assessment under section 143(3) of the Income-tax Act, 1961, was completed on February 16, 2004. While completing the assessment, the Assessing Officer has restricted the claim of deduction under section 80-I by disallowing the claim o....

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.... out that in the case of duty drawback, the same was given specifically to reduce the cost of manufacturing the goods. The very scheme of duty drawback is framed and embodied in the statutory provisions in order to relieve the goods to be exported of the burden of customs duties and excise duties. Referring to the decision of the Gujarat High Court that the duty drawback is "derived from" industrial undertaking and eligible for deduction, learned counsel seeks to draw support of the said decision to contend that the order of the Tribunal holding that the same was not "derived from" industrial activity, could not be held to be the correct view. 5. It may be seen that dealing with the inclusion of duty drawback for considering the deductio....

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....ved from industrial undertaking denotes that the immediate and effective source of income eligible for the grant of relief under section 80HH must be the industrial undertaking itself and not any other source. The said decision was affirmed by the apex court in the decision reported in Pandian Chemicals Ltd. v. CIT [2003] 262 ITR 278, wherein the Supreme Court held that the rules of interpretation would come into play only if there is any doubt with regard to the express language used. Where the words are unequivocal, there is no scope for importing the rule of liberal construction. In the circumstances, the apex court held that the interest derived by the industrial undertaking of the assessee on deposits made with the electricity board fo....