2007 (7) TMI 302
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....Lakhvinder Singh) and I. T. A. No. 5175/Delhi of 2004 and in respect of the assessment year 2001-02 (in the case of G. S. Exports). It is claimed that the following substantial question of law under section 260A of the Income-tax Act, 1961 (for brevity "the Act"), would arise for determination of this court : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in sustaining the order of the Commissioner of Income-tax (Appeals) directing the Assessing Officer to allow deduction under section 80-IB on the amount of duty drawback received by the assessee which cannot be termed as income 'derived from' an industrial undertaking ?" 2. Facts in brief may first be noticed from I. T. A. ....
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....ls) was confirmed and the appeal of the Revenue was dismissed, vide its order dated September 28, 2005. The view of the Tribunal is based on the view taken by Delhi Bench of the Tribunal in the case of Asst. CIT v. Vipin Sardana rendered in I. T. A. No. 5174/Delhi of 2004, in respect of the assessment year 2001-02. The aforementioned view of the Tribunal is discernible from paragraphs 6 and 7 which reads as under: "6. I have carefully considered the matter. I am respectfully bound by the orders of the Delhi Benches of the Tribunal in identical cases cited above where the controversy has been resolved in favour of the assessee after noticing the judgment of the Gujarat and Delhi High Courts. In the case of Vipin Sardana, the Division Bench ....
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....lassified as backward." 6. Mr. Yogesh Putney, learned counsel for the Revenue, has argued that in the case of Sterling Foods [1999] 237 ITR 579, the hon'ble the Supreme Court dealing with a case relating to the assessment year 2001-02 has held that income of an assessee from the duty drawback cannot be held to be an income derived from specified business for the purpose of allowing deduction under section 80-IB and, therefore, the Tribunal has committed a grave error in law by refusing to follow the judgment of the hon'ble Supreme Court in Sterling Foods' case [1999] 237 ITR 579. He has then referred that the aforementioned judgment has been followed by two Division Benches of this court in the cases of Nahar Exports Ltd. v. CIT [2007] 288....
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....e assessee had claimed that interest received on delayed payments on account of sale to the customers of the manufactured goods could clearly be termed as income derived from industrial undertaking which is distinct from the income on account of interest that has been received from fixed deposit. Learned counsel has urged that the expression "derived" used by section 80-IB cannot be subjected to a narrow construction and the court must prefer a construction which is favourable to the assessee. 8. In some connected appeals, Mr. Pankaj Jain, learned counsel for the assessee-respondent has also made submissions by arguing that the export leading to the claim of duty drawback is so closely linked to industrial undertaking that it has to be reg....
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....4. Export made claiming duty drawback Mr. Jain has insisted that the dictionary meaning of the word "derived" would also support his submission. In that regard, he has referred to Law Lexicon, 2nd Edition Reprint 2000 and Webster New 20th Century, 2nd Edition. 10. Controverting the submission made by the Revenue that section 28(iiic) provides for charging income-tax on any duty of customs and for excise repaid or repayable as drawback against export, learned counsel has submitted that it was confined to only that dut....
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....he instant case, the nexus is not direct but only incidental. The industrial undertaking exports processed sea food. By reason of such export, the Export Promotion Scheme applies. Thereunder, the assessee is entitled to import entitlements, which it can sell. The sale consideration therefrom cannot, in our view, be held to constitute a profit and gain derived from the assessee's industrial undertaking." 12. The aforementioned view has been followed by a Division Bench of this court in the cases of Nahar Exports Ltd. v. CIT [2007] 288 ITR 494 (P&H), Liberty Shoes Ltd. v. CIT [2007] 293 ITR 478 (P&H) ; [2007] CTR 181 and Liberty India v. CIT [2007] 293 ITR 520 (P&H). Even the Delhi High Court has taken a similar view in the case of CIT v. Ri....