2024 (7) TMI 1748

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.... (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning A.Y. 2013-14. 2. When the matter was called for hearing, the ld. counsel for the assessee, Mr. Rohit Jain, Advocate pointed out that two issues are broadly involved; (i) disallowance of deduction claimed under Section 80IC of the Act on account of duty drawback and; (ii) disallowance of deduction claimed under Section 80IC of the Act on account of interest received on KDRs. 3. Addressing the first issue, the ld. counsel submitted that the assessee is a partnership firm engaged in the business of manufacturing and export of home furnishing items like quilts, bedspreads, cushion covers, etc. The assessee filed return of income in which deductio....

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....ty paid must be necessarily deducted from the duty drawback are claimed from the authorities and only net amount of duty drawback requires to be excluded for the purposes of eligible profits and gains. 3.3 The ld. counsel next submitted that the identical issue came up before the Tribunal in A.Y. 2015-16 in ITA No. 6878/Del/2019 order dated 03.03.2023. The Tribunal has appreciated the contentions of the assessee in assessee's own case in the subsequent A.Y. 2015-16 and accepted the plea of the assessee on first principles. The matter was however remanded back to the file of the AO for suitable verifications in this regard and the AO was directed to exclude only net amount of duty drawback for the purposes of eligible deduction under 80-I....

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....1.15 crore and debited to Profit and Loss Account and therefore, in essence, no profit was derived per se on account of receipt by way of duty drawback. Consequently such duty drawback being lower than the expenditure incurred towards custom and excise duties, cannot be excluded for the purposes of determination of eligible profits under Section 80-IC in question. 7. The Hon'ble Delhi High Court in the case of CIT vs. Eltek SGS (P.) Ltd., (2008) 300 ITR 6 (Del) inter alia observed that duty drawback is in the nature of reimbursement. It thus follows that duty drawback would qualify for deduction under Section 80-IC of the Act in case such duty drawback is either equal to or lower than the corresponding costs towards customs and excise du....