S. 80IB of the Income-tax Act, 1961 — Whether income from DEPB and drawback eligible for deduction — Held, Yes.

2 ACIT v. Podar Associates
ITAT ‘B’ Bench, Jaipur
Before I. C. Sudhir (JM) and B. P. Jain (AM) ITA No. 579/JP/2008

A.Y. : 2003-04. Decided on : 13-8-2008 Counsel for revenue/assessee : Jai Singh/ Mahendra Gargieya

S. 80IB of the Income-tax Act, 1961 — Whether income from DEPB and drawback eligible for deduction — Held, Yes.

Per B. P. Jain :

Facts :

One of the issues before the Tribunal was about the allowability of deduction u/s.80IB with respect to income earned by way of DEPB and drawback. The CIT(A) had held in favour of the assessee.

Held :

The Tribunal agreed with the assessee that the income from DEPB and drawback went to reduce the cost of purchase and therefore, income to that extent was derived from the eligible undertaking. According to it, a similar view was expressed by the Gujarat High Court in the case of India Gelatine and Chemical Ltd. where the Court had also distinguished the decision in the case of Cambay Electric Supply Co. Ltd.. Further, it also referred to the provisions of S. 28(iiid), whereunder such receipt is treated as business profit. Accordingly, relying on the decisions of the Jaipur Bench of the Tribunal in the case of Vijay Industries and in the case of Garment Craft India Ltd. and also on the Delhi High Court decision in the case of Eltek SGS Pvt. Ltd., it upheld the order of the CIT(A).