COMMISSIONER OF INCOME TAX, KARNAL vs. SUNIL KUMAR

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ITA/347/2007HC Punjab & HaryanaPHHC01073043200717 February 2012Author: MR. JUSTICE ALOK SINGH,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the appeal filed by the revenue and answered the question of law in favour of the revenue. The Court's reasoning was based on the Supreme Court's decision in the case of Liberty India Vs. Commissioner of Income-Tax, (2009) 317 ITR 218 (SC). This precedent established that duty drawback cannot be considered as income 'derived from' an industrial undertaking for the purpose of claiming deductions under Section 80IB. Therefore, the High Court found that the ITAT was not right in confirming the order of the CIT(Appeals) that allowed the deduction. The operative direction was to allow the appeal and answer the question of law in favour of the revenue, implying that the deduction for duty drawback under Section 80IB should not be allowed.

What were the facts?

This appeal was filed by the Commissioner of Income-Tax, Karnal (revenue-appellant) against an order dated 16.6.2006 passed by the Income Tax Appellate Tribunal, New Delhi Bench. The appeal concerns the assessment year(s) not explicitly stated in the provided text. The core of the dispute revolves around the eligibility of duty drawback received by the assessee, Sh. Sunil Kumar Prop M/s Anshul Tax International, Panipat, for deduction under Section 80IB of the Income Tax Act. The Tribunal had confirmed the order of the CIT(Appeals) which allowed this deduction. The revenue contested this, arguing that duty drawback cannot be considered income 'derived from' an industrial undertaking.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the CIT(Appeals) directing the AO to allow deduction u/s 80IB on the amount of duty drawback received by the assessee, which cannot be termed as income “derived from” an industrial undertaking as held by the Hon'ble Supreme Court of India in the case of CIT Vs. Sterling Foods (1999) 237 ITR 579 (SC)? Assessee's contentions: The judgment does not record any specific contentions made by the assessee. The CIT(Appeals) had allowed the deduction, and the Tribunal confirmed this order. Revenue's contentions: The revenue argued that duty drawback is not income 'derived from' an industrial undertaking, citing the Supreme Court's decision in CIT Vs. Sterling Foods (1999) 237 ITR 579 (SC).

Which sections of the Income-tax Act were involved?

Section 80IB

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 17.02.2012 The Commissioner of Income-Tax, Karnal ....Appellant Versus Sh. Sunil Kumar Prop M/s Anshul Tax International, Panipat ....Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE ALOK SINGH Present: - Mr. Yogesh Putney, Advocate, for the appellant. None for the respondent. 1.Whether to be referred to the Reporters or not? 2.Whether the judgment should be reported in the Digest? ***** M.M. KUMAR, J. Instant appeal is directed against order dated 16.6.2006 passed by Income Tax Appellate Tribunal, New Delhi Bench.

2.

In the instant appeal, revenue-appellant has claimed following question of law: - “Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the CIT(Appeals) directing the AO to allow deduction u/s 80IB on the amount of duty draw back received by the assessee which cannot be termed as income “derived from” an industrial undertaking as held by the Hon'ble Supreme Court of India in the case of CIT Vs. Sterling Foods (1999) 237 ITR 579 (SC)?”

3.

Income-Tax, (2009) 317 ITR 218 (SC), by Hon'ble the Supreme Court.

-2-

4.

In view of the above, appeal is allowed and the question of law is answered in favour of the revenue. (M.M. Kumar) Judge (Alok Singh) Judge February 17, 2012 R.S.

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