C.I.T. vs. RUBAMIN INDUSTRIES

Facts

The Revenue has appealed against the order of the Income-tax Appellate Tribunal (ITAT), Ahmedabad Bench 'C', for Assessment Year 1993-94. The ITAT had dismissed the appeal of the Revenue, upholding the order of the Commissioner of Income-tax (Appeals). The Assessing Officer (AO) had added a difference to the assessee's income, considering a sale of 1,60,000 kgs of Zinc Oxide to an associate concern, M/s. Zincollied (India), at Rs. 0.73 per kg, which was lower than the average sale price to others. The CIT(A) had found no ulterior motive for this lower pricing and no other evidence from the AO to support the addition. The ITAT upheld this finding.

Held

The High Court dismissed the appeal, answering both issues against the Revenue and in favour of the assessee. The Court relied on the decisions in [2008] 301 ITR 439 (SC) in the case of B. Desraj vs. Commissioner of Income-tax and [2007] 290 ITR 667 (SC) in the case of Commissioner of Income-tax vs. Lakshmi Machine Works. The Court found these decisions fully applicable to the facts of the present case and therefore did not provide elaborate reasoning. The operative direction was the dismissal of the Tax Appeal.

Key Issues

1. Whether the duty drawback received by the assessee is part of business profit for the purpose of deduction under Section 80HHC? The Revenue contends that duty drawback is not part of business profit. The assessee's contention is not recorded. 2. Whether the sales tax collected by the assessee is part of the total turnover for the purpose of Section 80HHC? The Revenue contends that sales tax collected should not be included in the total turnover. The assessee's contention is not recorded. The High Court noted that these questions were admitted as substantial questions of law.