COMMISSIONER OF INCOME TAX vs. M/S J.B.EXPORTS LTD.

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ITA/369/2005HC DelhiDLHC01059351200520 July 2017Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH2 pages
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What did the High Court hold?

The High Court answered Question (a) in the affirmative, in favour of the Assessee and against the Revenue. This was based on the Court's prior decision in Commissioner of Income Tax v. Shri Ram Honda Power Equip, (2007) 289 ITR 475 (Del), which held that interest from FDRs is eligible for deduction under Section 80 HHC. For Question (b), the Court answered in the negative, in favour of the Revenue and against the Assessee. This was based on the Court's decision in Commissioner of Income Tax v. Ritesh Industries Ltd. (2005) 274 ITR 324 (Del), which held that duty drawback income is not derived from an industrial undertaking for the purpose of Section 80-I deduction. The appeal was disposed of accordingly.

What were the facts?

The Revenue has appealed against an order dated 6th October, 2004, passed by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 1992-93. The appeal was admitted by the High Court of Delhi on 13th September, 2005, with two questions of law framed for determination. The assessee is M/s J.B. Exports Ltd., and the appellant is the Commissioner of Income Tax. No appearance was made by the respondent assessee before the High Court. The ITAT's order is the subject of challenge.

What were the issues?

The High Court was called upon to decide two questions of law: 1. Whether the ITAT was correct in law in allowing deduction under Section 80 HHC to the assessee on the amount of interest from FDRs without applying the provisions of Explanation (baa) to Section 80 HHC of the Act? 2. Whether the amount of Rs.73,69,376/- being the duty drawback can be regarded as income derived from an industrial undertaking so as to entitle the assessee a deduction under Section 80-I of the Income Tax Act? The Revenue's contention, as implied by the framing of the questions, was that interest from FDRs should not be eligible for deduction under Section 80 HHC and that duty drawback income is not derived from an industrial undertaking for Section 80-I purposes. The judgment does not record specific arguments from the assessee, but the questions indicate the assessee would have argued for the allowability of both deductions.

Which sections of the Income-tax Act were involved?

Section 80 HHC,Section 80-I

AI-generated summary — verify with the full judgment below

$~R64 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 369/2005 COMMISSIONER OF INCOME TAX ..... Appellant Through: Mr. Asheesh Jain, Senior Standing Counsel for Revenue with Mr. Vikrant A. Maheshwari, Advocate. versus M/S J.B. EXPORTS LTD. ..... Respondent Through: None. CORAM: JUSTICE S.MURALIDHAR JUSTICE PRATHIBA M. SINGH O R D E R % 20.07.2017 1. This appeal by the Revenue is directed against the order dated 6th October, 2004 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 577/Del/1997 for the Assessment Year (‘AY’) 1992-93. 2. While admitting the appeal on 13th September, 2005, the following two questions of law were framed for determination :- a) Whether the ITAT was correct in law in allowing deduction under Section 80 HHC to the assessee on the amount of interest from FDRs without applying the provisions of Explanation (baa) to Section 80 HHC of the Act?

b) Whether the amount of Rs.73,69,376/- being the duty draw back can be regarded as income derived from an industrial undertaking so as to entitle the assessee a deduction under Section 80-I of the Income Tax Act?” 3. As far as Question (a) above is concerned, the same stands answered in favour of the Assessee and against the Revenue by the decision of this Court in Commissioner of Income Tax v. Shri Ram Honda Power Equip, (2007) 289 ITR 475 (Del). Accordingly, the Question (a) is answered in the affirmative i.e. in favour of the Assessee and against the Revenue. 4. As far as Question (b) above is concerned, it stands covered in favour of the Revenue by the decision of this Court in Commissioner of Income Tax v. Ritesh Industries Ltd. (2005) 274 ITR 324 (Del). This question is, accordingly, answered in negative i.e. in favour of the Revenue and against the Assessee. 5. The appeal stands disposed of accordingly. S.MURALIDHAR, J PRATHIBA M. SINGH, J JULY 20, 2017 j

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