M/S JUST NATURAL vs. THE COMMISSIONER OF INCOME TAX

ITA/807/2007HC KarnatakaKAHC01057592200730 October 2012Bench: B.V.PINTO,K.SREEDHAR RAO2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law framed is answered against the assessee. The Court relied on the decision of the Supreme Court in Liberty India Vs. Commissioner of Income Tax, (2009) 317 ITR 218 (SC). Based on this precedent, the High Court concluded that the Duty Draw Back of Rs. 14,93,306/- received by the assessee cannot be construed as profit and gains derived from an industrial undertaking. Consequently, the assessee is not eligible for deduction under Section 80-IB(3) of the Income Tax Act, 1961. The appeal filed by the assessee was dismissed.

What were the facts?

The assessee, M/s Just Natural, represented by its partner Sri J. Venkataraman, filed an appeal before the High Court of Karnataka. The appeal arose from an order dated June 22, 2007, passed by the Income Tax Appellate Tribunal (ITAT), Bangalore Bench, in ITA No. 1574/Bang/2005. This ITAT order confirmed the orders of the Appellate Commissioner and the Assistant Commissioner of Income Tax, Circle-8(1), Bangalore. The assessment year in question is 2003-04. The dispute concerns the eligibility of Duty Draw Back of Rs. 14,93,306/- for deduction under Section 80-IB(3) of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that Duty Draw Back of Rs.14,93,306/- received by the assessee cannot be construed as profit and gains derived from an industrial undertaking and hence the assessee is not eligible for deduction under Section 80-IB(3) of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that the Duty Draw Back received should be considered as profit and gains derived from an industrial undertaking, making it eligible for deduction under Section 80-IB(3). Revenue's Contention: The revenue contended that the Duty Draw Back is not derived from an industrial undertaking and therefore not eligible for the deduction under Section 80-IB(3). The judgment does not explicitly record the revenue's specific arguments beyond this implicit stance.

Which sections of the Income-tax Act were involved?

Section 80-IB(3),Section 260A

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 30TH DAY OF OCTOBER 2012 PRESENT THE HON'BLE MR. JUSTICE K.SREEDHAR RAO AND THE HON'BLE MR. JUSTICE B.V.PINTO ITA No.807/2007 BETWEEN : M/S JUST NATURAL NO.33,CHAMUNDINAGAR, R.T.NAGAR, BANGALORE, REP. BY ITS PARTNER SRI. J.VENKATARAMAN, AGED 75 YEARS. APPELLANT (BY SRI S.P. BHAT & C. BASAVAIAH, ADVOCATES) AND : THE COMMISSIONER OF INCOME TAX BANGALORE. RESPONDENT ( By SRI K.V. ARAVIND, ADVOCATE ) This I.T.A filed u/s.260A of the Income Tax Act, 1961 arising out of order dated 22.6.2007 passed in ITA No.1574/Bang/2005 for the Assessment Year 2003-04 praying that this Hon'ble Court may be pleased to: (i) formulate the substantial questions of law, and (ii) allow the appeal and set aside the order passed by the Income Tax Appellate Tribunal, Bangalore Bench in ITA No1574/Bang/2005 dt.22-06-07 confirming the order of the Appellate Commissioner and that of the

2 Assistant Commissioner of Income Tax, Circle-8(1), Bangalore in the interest of justice and equity.

This Appeal coming on for hearing this day, SREEDHAR RAO, J., delivered the following: JUDGMENT In view of the decision of the Supreme Court in Liberty India Vs. Commissioner of Income Tax, (2009) 317 ITR 218 (SC), the substantial question of law framed as under is answered against the assessee. Substantial question of law: “Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that Duty Draw Back of Rs.14,93,306/- received by the assessee cannot be constructed as profit and gains derived from an industrial undertaking and hence the assessee is not eligible for deduction under Section 80-1B(3) of the Income Tax Act, 1961?” Accordingly, the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE psg*

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