MRS. SASHI SADH,NEW DELHI vs. ITO, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘G’: NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA No. 6203/Del/2013 Assessment Year: 2010-11 Mrs. Sashi Sadh, 52/12, C.R. Park, Vs. Income Tax Officer, Ward-23(2), New Delhi New Delhi GIR/PAN : AMLPS4154L (Appellant) (Respondent)

Appellant by Sh. R.K. Singh, Adv. Respondent by Smt. Anima Barnwal, Sr.DR Date of hearing 27.06.2016 Date of pronouncement 30.06.2016 ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against the order dated 28.03.2013 of learned Commissioner of Income Tax(Appeals)-XXIII, New Delhi, for the assessment year 2010-11, raising the following grounds of appeal: 1. That the order of the learned Assessing Officer is bad in law and wrong on facts. 2. That the learned Assessing Officer wrongly disallowed Duty Draw Back amounting to Rs. 34,40,511/- from the eligible deduction u/s. 10B of the Income Tax Act. 3. The learned Commissioner of Income Tax(Appeals) erred in confirming the above additions of Rs. 34,40,511/-. 4. That the Appellant prays to add/alter/amend any one or all of the grounds of appeal on or before the hearing of appeal. 2. The facts in brief are that the assessee filed return of income on 24.09.2010 at Rs. 3,79,141/- which was processed under Section 143(1) of the Income-tax Act, 1961 (for short “the Act”) and the case was selected for scrutiny under CASS and statutory notice u/s 143(2) of the Act was issued on 30.08.2011. Assessee is the proprietor of M/s Neha Impex and is engaged in the

2 ITA No. 6203/Del/2013 AY: 2010-11 business of manufacturing and export of garments and allied products. During the course of assessment proceedings, Assessing Officer asked the assessee to justify the claim of deduction u/s 10-B of the Act. In response to the query of the Assessing Officer, assessee submitted her reply vide letter dated 22.2.2013 wherein she relied upon the judicial pronouncement of the 1TAT Special Bench, Indore in the case of M/s Maral Overseas Ltd. Vs. Additional Commissioner of Income-tax, Range-5, Indore 2012-TIOL-197-ITAT-INDORE-SB to justify the claim for deduction u/s 10-B of the Act. However, the Assessing Officer rejected the claim of the assessee relying upon the judicial pronouncements in the case of CIT Vs. K. Ravichandran Nair, 295 1TR 228 (SC), Hon'ble Supreme Court’s decision in the case of P.R. Prabhakar Vs. CIT, CIT Vs. Sterling Foods 237 ITR 579 (SC), Liberty India Vs. CIT (2009'f 317 ITR 0218 (SC). On the basis of the ratio of above judicial pronouncements, it was held by the Assessing Officer that exemption claimed u/s 10-B of Rs. 34,40,551/- by including the duty drawback as part of eligible profits derived from 100% export oriented unit is not allowable. Therefore, the Assessing Officer disallowed the claim of deduction u/s 10-B on DEPB and calculated the allowable deduction u/s 10-B at Rs. 46,16,991/- as against the assessee’s claim of Rs.78,76,299/-. 3. Aggrieved by the order of the AO, the assessee filed an appeal before ld. Commissioner of Income Tax(Appeals), who relying on the judgment of Hon’ble Supreme Court in the case of Sterling Foods and Liberty India, 237 ITR 579 (SC) sustained the addition made by the Assessing Officer. Aggrieved, the assessee is in appeal before the ITAT. 4. Grounds no. 1 & 4 are general in nature, which does not require any adjudication. 5. In grounds 2 & 3, the assessee has challenged the disallowance made by the Assessing Officer on Duty Draw Back amounting to Rs. 34,40,511/- from the eligible deduction u/s 10B of the Act and confirmed by the learned Commissioner of Income Tax(Appeals).

3 ITA No. 6203/Del/2013 AY: 2010-11 5.1 At the outset, learned counsel for the assessee submitted that the issue in dispute is squarely covered by the decision of ITAT, Delhi Bench in the assessee’s own case passed in ITA No. 3746/Del/2013, for assessment year 2009-10, which the learned Sr. Departmental Representative did not controvert. 5.2 After hearing both the parties and perusing the documents available on record, we find that the issue in dispute is squarely covered by the decision of ITAT, Delhi Bench in assessee’s own case passed in ITA No. 3746/Del/2013 for assessment year 2009-10. The relevant paragraphs are reproduced as under:

“8. On careful consideration of rival submissions of both the parties on the issue and on careful perusal of the decision of ITAT 'G' Bench, Delhi in the case of Sanjay Aggarwal vs. DCIT (Supra) we observe that the Coordinate Bench of this Tribunal has declined to accept the contention of the ld. CIT.DR that the decision of Special Bench cannot go beyond the case for disposal of which it was constituted. The relevant para 14 of this judgment reads as under: "14. Since the Special Bench has decided this issue in this manner, it is not possible for us to deviate from the same. There has to be some consistency in the view taken by the Tribunal. Once a Special Bench has decided a particular issue in a particular manner,then, that becomes binding on all the division benches across the country unless there is a contrary judgment of the Hon'ble Supreme Court or that of some High Court. As the ld. DR failed to point out any specific and direct judgment rendered by the Hon'ble High Court on the issue which is obtaining in the present appeal, we are disinclined to deviate from the Special Bench order in the case of All Cargo (supra). We, therefore, hold in principle that no addition can be made for any assessment year u/s 153A, the assessment for which is not pending on the date of search, unless any incriminating material is found in the course of search". 9. In view of above, we are in agreement with the decision of Coordinate Bench of ITAT 'G' Bench on this legal issue that there has to be some consistency in view taken by the Tribunal, hence, once Special Bench has decided a particular issue in a particular manner, then, that becomes binding of all the Division Benches of the Tribunal across the country unless there is a contrary judgment of Hon'ble Supreme Court or that some of High Courts. We may also note that the Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs. Hritnik Export (P) Ltd., ITA Nos. 219 & 239/2014 dated 13.11.2014 has considered and upheld the view taken by the Special Bench in the case of Maral Overseas P. Ltd. Vs. ACIT (Supra) by dismissing the appeal of the Revenue. The relevant operative part of this judgment reads as under: "By way of these appeals, the Revenue has challenged the orders passed by Income Tax Appellate Tribunal (Tribunal, for short) dated 11th September, 2013 and 24th October, 2013 relating to assessment years 2008- 09 and 2009-10, respectively. Tribunal has followed the decision of their Special Bench in the case of Maral

4 ITA No. 6203/Del/2013 AY: 2010-11 Overseas Ltd. versus Additional Commissioner of Income Tax decided on 20th March, 2012, in which it has been held:- 78. Section 10B sub-section (1) allows deduction in respect of profits and gains as are derived by a 100% EOU. Section 10B(4) lays down special formula for computing the profits derived by the undertaking from export. The formula is as under :- Profit of the business of the Export turnover X Total turnover of business carried out by the undertaking . 79. Thus, sub-section (4) of section 10B stipulated that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of turnover to the total turnover. Thus, not-with-standing the fact that sub- section (1) of section 10B refers the profits and gains as are derived by a 100% EOU, yet the manner of determining such eligible profits has been statutorily defined in sub-section (4) of section 10B of the Act. As per the formula stated above, the entire profits of the business are to be taken which are multiplied by the ratio of the export turnover to the total turnover of the business. Sub-section (4) does not require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking. Thus, once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits. The mode of determining the eligible deduction u/s 10B is similar to the provisions of section 80HHC inasmuch as both the sections mandates determination of eligible profits as per the formula contained therein. The only difference is that section 80HHC contains a further mandate in terms of Explanation (baa) for exclusion of certain income from the "profits of the business" which is, however, conspicuous by its absence in section 10B. On the basis of the aforesaid distinction, sub-section (4) of section 10A/10B of the Act is a complete code providing the mechanism for computing the "profits of the business" eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income. The CBDT Circular No. 564 dated 5th July, 1990 reported in 184 ITR (St.) 137 explained the scope and ambit of section 80HHC and the mode of determination of profits derived by an assessee from the export of goods. I.T.A.T., Special Bench in the case of International Research Park laboratories v. ACIT, 212 ITR (AT) 1, after following the aforesaid Circular, held that straight jacket formula given in sub-section (3) has to be followed to determine the eligible deduction. The Hon'ble Supreme Court in the case of P.R. Prabhakar; 284 ITR 584 had approved the principle laid down in the Special Bench decision in International Reserarch Park laboratories v. ACIT (supra). In the assessee IS own case the I.T.A.T. in the preceding years, after considering the decision in the case of liberty India held that provisions of section 10B are different from the provisions of section 80lA wherein no formula has been laid down for computing the eligible business profit.

5 ITA No. 6203/Del/2013 AY: 2010-11 80. In view of the above discussion, question no. 2 is answered in affirmative and in favour of the assessee. Accordingly, the assessee is eligible for claim of deduction on export incentive received by it in terms of provisions of section 108(1) read with section 108(4) of the Act.? The aforesaid view is in consonance with the decision of this Court dated 1st September, 2014 passed in ITA 438/2014, Commissioner of Income Tax-VII versus XLNC Fashions in which this court has held as under :- Deduction under Section 108 of the Income Tax Act, 1961 (Act, in short) is to be made as per the formula prescribed by Sub- Section (4), which reads as under: 10B. Special provision in respect of newly established hundred per cent export- oriented undertakings- .............. .............. (4) For the purposes of sub-section (1), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking? Sub-section (4), therefore, is the special provision which enables the assessee to compute the profits derived from the export of articles or things or computer software. We do not see any conflict between Sub- section (1) and Sub-section (4) to Section 10B, as Sub-section (1) states that deduction of such profits and gains as are derived by a hundred percent export-oriented undertaking from the export of articles or things or software would be eligible under the said Section. Sub- section (1) is a general provision and identifies the income which is exempt and has to be read in harmony with Sub-section (4) which is the formula for finding out or computing what is eligible for deduction under Sub-section (1). Neither of the two provisions should be made irrelevant and both have to be applied without negating the other. In other words, the manner of computing profits derived from exports under Sub-section (1), has to be determined as per the formula stipulated in Sub- Section (4), otherwise Sub-section (4) would become otiose and irrelevant. The issue in question in this appeal which pertains to the Assessment Year 2009-10, relates to duty draw back in the form of DEPB benefits. As per Section 28, clause (iii-c), any duty of customs or excise repaid or repayable as drawback to a person against exports under Customs and Central Excise Duties Draw Back Rules, 1971 is deemed to be profits and gains of business or profession. The said provision has to be given full effect to and this means and implies that the duty draw back or duty benefits would be deemed to be a part of the business income. Thus, will be treated as profit derived from business of the undertaking. These cannot be excluded. Even otherwise, when we apply Sub-section (4) to Section 10B, the entire amount received by way of duty draw back would not become eligible for

6 ITA No. 6203/Del/2013 AY: 2010-11 deduction/exemption. The amount quantified as per the formula would be eligible and qualify for deduction/exemption. The position is somewhat akin or close to Section 80HHC of the Act, which also prescribes a formula for computation of deduction in respect of exports. In view of the aforesaid, we do not find any merit in the present appeal and the same is dismissed.? Karnataka High Court in Commissioner of Income Tax, Central Circle versus Motorola India Electronics (P) Ltd., ITA No. 428/2007, decided on 11.12.2013, reported as [2014] 46 taxmann.com 167 (Karnataka) has also taken a similar view, wherein it has been held:- By Finance, Act, 2001, with effect from 01.04.2001, the present Sub- section (4) is substituted in the place of old Sub-section (4). No doubt Sub-section 10(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But Sub-section (4) explains what is (4) says that profits derived from export of articles or things or computer software shall be the account which bares to the profits of the business of the undertaking and not the profits and gains from export of articles. Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. It is interesting to note that similar provisions are not there while dealing with computation of income under Section 80HHC. On the contrary there is specific provisions like Section 80HHB which expressly excludes this type of incomes. Therefore, in view of the aforesaid provisions, it is clear that, what is exempted is not merely the profits and gains from the export of articles but also the income from the business of the undertaking.? In view of the aforesaid position, the appeals have to be dismissed. We order accordingly." 10. In view of above, respectfully note that the decision of Special Bench in the case of Maral Overseas P. Ltd. Vs. ACIT has been upheld by the Jurisdictional High Court of Delhi in the case of Hritnik Export (P) Ltd., (Supra). Therefore, we are inclined to hold that the decision of Special Bench in the case of Maral Overseas P. Ltd. Vs. ACIT (Supra), which has been confirmed and upheld by jurisdictional High Court of Delhi, is binding on all the Division Benches of the ITAT unless there is a contrary judgment of Hon'ble Supreme Court or that of the larger bench of Hon'ble High Court. On specific query from the bench the ld. CIT. DR failed to point out any specific and direct judgment either from Hon'ble Supreme Court or from Hon'ble Jurisdictional High Court or any other High Court on the issue, therefore, we decline to take a different or deviated view from the conclusion of the Special Bench in the case of Maral Overseas P. Ltd.(Supra). 11. Having heard so, we now need to examine the factual position of the case on merits. On careful consideration of rival contention and submissions of both the parties and careful perusal of relevant material placed before us on record, we note that the

7 ITA No. 6203/Del/2013 AY: 2010-11 main contention of the ld. DR is that the ld. CIT(A) grossly erred in allowing the duty drawback of Rs.21,62,369/- to be included as part of eligible profit derived from export oriented unit u/s 10B of the Act. The ld. DR vehemently contended that the ld. CIT(A) went wrong in following the decision of Special Bench of the ITAT, Indore, in the case of Maral Overseas P. Ltd.(Supra) and the issue has to be decided in the light of decision of Hon'ble Supreme Court in the case of Liberty India Vs. CIT 317 ITR 218 (SC). The ld. CIT. DR submitted that the decision of Ambika Sadh, Vs. CIT in ITA No.3606/Del/2013 dated 10.02.2014 of ITAT Delhi 'A' Bench is not binding on this bench of the Tribunal and even otherwise the Special Bench decision in Maral Overseas P. Ltd.(Supra) cannot be pressed into services for granting relief for the present assessee. 12. Replying to the above, the ld. counsel appearing for the assessee placed a copy of the decision of ITAT Delhi 'A'Bench in ITA No.3606/Del/2013 for A.Y. 2008-09 dated 10.02.2014 (Supra) and submitted that on similar set of facts and circumstances the appeal of the Smt. Ambika Sadh was allowed by the Tribunal and therefore, present appeal of the Revenue on the similar issue does not have legs to stand on the legal platform. The ld. counsel further contended that the issue in question stand squarely decided in favour of the assessee by the decision of Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs. Hritnik Export (P) Ltd, (Supra), decision of ITAT, Indore Special Bench in the case of Maral Overseas Ltd. vs. ACIT (Supra) and decision of ITAT Delhi 'A' Bench in the case of Smt. Ambika Sadh vs. CIT (Supra). Supporting the order of the CIT(A) the ld. counsel strongly contended that the AO and the department have not disputed that u/s 10B (1) of the Act, deduction in the ratio of profits and gains as are derived by the 100% Export Oriented Unit (EOU) are allowable and u/s 10B(4) of the Act, specific formula in computing the profits derived by the entity from export turnover. 13. The ld. counsel further contended that the department has not disputed that the provisions ofsection 10B(4) of the Act mandate that the deduction shall be computed by apportion the profits of the business of the undertaking in the ratio of export turnover by the total turnover and sub section(1) and sub section(4) of section 10B of the Act are to be read together while computing the eligible deduction u/s 10B of the Act. The ld. counsel submitted that in the case of Liberty India (Supra), Hon'ble Supreme Court has dealt with the provisions of section 80I of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub section (4) of section 10B of the Act. The ld. counsel especially pointed out that the decision of Hon'ble Supreme Court in the case of Liberty India (Supra) is not applicable to the present case therefore, contention of the Revenue are not sustainable and order of the ld. CIT(A) and impugned order of the CIT(A) should be upheld. 14. The ld. counsel for the assessee also pointed out and drawn our attention towards decision of Hon'ble Supreme Court in the case of Liberty India (Supra) and submitted that as per ratio of decision of Hon'ble Apex Court on the issue of derived from duty drawback has been rightly applied by the AO while dealing with section 10A of the Act. In the present case the ld. counsel fairly contended that the ruling of Special Bench in the case of Maral Overseas Ltd. cannot be taken as final, since while adjudicating upon the issueless relevant aspects of present case of apportion of formula has been given disproportionate importance while the vital aspect of income derived from has been completely ignored.

8 ITA No. 6203/Del/2013 AY: 2010-11 15. On careful consideration of above submissions and contentions, we may note that in the case of Smt. Ambika Sadh (Supra) ITAT Delhi 'A' Bench, allowing the appeal of the assessee held as under: "3. Ld. Counsel for the assessee contends that the issue in question stands settled in favour of assessee as decided on merits by the ITAT Indore Special Bench judgment in the case of Maral Overseas Ltd. Vs. Addl. CIT (ITA nos. 777 & 999(Ind) of 2004 & 295 & 356(Ind) of 2006) dated 28-3-2012). The Special Bench observed that in the case of Liberty India (supra) the Hon'ble Supreme Court has dealt with the provisions of Sec. 80IA of the I.T. Act where the issue under consideration was sec. 80IB. The Special Bench after duly considering the facts & issues held as under: "It is clear from the plain reading of section 10B(1) of the Act that the said section allows deduction in respect of profits and gains as are derived by a 100% EOU. Further, section 10B(4) of the Act stipulates specific formula for computing the profit derived by the undertaking from export. Thus, the provisions of subsection (4) ofsection 10B of the Act mandate that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of export turnover by the total turnover. Thus, even though sub-section (1) of section 10B refers to profits and gains as are derived by a 100% EOU, the manner of determining such eligible profits has been statutorily defined in sub-section (4) of that section. Both sub-sections (1) and (4) are to be read together while computing the eligible deductionu/s 10B of the Act. We cannot ignore sub-section (4) of section 10B which provides specific formula for computing the 74 profits derived by the undertaking from export. As per the formula so laid down, the entire profits of the business are to be determined which are further multiplied by the ratio of export turnover to the total turnover of the business. In case of Liberty India, the Hon'ble Supreme Court has dealt with the provisions of section 80IA of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by the undertaking from the export. Thus, the decision of the Hon'ble Supreme Court is of no help to the revenue in determining the claim of deduction u/s 10B in respect of export incentives. 78. Section 10B sub-section (1) allows deduction in respect of profits and gains as are derived by a 100% EOU. Section 10B(4) lays down special formula for computing the profits derived by the undertaking from export. The formula is as under :- Profit of the business of the X Total turnover of business Undertaking carried out by the undertaking 79. Thus, sub-section (4) of section 10B stipulated that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of turnover to the total turnover. Thus, not-with- standing the fact 75 that sub- section (1) of section 10Brefers the profits and gains as are derived by a 100% EOU, yet the manner of determining such eligible profits has been statutorily defined in sub-section (4) of section 10B of the Act. As per the formula stated above, the entire profits of the business are to be taken which are multiplied by the ratio of the export turnover to the total turnover of the business. Sub-section (4) does not

9 ITA No. 6203/Del/2013 AY: 2010-11 require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking. Thus, once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits. The mode of determining the eligible deduction u/s 10B is similar to the provisions of section 80HHC inasmuch as both the sections mandates determination of eligible profits as per the formula contained therein. The only difference is that section 80HHC contains a further mandate in terms of Explanation (baa) for exclusion of certain income from the "profits of the business" which is, however, conspicuous by its absence in section 10B. On the basis of the aforesaid distinction, sub-section (4) of section 10A/10B of the Act is a complete code providing the 76 mechanism for computing the "profits of the business" eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income. The CBDT Circular No. 564 dated 5th July, 1990 reported in 184 ITR (St.) 137 explained the scope and ambit of section 80HHC and the mode of determination of profits derived by an assessee from the export of goods. I.T.A.T., Special Bench in the case of International Research Park Laboratories vs. ACIT, 212 ITR (AT) 1, after following the aforesaid Circular, held that straight jacket formula given in sub-section (3) has to be followed to determine the eligible deduction. The Hon'ble Supreme Court in the case of P.R. Prabhakar; 284 ITR 584 had approved the principle laid down in the Special Bench decision in International Research Park Laboratories vs. ACIT (supra). In the assessee's own case the I.T.A.T. in the preceding years, after considering the decision in the case of Liberty India held that provisions of section 10B are different from the provisions of section 80IA wherein no formula has been laid down for computing the eligible business profit. 80. In view of the above discussion, question no. 2 is answered in affirmative and in favour of the assessee. Accordingly, the assessee is eligible for claim of deduction on export incentive received by it in terms of provisions of section 10B(1) read with section 10B(4) of the Act. 3.1. Since the Special Bench after considering the ratio of decisions in the case of Liberty India (supra); International Research Park Laboratories v. ACIT 212 ITR (AT) 1; and CBDT Circular has held that while working out the deduction u/s 10B(1) the calculation of eligible profits is to be made by including the claim of export incentives, thus the claim ultimately allowed by the assessing officer is justified, which is endorsed by Special Bench. Therefore, the order of CIT should be set aside as the merits stand decided. 4. Ld. DR supported the order of ld. CIT.

10 ITA No. 6203/Del/2013 AY: 2010-11 5. We have heard rival submissions and gone through the relevant material available on record. In our considered view, since the issue in question stands squarely decided in favour of the assessee by the ITAT Special Bench order in the case of Maral Overseas Ltd. (supra), which has not been disturbed by any superior authority, is binding on us. Respectfully following the same, we hold that on merits the assessee's computation of eligible profit u/s 10B is to be allowed after including the export profits as claimed by the assessee. In view thereof, without going into technicalities of validity of sec. 263 we uphold the action u/s 263 and the issue on merits is decided in favour of the assessee following the ITAT Special Bench Judgment (supra). Thus the order ld. CIT setting aside the assessment back to the file of assessing officer stands vacated and the claim of the assessee as allowed by A.O. stands. 16. In the present case from operative part of the impugned order we observe that the ld. CIT(A) has granted relief for the assessee with following conclusion: "4. I have carefully considered the submissions made by the appellant. I have also perused the judgments relied upon by the Assessing Officer and by the appellant. As argued by the appellant, the judgment of the Supreme Court in the case of M/s. Liberty India (Supra) relates to the claim of deduction under section 80I, 80IA and80IB, which have a common scheme and the said sections provide for incentives in the form of deductions which are linked to profits 'derived from industrial undertaking'. The appellant has relied on the recent Special Bench Judgment in the case of Maral Overseas Ltd. Vs. Addl. CIT reported at 2012-TIOL- 197- ITAT-Indore-SB. In the judgment dated 28.03.2012, the Special Bench of the ITAT has held that, "...In case of Liberty India, the Hon'ble Supreme Court has dealt with the provisions ofsection 80IA of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by the undertaking from the export. Thus, the decision of the Hon'ble Supreme Court is of no help to the revenue in determining the claim of deduction under section 10B in respect of export incentives". 4.1 The Hon'ble Special Bench has further held that sub-section 10B(4) does not require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits. The Court has held that the mode of determining the eligible deduction under section 10B is similar to the provisions ofsection 80HHC, with the significant difference that section 80HHC contains a further mandate in terms of Explanation (baa) for exclusion of certain income from the profits of the business, which is conspicuously absent in section 10B. Sub- section (4) of section 10B of the Act is a complete code providing the mechanism for computing the profits of the business eligible for deduction under section 10B. Thus, after considering the decision of the Supreme Court in the case of Liberty India Ltd., the Special Bench has held that the provisions of section 10B are different from the provisions of section 80IA, wherein no formula has been laid down for computing the eligible business profit. In view of the direct judgment on this issue, the appellant is held to be eligible for the claim of deduction on the export incentive received by it in terms

11 ITA No. 6203/Del/2013 AY: 2010-11 of section 10B(1)read with section 10B(4) of the Act. Accordingly, the appellant succeeds at its ground of appeal." 17. From vigilant perusal and careful consideration of the ratio of decision of ITAT Special Bench, Indore we observe that the Special Bench after considering the ratio of decision in the case of Liberty India (Supra), International Research park Laboratories vs. ACIT 212 ITR (AT) 1 and relevant Circular of the CBDT has held that while working out the deduction u/s 10B(1) of the Act the calculation of eligible profits has to be made by including the claim of export incentives, therefore, the claim ultimately allowed by the AO was found to be justified which was also endorsed by Special Bench in that case. 18. On careful consideration of factual matrix of the present case, we are of the considered opinion that the issue in question related to allowability of the duty drawback stand squarely covered in favour of the assessee by the order of the jurisdictional High Court of Delhi in the case of CIT vs. Hritnik Export (P) Ltd, (Supra), wherein their lordships speaking for the Jurisdictional High Court of Delhi after considering and approving the ratio of the decision of Special Bench in the case of Maral Overseas Ltd.,(Supra) have held that as per section 28, clause (iiic) of the Act any duty of Custom and Excise repayable as drawback to a person against export under Custom and Central Excise Duty drawback Rules 1971 is deemed to be the profits and gains of business or profession. Their lordship further held that the said provision has to be given full effect to and this means that the duty drawback or duty benefits would be deemed to be a part of business income and this will be treated as profit derived from business of the undertaking and the same cannot be excluded. 19. In the present case, from operative part of the impugned order as reproduced hereinabove, we observe that before granting relief for the assessee the ld. CIT(A) has held that the dedcision of Hon'ble Apex Court in the case of Liberty India relates to the claim of deduction u/s 80I, 80IA & 80IB of the Act which have a common scheme and the said sections provide for incentives in the form of deductions which are linked to profit derived from industrial undertaking. We may also note that in the case of Maral Overseas Ltd.,(Supra) the Special Bench of the ITAT has held that in the case of Liberty India the Hon'ble Apex Court has dealt with the provisions of section 80IAof the Act for which no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub section (4) of section 10B of the Act, for computation of the profits derived by the undertaking from the export business. Under these facts and circumstances, we respectfully held that the ld. CIT(A) was right in holding that the benefit of the ratio of decision of Hon'ble Apex Court in the case of Liberty India (Supra) is not allowable for the Revenue in determining the claim of the assessee u/s 10B of the Act. The ld. CIT(A) was right in holding that section 10B(4) of the Act is a complete code which provides a formula/mechanism for computing the profits of the business eligible for deduction u/s 10B of the Act and in view of the decision of Special Bench in the case of Maral Overseas Ltd.,(Supra) the present assessee was rightly held to be eligible for the claim of deduction on the export incentive received by it as per provision of section 10B (1) r.w.s. 10B(4) of the Act. 20. On the basis of foregoing discussion, we reach to logical fortified conclusion that the AO misinterpreted the ratio of decision of Hon'ble Apex Court in the case of Liberty India(Supra) while denying claim of the assessee u/s 10B of the Act.

12 ITA No. 6203/Del/2013 AY: 2010-11 21. On the other hand we are inclined to hold that the ld. CIT(A) was right in following the decision of Special Bench of ITAT Indore in the case of Maral Overseas Ltd.,(Supra) while granting relief for the assessee in the impugned order. We also respectfully note that the Hon'ble Jurisdictional High Court of Delhi in the recent decision dated 13.11.2013 in the case of CIT vs. Hritnik Export (P) Ltd., (Supra) have upheld the ratio of the decision of Special Bench of ITAT Indore in the case of Maral Overseas Ltd.,(Supra) and the ld. CIT. DR has miserably failed to point out any specific and direct judgment on the issue which may compel us to take deviated view of stand from the Special Bench order (Supra). 22. To sum up, we hold that the ratio of the decision of the Special Bench of the Tribunal is binding on the all Division Benches of the Tribunal until and unless there is a different view either of Hon'ble Supreme Court or by Hon'ble Jurisdictional High Court of any other High Court on the issue. We also hold that the AO was not justified in disallowing the claim of the assessee on the basis of decision of Hon'ble Apex Court in the case of Liberty India (Supra). 23. Per contra, we are inclined to hold that the ld. CIT(A) was right and quite justified in granting relief for the assessee by following decision of Special Bench in the case of Maral Overseas Ltd.,(Supra) and we uphold the same. Accordingly sole ground of the Revenue being devoid of merit is dismissed. 24. In the result, appeal of the Revenue is dismissed.” 6. Respectfully following the above decision, we hold that the learned Commissioner of Income Tax (Appeals) was not justified in upholding the disallowance of the assessee’s claim by the Assessing Officer. Accordingly, grounds no. 2 & 3 are allowed. 7. In the result, the appeal of the assessee is allowed. The decision is pronounced in the open court on 30th June, 2016. Sd/- Sd/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30th June, 2016. Rk/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi