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ITO Ward-23(2) 52/12, Room No. 1208, Pratyakshkar Bhawan, Civil Centre, New Delhi-110002 Vs. Smt. Shashi Sadh, Chitranjan Park New Delhi-110019
December, 31st 2014
         IN THE INCOME TAX APPELLATE TRIBUNAL
               DELHI BENCH: `G' NEW DELHI
     BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER
                               AND
             SHRI C. M. GARG, JUDICIAL MEMBER
                       I.T.A .No.-3746/Del/2013
                  (ASSESSMENT YEAR-2009-10)

ITO                               Vs.                     Smt. Shashi Sadh,
Ward-23(2)                                                52/12, Chitranjan Park
Room No. 1208, Pratyakshkar Bhawan,                       New Delhi-110019
Civil Centre, New Delhi-110002
                                                          PAN:AMLPS4154L
(APPELLANT)                                               (RESPONDENT)

                   Revenue by:-Sh. Ramesh Chand, CIT. DR
                   Assessee by:-Sh. Satish Khosla, Adv.


                                   ORDER


PER C. M. GARG, JM.

      This appeal of the Revenue has been preferred against the order of CIT

(Appeals) -XXIII, New Delhi, vide dated 25.03.2013 in Appeal No.272/11-12

for the Assessment Year 2009-10.


2.    The sole ground raised by the assessee in this appeal reads as under:


         "1. On the facts and in the circumstances of the case; the
             Ld. CIT(A) has 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
             Income Tax Act."
3.    Briefly stated the facts giving rise to Revenue's appeal as noted by the

CIT(A) are that the return of income for the A.Y. 2009-10 on 30.09.2009
                                       2




disclosing a total income of Rs.2,92,453/- was filed and the appellant claimed

deduction u/s 10B of Rs.28,75,193/-. The return of income was revised on

16.08.2010, disclosing income of Rs.35,650/- in which deduction u/s 10B was

claimed at Rs.31,94,659/-, as earlier it had been wrongly claimed at 90% instead

of 100%. During the scrutiny assessment proceedings, the Assessing Officer

verified the claim of deduction u/s 10B of the IT Act. The appellant is engaged

in the business of export of made ups and garments through a 100% Export

Oriented Unit in Noida Special Economic Zone. The Assessing Officer

observed from the Profit & Loss a/c that net profit of Rs.32,30,306/- included

duty drawback of Rs.21,62,369/-. The Assessing Officer was of the opinion that

deduction u/s 10B could not be allowed on the portion of duty drawback,

relying on the judgment of the Supreme Court in the case of Liberty India Vs.

CIT 317 ITR 218, wherein duty drawback was held ineligible for computing

deduction u/s 80IA and 80IB.


4.    The appellant submitted before the Assessing Officer that as per the

provisions of section 10B, the deduction was to be computed on the basis of

export turnover which was the export consideration brought into the country in

foreign exchange, but not including freight, telecommunication charges or

insurance attributable to the delivery of goods outside India, and expenses

incurred in foreign exchange in providing technical services outside India.

These exceptions did not include duty drawback which was paid to the exporter
                                       3




by the Government of India. The Assessing Officer, however, relied on the

aforementioned case law to hold that the appellant was not entitled to include

duty drawback for the purpose of computing deduction u/s 10B of the IT Act.

He recomputed the deduction claimed at Rs.10,32,290/- and arrived at a total

income of Rs.21,35,350/-.


5.    The aggrieved assessee preferred an appeal before ld. CIT(A) which was

allowed by passing the impugned order. Now, being aggrieved by the impugned

order of the ld. CIT(A) the Revenue has filed present appeal before this

Tribunal with the sole ground as reproduced hereinabove.


6.    We have heard argument of both the sides and carefully perused the

relevant material placed on record. The ld. Departmental Representative (DR)

submitted that the ld. CIT(A) has granted relief to the assessee by following the

decision of Hon'ble Special Bench of ITAT, Indore in the case of Maral

Overseas Ltd. vs. ACIT Reported as (2012)-TIOL-197-ITAT-Indore,-Special

Bench dated 28.03.2012 but the section 255(3) of the Income Tax Act 1961,

(for short the Act) itself explicit that the Special Bench decision cannot go

beyond the case for disposal of which it was constituted. The ld. counsel

appearing for the assessee contended that the same argument of the ld. CIT DR

was considered and dismissed in the case of Sanjay Aggarwal vs. DCIT in ITA

No.3184/Del/2013 for A.Y. 2003-04 by the ITAT, Delhi `G ' Bench. He further
                                        4




submitted that since the ld. DR could not substantiate and fail to point out any

specific and direct judgment rendered by either Hon'ble Supreme Court or

Hon'ble High Court on the issue that decision of Special Bench is not binding

on the Coordinate Bench of the Tribunal then the same deserve to be followed

by the other division benches of the Tribunal as there has to be same

consistency in the view taken by the Tribunal on a particular issue.


7.    We have gone through the written submissions of ld. CIT(A) DR,

decision of Hon'ble Supreme Court in the case of Union of India Vs. Paras

Laminates Pvt. Ltd. 186 ITR 726 and decision of ITAT Delhi `G' Bench in the

case of Sanjay Aggarwal vs. DCIT (Supra).


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,
                                       5




               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:
                              6




"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 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
                             7




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
                              8




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.




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-

..............

..............
                             9




(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
                              10




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 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
                                       11




          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
                                       12




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 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
                                       13




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 of section 10B(4) of the Act mandate that the deduction shall
                                       14




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
                                         15




importance while the vital aspect of income derived from has been completely

ignored.


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) of section 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 deduction
                         16




u/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 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
                        17




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
                                  18




          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.

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).
                                        19







          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 and 80IB, 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 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
                            20




    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 of
    section 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 of section 10B(1) read with section
    10B(4) of the Act. Accordingly, the appellant succeeds at its
    ground of appeal."
                                         21




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
                                       22




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 80IA of 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
                                       23




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.


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
                                         24




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.


        Order pronounced in the open Court on 30/12/2014.


        Sd/-                                                 Sd/-


  (S. V. MEHROTRA)                                      (C. M. GARG)
ACCOUNTANT MEMBER                                     JUDICIAL MEMBER

Dated/ 30/12/2014

*AK VERMA*

Copy forwarded to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(Appeals)
5.    DR: ITAT


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