Circle, Panipat Vs M/s Fashion Group International
Village Ugrakheri, Panipat
Appellant by : Shri S.K.Gupta, DR
Respondent by : Shri Ved Jain & Rano Jain CA
PER BENCH :
1.This is an appeal filed by revenue against the order of CIT(A) dated 27th September, 2004.
2.The only ground of appeal taken by the revenue is that the learned CIT(A) has erred in allowing deduction U/s 80IB on the amount of duty drawback of Rs.84,802/-.
3.At the time of hearing, the learned AR of the assessee filed before us copy of the order of the Delhi Bench of the Tribunal in the case of ACIT Circle Panipat Vs Anand International, Panipat wherein order dated 13th May, 2005 on the similar issue the appeal of the revenue was dismissed and the issue was decided in favour of the assessee. While doing so the Tribunal observed to quote as under :-
Now both the assessee and the revenue are in appeal before the Tribunal . I have already disposed off the appeal of the assessee against the assessee as the same is covered by the decision of the Supreme Court in the case of Sterling Food. Regarding the appeal of the department, the counsel of the assessee who appeared before the Tribunal stated that the issue is squarely covered by the latest decision of the Honourable Gujarat High Court in the case of CIT VS India Gelatine and Chemicals Ltd. 194 CTR 492. The copy of the order was also filed. On the other hand, the learned DR placed reliance on the order of the A.O. It was further submitted that the issue is covered by the decisions of the Madras High Court in the case of CIT VS Jameel Leathers 246 ITR 97 and CIT VS Vishwanathan & Co. 261 ITR 737. Ion reply, the counsel of the assessee stated that both these decisions have taken into consideration by the Honble Gujarat High Court while deciding the issue in favour of the assessee.
After considering the order of CIT(A) and Honble Gujarat High Court I find that the order of CIT(A) is liable to be sustained on this issue. The CIT(A) has categorically held that the duty drawback has a direct link with the business activity of industrial undertaking. Therefore, deduction U/s 80-IB is allowable. Similar issue was before the Honble Gujarat High Court in the case of CIT VS India Gelatine and Chemicals Ltd. (supra) and the Honble High Court has also held that duty drawback is allowable. Therefore, respectfully following the decision of the Honble Gujarat High Court, I confirm the order of CIT(A).
4. The learned DR relied on the order of the A.O. The learned DR relied on the order of the Honble High Court in the case of CIT Vs Ritesh Industries Ltd. reported in 142 Taxman 551 (Delhi) wherein it was held that duty drawback cannot be regarded as profit or gain derived from an industrial undertaking so as to entitle the assessee deduction U/s 80-I. Hence, it was his submission that the assessee was not entitled to deduction.
5.We have heard the rival submissions and perused the orders of both the lower authorities and the material available on record. The learned AR of the assessee had submitted that the decision of the Honble Delhi High Court in the case of Ritesh Industries Ltd.(supra) is not applicable as the assessee is of Panipat and therefore falls under the jurisdiction of the Punjab and Haryana High Court. Further it was submitted that the order of the Tribunal in the case of Anand International(supra) was applicable as it was an assessee of Panipat. Moreover, when there are conflicting judgements of different High Courts and no decision of the jurisdictional High Court is available on the issue, then it is an accepted proposition that the decision favouring the assessee should be followed. For this reliance was placed on the decision of the apex court in CIT VS Vegetable Products Ltd. 88 ITR 192. In our considered opinion therefore, the issue stands decided by the decision of Delhi Bench of the Tribunal in the case of Anand International, Panipat(supra) wherein similar facts of the case it was held that deduction U/s 80-IB was allowable on duty drawback as it has a direct link with the business activity of industrial undertaking. Respectfully following the same we decide the issue in favour of the assessee and reject the ground of appeal of the revenue.
6.In the result, the appeal of the revenue is dismissed.
(SALIL KAPOOR) Accountant Member
Copy forwarded to :
1.ACIT Circle, Panipat
2.Shri Vipin Sardana Prop. M/s Fashion Group International, Village, Uragheri, Panipat