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Judgment
This appeal has been preferred by the revenue u/s 260A of the Income Tax Act, 1961 (in short, ''the Act'') against the order of the Income Tax Appellate Tribunal, Chandigarh Bench ''A'', Chandigarh passed in ITA No. 160/CHD/2005, dated 18-7-2006 for the assessment year 2000-01, raising following substantial question of law:
Whether on the facts and law, the Hon''ble Income Tax Appellate Tribunal was justified in allowing deduction u/s 80-I on export incentives/DEPB entitlements when the same was not a profit derived from industrial undertaking?
The assessee is engaged in the business of manufacturing and export of stationery goods. It filed its return for assessment year 2000-01. The Assessing Officer did not allow the claim for deduction u/s 80-I of the Act in respect of export incentives in the form of DEPB entitlement holding that the same was not derived from industrial undertaking. Reliance was placed on judgment of the Hon''ble Supreme Court in Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, . The said view was, however, reversed by the CIT(A) and the Tribunal. The Tribunal followed judgment of the Madras High Court in Commissioner of Income Tax Vs. Jameel Leathers and Uppers, and judgment of Gujarat High Court in Commissioner of Income Tax Vs. India Gelatine and Chemicals Ltd., .
Learned counsel for the revenue submits that the matter is covered in favour of the revenue by the judgment of the Hon''ble Supreme Court in Sterling Foods ''case (supra) and judgment of this Court in Liberty India Vs. Commissioner of Income Tax, .
We have passed a separate order today in M/s. Raj Overseas in appeal being ITA No. 629 of 2007, filed by assessee against the order of the Tribunal taking a contrary view on the basis of judgment of the Hon''ble Supreme Court in Sterling Foods'' case (supra) and judgment of this Court in Liberty India''s case (supra).
It appears that the judgment of the Tribunal in the present case was prior to the judgment of this Court in Liberty India''s case (supra). Judgment in Liberty India''s case (supra) was rendered by this Court on 22-9-2006, while judgment of the Tribunal in the present case is 18-7-2006)
Following the law laid down in the Hon''ble Supreme Court in Sterling Foods'' case (supra) and DB Judgment of this Court in Liberty India''s case (supra), we allow this appeal by answering the question in favour of the revenue and against the assessee.