SAKTHI FOOTWEAR Vs. ASSISTANT COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE appeal is filed by the assessee against the order of the Income -tax Appellate Tribunal, Chennai, made in I. T. A. No. 553/Mds/2005, seeking admission on the following substantial questions of law:

(2.) THE appellant -firm is engaged in the business of shoe uppers. For the assessment year 2001 -02, the appellant filed its return admitting an income of Rs. 2,40,000. The assessment under Section 143(3) of the Income -tax Act, 1961, was completed on February 16, 2004. While completing the assessment, the Assessing Officer has restricted the claim of deduction under Section 80I by disallowing the claim of duty drawback as well as interest on bank deposit. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income -tax (Appeals) -VIII, who confirmed the assessment. The further appeal before the Income -tax Appellate Tribunal resulted in failure. Hence, the present appeal is filed seeking admission by framing the substantial questions of law as stated above.

(3.) AS far as the first question is concerned, viz., the deduction under Section 80I in respect of duty drawback, learned Counsel for the appellant placed reliance on the Gujarat High Court decision reported in CIT v. India Gelatine and Chemicals Ltd. : [2005] 275 ITR 284, wherein it was held that duty drawback was 'derived from' the industrial undertaking and, therefore, would be eligible for deduction under Section 80J. Learned Counsel for the appellant also pointed out that in the case of duty drawback, the same was given specifically to reduce the cost of manufacturing the goods. The very scheme of duty drawback is framed and embodied in the statutory provisions in order to relieve the goods to be exported of the burden of customs duties and excise duties. Referring to the decision of the Gujarat High Court that the duty drawback is 'derived from' industrial undertaking and eligible for deduction, learned Counsel seeks to draw support of the said decision to contend that the order of the Tribunal holding that the same was not 'derived from' industrial activity, could not be held to be the correct view.