SARAF SEASONING UDYOG Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE two appeals have been filed by the assessee, seeking to challenge, the judgment of the Tribunal dt. 10th Feb., 2006, deciding two appeals, relating to asst. yrs. 2003 -04 and 2004 -05.

(2.) APPEALS were admitted on 11th Sept., 2006, by framing the following substantial question of law: Whether in the facts and circumstances of the case and considering the fact that Clause (iiid) was inserted in Section 28 of the IT Act. 1961 retrospectively w.e.f. 1st April, 1998 vide Taxation Laws (Amendment) Act, 2005, the Tribunal was justified in holding that the income derived by the assessee from the sale of DEPB licenses was not the profit and gains from the industrial undertaking which was held to be eligible for claiming deduction under Section 80IB of the Act, 1961 otherwise?

(3.) THE AO, in the light of the judgment of the Hon'ble Supreme Court, in the case of CIT v. Sterling Foods : 1999ECR481(SC) , issued show -cause notice, as to why deduction in respect of this amount be not disallowed, by treating it as income from other sources. The assessee, contested the notice, and submitted, that the licence has been received, in respect of the sales effected, therefore, consideration/income on the sale of DEPB licenses, has been treated as income/profit, derived from industrial undertaking, and as such, within the meaning of Section 28, the income is to be considered, as export income, and not income from other sources. It was also contended, that since 100 per cent deduction is admissible under Section 80IB, the assessee is entitled to the same deduction on the income earned from sale of DEPB licenses. The AO, vide order dt. 30th March, 2005, disallowed the deduction.