1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2370 Of 2009 The Commissioner of Income Tax – 18, Mumbai ..Appellant. Versus M/s.Rachna Udhog ..Respondent. Mr.Suresh Kumar for the appellant. Mr.Atul K. Jasani for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 13th January, 2010. P.C. : 1. Admit on the following substantial question of law. “Whether on the facts and circumstances of the case and in law, the Tribunal was legally right to uphold the decision of CIT (A) to allow deduction under section 80IB of the Income Tax Act, 1961 on the duty draw back which is the Government incentive and not the profit earned from Industrial Undertaking ? 2. With the consent of the learned counsel, the appeal is taken up for hearing and final disposal. 3. The question of law which is raised in the appeal is no longer res- integra and is covered in favour of the revenue in the judgment of the Supreme Court in the case of Liberty India V/s. CIT (2009) 317 ITR 218 (SC). The ratio of the judgment of the Supreme Court as stated in paragraphs 22 and 24 of the 2 judgment, is as follows : “22. .... Therefore, we are of the view that duty drawback, DEPB benefits, rebates etc. cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA / 80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking. 23. ...... ... ... ... 24. In the circumstances, we hold that Duty drawback receipt / DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/ 80-IA/ 80-IB of the 1961 Act.” 4. In view of the judgment of the Supreme Court in Liberty India (Supra), the question of law as framed above would have to be answered in the negative and in favour of the revenue. In the circumstances, the appeal is allowed and the judgment of the Tribunal dated 14th October 2008 is set aside. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)