IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 96 of 2004 DATE OF DECISION : 14.12.2009 Nahar Exports Limited, Ludhiana .... APPELLANT Versus Commissioner of Income Tax (Central), Ludhiana ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR Present: Mr. Sanjay Bansal, Senior Advocate, with Ms. Shweta Malhotra, Ms. Harpreet Kaur and Mr. Prashant Bansal, Advocates, for the appellant-assessee. Mr. K.K. Mehta, Advocate, for the respondent-revenue. * * * SATISH KUMAR MITTAL , J. The assessee has filed this appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as `the Act'), against the order dated 24.9.2003, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), Chandigarh (hereinafter referred to as `the ITAT') in ITA No. 104/Chandi/1993, pertaining to the assessment year 1990-91, raising the following substantial questions of law :- (i) Whether on a correct and proper interpretation of the provisions of Section 80-I of the Act, the ITAT was right ITA No. 96 of 2004 -2- in law in holding that the cash compensatory allowance received by the appellant was not profits and gains derived from its Industrial Undertaking ? (ii) Whether on the facts and in the circumstances of the case, the ITAT has misdirected itself in law as well as on facts in holding that the appellant was not entitled to deduction under Section 80-I of the Act in respect of the claim on which deduction have been claimed by the assessee there under ? (iii) Whether the findings returned and recorded by the ITAT while holding that the appellant was not entitled to deductions under Section 80-I of the Act are arbitrary and perverse ? Learned counsel for the appellant states that in this appeal, he is pressing only the first question. We have heard the learned counsel for the parties. The assessee has raised the aforesaid first question with regard to the amount received by it on exports as Cash Compensatory Allowance. It is the case of the assessee that it has received the said Cash Compensatory Allowance from the Central Government against its export of goods manufactured by industrial undertaking during the year, therefore, the said Allowance is an additional price received from Government for the exports made and thus is profits and gains derived from the industrial undertaking. The ITAT has disallowed the said deduction while coming to the conclusion that there is no direct nexus between receipt of Cash Compensatory Allowance and the industrial undertaking. The source of Cash ITA No. 96 of 2004 -3- Compensatory Allowance received by the assessee was only a receipt on account of export promotion scheme of the Central Government. But the said receipt has no nexus between profits and gains derived from an industrial undertaking, therefore, the said benefits cannot be permitted to be deducted under Section 80-I of the Act. The similar benefits received by the assessee i.e. DEPB, have been disallowed by this Court in Liberty India v. Commissioner of Income-Tax (2007) 293 ITR 520, which has been affirmed by the Hon'ble Supreme Court in Liberty India v. Commissioner of Income-Tax, (2009) 317 Income Tax Reports 218 (SC). Learned counsel for the appellant could not controvert that the Cash Compensatory Allowance is similar to DEPB, therefore, he could not make out a case for deducting the said amount as eligible deduction under Section 80-I of the Act. Since the controversy is no longer res integra, therefore, no substantial question of law arises in this appeal from the order of the ITAT. Dismissed. ( SATISH KUMAR MITTAL ) JUDGE December 14, 2009 ( MEHINDER SINGH SULLAR ) seema/ndj JUDGE