ITA No. 91 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 91 of 2010 Date of Decision: 29.9.2010 The Commissioner of Income Tax-III, Ludhiana ....Appellant. Versus M/s Jaswand Sons ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Denesh Goyal, Advocate for the appellant. Mr. Pankaj Jain, Advocate for the respondent. ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as “the Tribunal”) passed in ITA No. 622/CHANDI/2008 dated 27.2.2009 for the assessment year 2005-06, proposing following substantial questions of law:- “1. Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in holding that CIT (A) was justified in deduction under section 80IB of I.T. Act, 1961 on a sum of Rs.2,30,85,177/- received by assessee from ITA No. 91 of 2010 -2- export house as DEPB considering it to be a part of sales made by assessee? 2. Whether on the facts and circumstances of the cases Hon'ble ITAT erred in not holding the DEPB of Rs.2,30,85,117/- received from the export house as not derived from the industrial undertaking eligible for deduction under section 80IB of I.T.Act, 1961? 3. Whether on the facts and circumstances of the case Hon'ble ITAT has erred in law in not holding DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purpose of section 80IB? 4. Whether on the facts and circumstances of the cases Hon'ble ITAT has erred in not following the decision of Hon'ble Punjab & Haryana High Court in the case of M/s Liberty India Vs. CIT Karnal reported in 293 ITR 520 which has been upheld by the Hon'ble Supreme Court?” 2. The assessee is manufacturer and exporter of hosiery goods. During the assessment, claim for deduction under Section 80IB was made in respect of income derived from sale of export incentives. The said claim was rejected as not falling under Section 80IB not being income derived from industrial undertaking. On appeal, the CIT (A) upheld the plea of the assessee on the ground that part of sales of the assessee were to an export house. The said view has been affirmed by ITA No. 91 of 2010 -3- the Tribunal. 3. We have heard learned counsel for the parties. 4. Learned counsel for the revenue submits that the Tribunal erred in allowing the claim under Section 80IB only on the ground that part of sales of the assessee were to an export house which has no relevance to the question of deduction under Section 80IB. The income derived from export incentive was not eligible for deduction under Section 80IB, not being income derived from the industrial undertaking as held by the Hon'ble Supreme Court in CIT v. Sterling Foods, [1999] 237 ITR 579 (SC) and this Court in Liberty India v. CIT, [2007] 293 ITR 520. The same view has been taken by this Court in the cases of the assessee in ITA No. 301 of 2007 (M/s Jaswand Sons v. CIT Ludhiana) decided on 17.9.2007 and Jaswand Sons v. Commissioner of Income tax (Appeals), [2010] 326 ITR 39. 5. In view of above, questions raised by the revenue have to be decided in its favour. 6. Accordingly, the appeal is allowed. (ADARSH KUMAR GOEL) JUDGE September 29, 2010 (AJAY KUMAR MITTAL) gbs JUDGE