Saraf Exports Vs CIT,Jaipur (Supreme Court)
Date-10th April, 2023
Sub-Whether Duty drawback and DEPB received as an incentive for exports can be said to be derived from the business of industrial undertaking and thus eligible for the benefits of Section 80-IB of Income-tax Act,1961?

The Supreme Court was called upon to consider this issue again though the issue was already covered against the assessee in view of decision of Supreme Court itself in the case of Liberty India and Sterling Food. This was in view of subsequent decision in the case of Meghalaya Steel where the transport and interest subsidies were held to be eligible for deduction as they were held to have been derived from the business of the undertaking and thus an argument was made that the said decision has widened the scope of deduction. The Supreme Court however, reiterated that the Duty-drawback and DEPB were not eligible and the decision in the case of Meghalaya Steel also considered this issue.

This judgement would be useful for interpretation of meaning of the term derived from which is used in various sections including in the new regime of taxation which has been introduced by Finance Act,2023.

Ramesh Patodia
11-04-2023