Lucknow ITAT distinguishes Liberty India SC Judgement on 80-IB

Whether duty drawbacks is to be considered for deduction u/s 80-IB depends upon their nexus with business operations; Question of whether duty drawback an “incidental profit” or “profit of first degree” depends on the business model; Despite SC rulings in Liberty India, there may still be a room for considering a plea that assessee would not carry out business activity in industrial undertaking without such duty drawbacks, as it would mean carrying of business for incurring losses; In Liberty India case, duty drawback was not such a significant part of the receipts so as to make business operations unviable without them; Direct AO to re-examine facts to determine nexus of duty drawback with operations of industrial undertaking; Lower authorities proceeded on presumption that duty drawbacks can’t have direct nexus with industrial undertaking, relying on Liberty ruling; Reliance placed on Delhi HC ruling in Dharmpal Premachand, SLP against which dismissed by SC: Despite binding nature of SC rulings, no prevention on ITAT from discharging duty of ensuring that all relevant facts on record : Lucknow ITAT in Arvind Footwear Pvt. Ltd.

For complete text of judgement arvind Fotwear-Lucknow ITAT distinguishes SC in Liberty India

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