Case Law Details
PCIT Vs Reckitt Benckiser Healthcare India Ltd (Gujrat High Court)
Gujarat High Court held that deduction under section 80IC of the Income Tax Act available on export benefit on account of the refund of excise duty.
Facts- The assessee received the export benefits, which were in the nature of excise duty refund, as its Baddi Unit was eligible for outright excise duty exemption and the same did constitute independent source of income. The assessee had claimed deduction u/s. 80IC of the export benefit of Rs.35.59 lakhs, representing refund of excise duties paid on material and other items purchased for manufacturing purpose for its Baddi Unit.
AO disallowed the claim holding that the excess duty refund did not represent the income with first degree of nexus with the manufacturing profits. It had disallowed the deduction, while computing the deduction u/s. 80IC of the Act. The assessee had challenged it before the CIT(Appeals), which deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- In CIT vs. Dharam Pal Prem Chand it is held that the refund of excise duty was pivoted to the activities carried on by the assessee and, thus, it has been held that the payment of central excise duty has a direct nexus with the manufacturing activity and, likewise, a refund of central excise duty also has a direct nexus with the manufacturing activities. Neither the payment of central excise duty would arise in absence of natural activity, nor the refund would be possible without there being any industrial activity, thus, it has an inextricable link between the manufacturing activity, the payment of central excise duty, and its refund.
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