The Hon’ble Supreme Court of India (“Hon’ble SC”) in the recent decision in Saraf Exports v. CIT settled the issue of entitlement of deduction as per Section 80IB of the Income Tax Act, 1961 (‘IT Act’). The issue was pertaining to the receipts under Duty Drawback scheme (‘DDS’) and transfer of Duty Entitlement Pass book scheme (‘DEPB’). During the subject period, the taxpayer received certain incentives under DDS and DEPB. These said benefits were claimed as deduction u/s Section 80IB of the IT Act, as being ‘derived from’ its industrial undertaking of manufacturing wooden handicrafts. The Hon’ble Supreme Court held that export incentives will not qualify as first-degree nexus for the purposes of claim of deduction under Section 80-IB. The decision has reiterated the principle laid down earlier that restrictive meaning must be given to the expression ‘derived from’.
Link: Impact analysis of the Supreme Court decision in Saraf Exports v. CIT: Worth the wager?
Audio Source: An article published on the LKS website in June 2023.
Authors: Krishna Laasya V
Voice: Dikshita Damodaran, Amrusha Monga