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  Sub: Incentives like Duty Drawback/export benefits like DEPB are taxable
 09/09/2009
In a recent judgment the Supreme Court has said profits derived from the duty entitlement passbook (DEBP) scheme and the duty drawback scheme are incentives and cannot be termed as profits from business to claim income tax deductions. The court dismissed a batch of petitions filed by various firms and held that the duty drawback receipt/DEPB benefits are incentives that flow from government schemes and the Customs Act, and therefore are not profits derived from the eligible business under Section 80IB of the Income tax Act, 1961. "In our view, DEPB/Duty Drawback are incentives which flow from the schemes framed by the Central government or from Section 75 of the Customs Act 1962, hence incentive profits are not profits derived from the eligible business under Section 80IB. They belong to the category of ancillary profits of such undertakings," the court said. The Supreme Court has said profits derived from the duty entitlement passbook (DEBP) scheme and the duty drawback scheme are incentives and cannot be termed as profits from business to claim income tax deductions. Trade experts say the exporters are expected to knock the door of the Commerce Ministry to amend the rules/Act to ensure they do not loose part of the benefits as taxes. The alert is sent for information of all our customers – exporters.








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