Judgment :-

S.H. KAPADIA, J.

Leave granted.

2. The issue for consideration is: whether profit from Duty Entitlement Passbook Scheme (DEPB) and Duty Drawback Scheme could be said to be profit derived from the business of the Industrial Undertaking eligible for deduction under Section 80-IB of the Income-tax Act, 1961 (1961 Act)?

3. At the outset, we may indicate that although in the present judgment we have focused on the analysis of Section 80-IB, the basic Scheme of Sections 80I, 80-IA and 80-IB (as they then stood) remains the same.

Facts:

4. The facts in the lead matter (Civil Appeal arising out of SLP(C) No. 5827/07 entitled M/s Liberty India v. CIT) are as follows:

5. The appellant, a partnership firm, owns a small scale industrial undertaking engaged in manufacturing of fabrics out of yarns and also various textile items such as cushion covers, pillow covers etc. out of fabrics/yarn purchased from the market. During the relevant previous year corresponding to Assessment Year 2001-02, appellant claimed deduction under Section 80-IB on the increased profits of Rs. 22,70,056.00 as profit of the industrial undertaking on account of DEPB and Duty Drawback credited to the Profit & L