In Brief
The Supreme Court dismissed an assessee's appeal challenging a High Court order denying Section 80-IB tax deductions on profits from DEPB (Duty Entitlement Pass Book) and Duty Drawback schemes. While these receipts are taxable as revenue under separate sections, they do not qualify for deduction under Section 80-IB because they are not income 'derived from' the industrial undertaking itself. Instead, they flow directly from Government export incentive schemes. The Court held that Section 80-IB requires a direct, first-degree nexus with the undertaking; since DEPB entitlements arise only upon export (after manufacture), the relation is indirect. The Court reaffirmed prior precedents and distinguished the subsidies case (Meghalaya Steels), ruling any contrary High Court decision non-binding.
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