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whether Duty Drawback incentive is taxable?

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ramagovindu (Querist)
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17 December 2010
We are a Hydro Power Generation company (under SVP Company). Commercial production was started from October’2009. The Company is entitled for refund of Excise Duty Paid on Equipment purchased as well as on Steel and cement purchased for Civil works of the Project. After Commencement of Commercial Production we have made Duty Draw back claim with Excise Department and Refund Order was received during the FY 2010-11.
Please advise whether the Excise Duty Drawback is taxable under IT Act. and also advise us the Accounting treatment for the Duty Drawback amount received.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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17 December 2010 The amount reimbursed, as per my understanding, should be reduced from the cost of the asset as per explanation 10 to section 43(1) of the Income tax Act,1961. To that extent it is tax free.

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