ITAT Mumbai Reasserts Economic Substance in DEPB and Limits of Section 263

When Export Incentives Are Treated as Illusions. ITAT Draws the Line on DEPB and Section 263. What happens when export incentives are stripped from the very exports that generate them, and then taxed back as if they were alien to the business. The ITAT Mumbai’s decision in Aamir Khatri v. DCIT is a pointed reminder that tax computation cannot be reduced to accounting gymnastics. By rejecting the artificial segregation of DEPB income from export turnover and curbing the overreach of section 263, the Tribunal has reaffirmed a foundational principle, revisionary power is not a licence to rewrite commercial reality. This ruling is not just about DEPB. It speaks to a broader trend, where computational formalism increasingly displaces economic substance, and why courts are pushing back. J the App by JustIDT takes a look.