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This paper investigates two-way relaying with direct link transmission. We propose to combine incremental relaying (IR) with the time division broadcast protocol (TDBC) to form a new scheme, termed TDBC-IR, to increase the spectral efficiency of TDBC. Assuming half-duplex decode-and-forward relaying, the performance of three protocols, TDBC, TDBC-IR, and physical-layer network coding (PNC), are studied and compared, in terms of outage probability, expected rate (ER), and diversity-multiplexing tradeoff (DMT). It is found that 1)TDBC-IR has the same outage performance as that of TDBC and better than PNC; 2) the ER of TDBC-IR is greater than TDBC and PNC in the whole signal-to-noise ratio region, i.e., TDBC-IR has improved spectral efficiency performance; 3) the maximum achievable diversity order of TDBC-IR and TDBC are both two whereas that of PNC is one; 4) the maximum achievable multiplexing gain of TDBC-IR is one, which is better than TDBC (its maximum achievable is 2/3) and achieves the maximum of PNC (its maximum achievable is one). Since multiplexing gain reflects spectral efficiency, the DMT analysis confirms the spectral efficiency advantage of TDBC-IR over TDBC.