Commissioner Of Income Tax v. M/S Abhishek Industries Limited

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.93 of 2011 (O&M)Date of decision: 27.4.2011 Commissioner of Income Tax. Vs. M/s Abhishek Industries Limited. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Rajesh Katoch, Standing Counselfor the appellant. ---for the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue underSection 260-A of the Income Tax Act, 1961 (for short, “the Act”)against the order of the Income Tax Appellate Tribunal,Chandigarh in I.T.A. No.311/CHANDI/2007 dated14.5.2010 forthe assessment year 2003-04 claiming following substantialquestions of law:- “(i)Whether on the facts and circumstances of the case,the ITAT is right in law in not holding that total saleconsideration inclusive of face value of DEPB andpremium amount received thereof represents profitchargeable under sections 28(iiid) and 28(iiie) of theIncome Tax Act, 1961?the ITAT is right in law in not holding that total saleconsideration inclusive of face value of DEPB andpremium amount received thereof represents profitchargeable under sections 28(iiid) and 28(iiie) of theIncome Tax Act, 1961? (ii)Whether on the facts and circumstances of the case,the ITAT is right in law in not holding that profit onthe ITAT is right in law in not holding that profit on transfer of DEPB entitlement represents the entireamount inclusive of premium of sale of such DEPB?(iii)Whether on the facts and circumstances of the case,the ITAT is right in law in holding that the word “profit”referred to in Sections 28(iiid) and 28(iiie) of theIncome Tax Act, 1961 means the difference betweenthe sale price of DEPB and the face value of DEPBignoring the fact that the entire amount represents theprofit in the hands of assessee? (iv) Whether on the facts and circumstances of the case,the ITAT is right in law in deducting the face value ofDEPB from sale price of DEPB for calculating profitunder Sections 28(iiid) and 28(iiie) of the Income TaxAct, 1961 as if the face value is the cost incurred bythe assessee to acquire the DEPB? (v) Whether on the facts and circumstances of the case,the ITAT is right in holding that the word profit referredto in Sections 28(iiid) and 28(iiie) of the Income TaxAct, 1961 requires any artificial cost to be interpolatedto the extent that the face value of DEPB/DFRCshould be deducted from the sale proceed for thepurpose of determination of deduction under Section80HHC of the Income Tax Act, 1961? (vi) Whether on the facts and circumstances of the case, the ITAT is right in law in not appreciating thatdeduction u/s 80HHC of the Income Tax Act, 1961was rightly computed in accordance with amendmentmade by the Taxation Laws (Amendment) Act, 2005with retrospective effect from 01.04.1998? (vii)Whether on the facts and circumstances of the case,the Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that 90% amount of DEPB wasrightly excluded while working “Profits of thethe Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that 90% amount of DEPB wasrightly excluded while working “Profits of the Business” as per explanation (baa) to section 80 HHCread with clause (iiid) and (iiie) of section28 of theIncome Tax Act, 1961 inserted by Taxation Laws(Amendment) Act 2005?” (viii) Whether on the facts and circumstances of the case,the Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that the whole amount ofconsideration of DEPB that the assessee received isprofit, because of the cost of same is Nil to theassessee?the Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that the whole amount ofconsideration of DEPB that the assessee received isprofit, because of the cost of same is Nil to theassessee? Business” as per explanation (baa) to section 80 HHCread with clause (iiid) and (iiie) of section28 of theIncome Tax Act, 1961 inserted by Taxation Laws(Amendment) Act 2005?” (viii) Whether on the facts and circumstances of the case,the Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that the whole amount ofconsideration of DEPB that the assessee received isprofit, because of the cost of same is Nil to theassessee?the Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that the whole amount ofconsideration of DEPB that the assessee received isprofit, because of the cost of same is Nil to theassessee? (ix)Whether on the facts and circumstances of the case,the Hon’ble Income Tax Appellate Tribunal is justifiedin law in not holding that 90% of profit on transfer ofexport incentives is not to be increased whilecomputing profits u/s 80HHC(3)(a) as the assesseefailed to fulfill the conditions as contained in Third orFourth proviso inserted by the Taxation Laws(Amendment) Act, 2005 as the export turnover of theassessee company is more than Rs.10 Crores?(x)The decision of Hon’ble Special Bench of MumbaiTribunal, in the case of M/s Topman Exports 318 ITR87 (Mum) (SB) by relying upon which the Hon’bleITAT Chandigarh decided the issue of deduction u/s80 HHC on DEPB against the Department, has beenreversed by the Hon’ble Mumbai High Court in thecase of CIT Vs Kalpataru Colours and Chemicals inITA (Lodg.) No.2887 of 2009 dated 28/29 June 2010holding that it is not permissible to bifurcate theproceeds of the DEPB into “face value” for section 80HHC r.w.s. 28(iiid) of the Income Tax Act. Furtherheld that since the assessee had an export turnoverexceeding Rs.10 crores and did not fulfill theconditions set out in the third proviso to sec.80HHC (3), it was not entitled to deduction u/s 80HHC on theamount received on transfer of DEPB.” 2. Learned counsel for the appellant states that thematter is covered in favour of the revenue by orders of this Courtdated 16.8.2010 in I.T.A. No.301 of 2010 CITv. M/s VictorForgingsand I.T.A. No.299 of 2010CITv. F.C. Sondhi, whereinafter noticing the judgment of the Bombay High Court inCIT v.Kalpataru Colours & Chemicals2010 (42) DTR 193, the matterwas remanded to the Tribunal for fresh decision in accordancewith law. 3. Since we find that the matter is covered by earlierorders of this Court, we dispose of this appeal in same terms.For this purpose, we have not considered it necessary to issuenotice to the respondent, but we give liberty to the respondent tomove this Court if they have any grievance against this order. (ADARSH KUMAR GOEL) JUDGE April 27, 2011ashwani (AJAY KUMAR MITTAL ) JUDGE