Commissioner Of Income Tax v. M/S Kanin (India

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.873 of 2010 (O&M)Date of decision: 15.3.2011 Commissioner of Income Tax. Vs. M/s Kanin (India). -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE JASWANT SINGH 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.768/CHANDI/2008 dated 31.8.2009 forthe assessment year 2004-05 proposing to raise followingsubstantial questions of law:- “(i)Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is justified in law innot holding that the whole amount of consideration ofDEPB that the assessee received is profit, because of thecost of same is Nil to the assessee and when the Hon’bleMumbai High Court in the case Commissioner of IncomeTax 13 Mumbai Vs. M/s Kalpataru Colours & Chemicals,Hon’ble Income Tax Appellate Tribunal is justified in law innot holding that the whole amount of consideration ofDEPB that the assessee received is profit, because of thecost of same is Nil to the assessee and when the Hon’bleMumbai High Court in the case Commissioner of IncomeTax 13 Mumbai Vs. M/s Kalpataru Colours & Chemicals, Mumbai reported in 2010-TIOL-483-HC-MUM-IT hasdecided contrary to it.decided contrary to it. (ii)Whether on the facts and circumstances of the case, theITAT was 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?ITAT was 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, theHon’ble Income Tax Appellate Tribunal is justified in law innot holding that 90% amount of DEPB was rightly excludedwhile working “Profits of the Business” as per explanation(baa) to section 80 HHC read with clause (iiid) and (iiie) ofsection28 of the Income Tax Act, 1961 inserted byTaxation Laws (Amendment) Act 2005?” Hon’ble Income Tax Appellate Tribunal is justified in law innot holding that 90% amount of DEPB was rightly excludedwhile working “Profits of the Business” as per explanation(baa) to section 80 HHC read with clause (iiid) and (iiie) ofsection28 of the Income Tax Act, 1961 inserted byTaxation Laws (Amendment) Act 2005?” (iii)Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is justified in law innot holding that 90% of profit on transfer of exportincentives is not to be increased while computing profitsu/s 80HHC(3)(a) as the assessee failed to fulfill theconditions as contained in Third or Fourth proviso insertedby the Taxation Laws (Amendment) Act, 2005 as theexport turnover of the assessee company is more thanRs.10 Crores?Hon’ble Income Tax Appellate Tribunal is justified in law innot holding that 90% of profit on transfer of exportincentives is not to be increased while computing profitsu/s 80HHC(3)(a) as the assessee failed to fulfill theconditions as contained in Third or Fourth proviso insertedby the Taxation Laws (Amendment) Act, 2005 as theexport turnover of the assessee company is more thanRs.10 Crores? (iv)Whether on the facts and circumstances of the case, theITAT 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?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? (v)Whether on the facts and circumstances of the case, theITAT is right in law in not holding that profit on transfer ofDEPB entitlement represents the entire amount inclusiveof premium of sale of such DEPB?ITAT is right in law in not holding that profit on transfer ofDEPB entitlement represents the entire amount inclusiveof premium of sale of such DEPB? (vi)Whether on the facts and circumstances of the case, theITAT is right in law in holding that the word “profit” referredITAT is right in law in holding that the word “profit” referred to in Sections 28(iiid) and 28(iiie) of the Income Tax Act,1961 means the difference between the sale price ofDEPB and the face value of DEPB ignoring the fact thatthe entire amount represents the profit in the hands ofassessee? (vii)Whether on the facts and circumstances of the case, theITAT is right in law in deducting the face value of DEPBfrom its sale price for calculating profit under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 as if the facevalue is the cost incurred by the assessee to acquire theDEPB?ITAT is right in law in deducting the face value of DEPBfrom its sale price for calculating profit under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 as if the facevalue is the cost incurred by the assessee to acquire theDEPB? (viii)Whether on the facts and circumstances of the case, theITAT is right in holding that the word profit referred to inSections 28(iiid) and 28(iiie) of the Income Tax Act, 1961requires any artificial cost to be interpolated to the extentthat the face value of DEPB/DFRC should be deductedfrom the sale proceed for the purpose of determination ofdeduction under Section 80HHC of the Income Tax Act,1961?ITAT is right in holding that the word profit referred to inSections 28(iiid) and 28(iiie) of the Income Tax Act, 1961requires any artificial cost to be interpolated to the extentthat the face value of DEPB/DFRC should be deductedfrom the sale proceed for the purpose of determination ofdeduction under Section 80HHC of the Income Tax Act,1961? (vi)Whether on the facts and circumstances of the case, theITAT is right in law in not appreciating that deduction u/s80HHC of the Income Tax Act, 1961 was rightly computedin accordance with amendment made by the TaxationLaws (Amendment) Act, 2005 with retrospective effectfrom 01.04.1998?”ITAT is right in law in not appreciating that deduction u/s80HHC of the Income Tax Act, 1961 was rightly computedin accordance with amendment made by the TaxationLaws (Amendment) Act, 2005 with retrospective effectfrom 01.04.1998?” 2. Learned counsel for the appellant states that the matter iscovered in favour of the revenue by orders of this Court dated16.8.2010 in I.T.A. No.301 of 2010 CIT v. M/s Victor ForgingsandI.T.A. No.299 of 2010CITv. F.C. Sondhi, wherein after noticingthe judgment of the Bombay High Court in CITv. KalpataruColours & Chemicals2010 (42) DTR 193, the matter was remanded to the Tribunal for fresh decision in accordance withlaw. 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 March 15, 2011ashwani (JASWANT SINGH ) JUDGE