Commissioner Of Income Tax v. M/S Tipson Cycles Pvt. Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.438 of 2010 Date of decision: 7.9.2010 Commissioner of Income Tax. Vs. M/s Tipson Cycles Pvt. Ltd. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Vivek Sethi, Advocatefor the appellant. for the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assesseeunder Section 260-A of the Income Tax Act, 1961 (for short, “theAct”) against the order of the Income Tax Appellate Tribunal,Amritsar, proposing to raise following substantial 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 90% amount of DEPB was rightly excludedwhile working “Profits of the Business” as per explanation(baa) to section 80HHC read with clause (iiid) and (iiie) ofSection 28 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 80HHC read with clause (iiid) and (iiie) ofSection 28 of the Income Tax Act, 1961 inserted byTaxation Laws (Amendment) Act, 2005? (ii)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?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? (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 profitsHon’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 profits u/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? Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law in notholding that the total sale consideration inclusive of face valueof DEPB and premium amount received thereof representsprofit chargeable 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 right in law in notholding that profit on transfer of DEPB entitlement representsthe entire amount inclusive of premium of sale of such DEPB? (iii) Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law inholding that the word “profit” referred to in Sections 28(iiid)and 28(iiie) of the Income Tax Act, 1961 means the differencebetween the sale price of DEPB and the face value of DEPBignoring the fact that the entire amount represents the profit inthe hands of assessee? (iv) Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law indeducting the face value of DEPB from sale price of DEPB forcalculating profit under Sections 28(iiid) and 28(iiie) of theIncome Tax Act, 1961 as if the face value is the cost incurredby the assessee to acquire the DEPB? (v) (iii) Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law inholding that the word “profit” referred to in Sections 28(iiid)and 28(iiie) of the Income Tax Act, 1961 means the differencebetween the sale price of DEPB and the face value of DEPBignoring the fact that the entire amount represents the profit inthe hands of assessee? (iv) Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law indeducting the face value of DEPB from sale price of DEPB forcalculating profit under Sections 28(iiid) and 28(iiie) of theIncome Tax Act, 1961 as if the face value is the cost incurredby the assessee to acquire the DEPB? (v) Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law inholding that the word “profit” referred to in Sections 28(iiid)and 28(iiie) of the Income Tax Act, 1961 requires any artificialcost to be interpolated to the extent that the face value ofDEPB/DFRC should be deducted from the sale proceed forthe purpose of determination of deduction under Section80HHC of the Income Tax Act, 1961? (vi) (vii)Whether on the facts and circumstances of the case, theHon’ble Income Tax Appellate Tribunal is right in law in notappreciating that deduction under Section 80HHC of theIncome Tax Act, 1961 was rightly computed in accordancewith amendment made by the Taxation Laws (Amendment)Act, 2005 with retrospective effect from 1.4.1998?” 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. Kalpataru Colours & Chemicals2010 (42) DTR 193, the matter wasremanded 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 September 07, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE