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

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.434 of 2010 Date of decision: 13.9.2010 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 dated 28.10.2009 of the Income TaxAppellate Tribunal, Chandigarh in I.T.A. No.1044/CHD/2007 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 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 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 the 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 the 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? (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” referredto 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?ITAT is right in law in holding that the word “profit” referredto 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 sale price of DEPB for calculating profit underSections 28(iiid) and 28(iiie) of the Income Tax Act, 1961as if the face value is the cost incurred by the assessee toacquire the DEPB?ITAT is right in law in deducting the face value of DEPBfrom sale price of DEPB for calculating profit underSections 28(iiid) and 28(iiie) of the Income Tax Act, 1961as if the face value is the cost incurred by the assessee toacquire the DEPB? (viii)Whether on the facts and circumstances of the case, theITAT is right in law in holding that the word profit referredto in Sections 28(iiid) and 28(iiie) of the Income Tax Act,1961 requires any artificial cost to be interpolated to theextent that the face value of DEPB/DFRC should bededucted from the sale proceed for the purpose ofdetermination of deduction under Section 80HHC of theIncome Tax Act, 1961?ITAT is right in law in holding that the word profit referredto in Sections 28(iiid) and 28(iiie) of the Income Tax Act,1961 requires any artificial cost to be interpolated to theextent that the face value of DEPB/DFRC should bededucted from the sale proceed for the purpose ofdetermination of deduction under Section 80HHC of theIncome Tax Act, 1961? (ix)Whether on the facts and circumstances of the case, theITAT is right in law in not appreciating that deduction underSection 80HHC of the Income Tax Act, 1961 was rightlycomputed in accordance with amendment made by theTaxation Laws (Amendment) Act, 2005 with retrospectiveeffect from 1.4.1998?”ITAT is right in law in not appreciating that deduction underSection 80HHC of the Income Tax Act, 1961 was rightlycomputed in accordance with amendment made by theTaxation Laws (Amendment) Act, 2005 with retrospectiveeffect 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 Forgingsand I.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 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 13, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE