The Commissioner Of Income Taxrange Xiv, Chennai � 34 v. M/S.sara Leather Idnustries

DATED: 11.03.2013 CORAM:THE HON'BLE MRS.JUSTICE R.BANUMATHIANDTHE HON'BLE MR.JUSTICE K.RAVICHANDRA BAABU T.C.(A) NO.990 OF 2010 The Commissioner of Income TaxRange XIV, Chennai � 34. .... Appellant Vs. M/s.Sara Leather Idnustries,829/1,. Periyar E.V.R.Road,Kilpauk, Chennai � 10. .... Respondent Prayer: Tax Case Appeal is filed under Section 260A of the Income Tax Act, 1961 against the Orderdated 26.4.2010 made in I.T.A.No.771/Mds/2008. For Appellant : Mr.J.NarayanasamyStanding Counselfor Income-tax For Respondent : Mr.S.Sridhar JUDGMENT (Judgment of the Court was made by R.BANUMATHI.J.) The adjudication regarding the exclusion of sale proceeds of DEPB licence in the computation of80HHC deduction is the issue falling for consideration in this appeal filed by the revenue. Therevenue's appeal was admitted on the following substantial questions of law:"1. Whether on the facts and circumstances of the case, the Tribunal was right in remanding theissue back to Assessing Officer based on the case of Mumbai, Special Bench, which was reversed by Mumbai High Court? 2. Whether in the facts and circumstances of the case, the claim of deduction u/s.80HHC in respectof the profits on sale of DEPB is alowable? 2. Brief facts of the case are that the assessee is a firm engaged in the business of manufacture andexport of finished leather shoe uppers and other leather products. For the assessment year2004-2005, the assessee firm filed return of income on 30.10.2004 admitting the taxable income ofRs.1,36,02,280/- after claiming deduction under Section 80HHC to the tune of Rs.56,14,857/- on 90%of the export incentives being Rs.2,90,21,720/-. The Assessing Officer held that the assessee firmwas not eligible to claim deduction under Section 80HHC in respect of the export profits. TheAssessing Officer further held that the assessee firm was not entitled for any relief in respect ofincome by way of sale of DEPB licence and thus the Assessing Officer denied the claim of assesseefor deduction under Section 80HHC. 3. Aggrieved, the assessee filed appeal before Commissioner of Income-tax (Appeals). Thecommissioner of Income-tax (Appeals) upheld the order of the Assessing Officer and held that theAssessing Officer had brought out clearly the fact that the assessee firm had not compiled with theconditions prescribed under the third proviso to Section 80HHC. Aggrieved by the Order ofCommissioner of Income-tax (Appeals), the assessee filed appeal before the Tribunal. Referring tothe decision of Special Bench of the Income-tax Appellate Tribunal, Mumbai in the case of TopmanExports v. Income Tax Officer, (2009) 318 ITR (AT) 87 (Mumbai)(SB) and after extracting paragraphNo.89 of the said judgment of the Special Bench of ITAT, Mumbai, the Tribunal allowed theassessee's appeal and remitted the matter back to the Assessing Officer with a direction to followthe decision of the Special Bench and decide the issue accordingly after giving adequate opportunityof hearing to the assessee. The Tribunal also directed the assessee to cooperate with the assessingofficer by providing necessary details that would be required by the Assessing Officer for decidingthe issue. 4. Being aggrieved by the Order of the Tribunal revenue has preferred this appeal. HeardMr.J.Narayanasamy, learned counsel appearing for the revenue and Mr.Sridhar, learned counselappearing for the assessee. 4. Being aggrieved by the Order of the Tribunal revenue has preferred this appeal. HeardMr.J.Narayanasamy, learned counsel appearing for the revenue and Mr.Sridhar, learned counselappearing for the assessee. 5. The learned counsel for the revenue as well as the assessee submitted that the decision of theSpecial Bench of the Income-tax Appellate Tribunal, Mumbai in the case of Topman Exports v.Income Tax Officer, (2009) 318 ITR (AT) 87 (Mumbai)(SB) was challenged before the Mumbai HighCourt and the said decision of the Special Bench has been reversed by the Bombay High Court. Thedecision of the Bombay High Court was challenged by the assessee before the Supreme Court inTopman Exports Vs. CIT, (2012) 342 ITR 49 (SC). The Hon'ble Supreme Court allowed the appeal tothe extent indicated in the judgment and directed the Assessing Officer to compute the deduction ofSection 80HHC in the case of assessee in accordance with the judgment of the Honourable SupremeCourt. 6. Therefore, following the judgment of the Supreme Court in Topman Exports Vs. CIT, (2012) 342ITR 49 (SC), the Tax Case appeal is disposed of by directing the Assessing Officer to compute thededuction under Section 80HHC in the light of the decision of the Supreme Court in Topman ExportsVs. CIT, (2012) 342 ITR 49 (SC) and pass fresh orders after affording opportunity to the assessee. usk Copy to:1. The Income Tax Appellate TribunalChennai 'D' Bench. 2. The Commissioner of Income Tax (Appeals)-XII,Chennai 3. The Joint Commissioner of Income Tax,Business Range XIVChennai 34