Vikas Kalra v. The Commissioner of Income Tax-Viii, New Delhi

Income Tax Act, 1961 - ss. 80 HHC and 28(iiid) - Deductions in respect of profits retained for export business - Claim for, by exporter-Assessing Officer held that the entire sale value of Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB u!s 28(iiid) and did not allow exemption/deduction u/s 80 HHC - Order upheld by Commissioner of Income Tax (Appeals) - Appellate Tribunal relying on a decision of Special Bench of the Tribunal in Ml s Topman Exports holding that the face value of DEPB would be cash assistance against export and would fall u/s 28 (iiid) and sale value less the face value of DEPB would be profit on transfer of DEPB - High Court remitted the case to the Appellate Tribunal since the decision of the Special Bench was reversed by the High Court in CIT v Kalpataru Colours and Chemicals :- As regards the additional issue whether the Tribunal was correct in law in ignoring explanation (baa) u/s 80 HHC which specifically excludes profits of DEPB from total turnover, the High Court held that the issue was covered by CIT v Shri Ram Honda Power Equip - On appeal held: Appeals disposed of in terms of the judgment passed by this Court in Mis Topman Exports v. Commissioner of Income Tax, Mumbai and other connected appeals setting aside the judgment of the High Court in CIT v Kalpataru Colours and Chemicals; and Mis ACG Associated Capsules Private Limited v. Commissioner of Income Tax, Central-IV, Mumbai and other connected appeals affirming the judgment of the High Court in CIT v Shri Ram Honda Power Equip.

Appellant-exporter filed returns of income claiming deductions in respect of profits retained for export business under Section 80HHC of the Income Tax Act, 1961. The Assessing Officer held that the entire sale value of Duty Entitlement Pass Book (DEPB) represented the prnfit on transfer of DEPB under Section 28(iiid) of the Act and did not allow the amount of deduction under Section 80HHC. The Commissioner of Income Tax (Appeals) upheld the order. On appeal, the Tribunal following the order of the ~pecial Bench of the Tribunal in the M/s Topman Exports's case allowed the deductions holding that the face value of the DEPB would be 'cash assistance' against export and would fall under Section 28(iiib) of the Act and the sale value less the face value of the DEPB would be profit on transfer of DEPB. Aggrieved the Revenue filed appeals. The High Court he~d that the tribunal had simply followed the decision of the Special Bench of the Tribunal which was reversed by the High Court in Commissioner of the Income Tax v. Kalpataru Colours and Chemicals IT A(L) 2887 of 2009 and remitted the case to the tribunal to decide the appeals on merits. As regards the issue whether the Tribunal was correct in law in ignoring Explanation (baa) under Section 80HHC of the Act which specially excludes profits of DEPB from total turnover, the High Court held that the issue was covered by its judgment in the Commissioner of Income-Tax v. Shri Ram Honda Power Equip (2007) 289 ITR: 475 (Delhi). Therefore, the appellant filed the instant appeals.

Disposing of the appeals, the Court HELD: The instant appeals are disposed of in terms of the judgment in Civil Appeal arising out SLP (C) No.26558 of 2010 (M/s Topman Exports v. Commissioner of Income Tax, Mumbai) and other connected appeals setting aside the judgment of the High Court in Commissioner of the Income Tax v. Kalpataru Colours and Chemical; and in terms of the judgment in Civil Appeal arising out of 5.L.P. (C) No.32450 of 2010 (Mis ACG Associated Capsules Private Limited v. Commissioner of Income Tax, Central-IV, Mumbai) and other connected appeal affirming the judgment of the High Court in Commissioner of Income Tax v. Shri Ram Honda Power Equip's case. [Para 5] [277-D-F]

Commissioner of the Income Tax v. Kalpataru Colours and Chemicals ITA (L) 2887 of 2009; Commissioner of Income-Tax v. Shri Ram Honda Power Equip (2007) 289 ITR 475 (Delhi); Mis. Topman Exports v. Commissioner of Income Tax, Mumbai [2012] 4 SCR 684; Mis ACG Associated Capsules Private Limited v. Commissioner of Income Tax, Central-IV, Mumbai 2012 (2) SCR 401, referred to.