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 Asstt. Commissioner of Income Tax, Central Circle-9, New Delhi Room No. 357, ARA Centre, E-2 vs. M/s Moets Bar-B-Cue,50, Defence Colony Market, New Delhi 110 024 PAN/GIR NO. : AAAFM7936M | |
| | ADIT, Cir. 1(1), (Intl. Taxation), 204, Drum Shape Building, IP Estate, New Delhi 110 002 vs. Ms. Meena Chopra, P-13, Ground Floor,Malviya Nagar, New Delhi | | CIT vs. Awadh Hotels (P) Ltd (Allahabad High Court) | | BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER | | BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER | | Mehsana Circle Vs Mehsana M/s.Shree Riddhi Corporation 32, Amikunj Society Near Technical School, Kalol | | ITO, Ward 40(3), Room No. 307, Mayur Bhavan, vs. Sh. Mohan Lal Walia, Through L/H Mrs. Prem Walia, G-251, Palam Vihar, Gurgaon, | | M/s. All Cargo Global Logistics Ltd.5th Floor, Diamond Square, C.S.T. Road, Kalina, Santacruz (E),Mumbai – 400 098. | | Dy. Commissioner of Income Tax, Circle 6(1), Room No. 413, CR Building, New Delhi vs. Maharani Paints India Pvt. Ltd., TA-3/146-C, Tuglakabad Extn.,New Delhi | | Income Tax Officer, Ward 38(2), Room No. 234A, 2nd floor, CR Bldg., IP Estate, New Delhi vs. Sh. Naresh Kumar Through Legal Heir Sh. Naveen Kumar, 9307, Gaushala Marg, Kishan Ganj Delhi – 110 006 | | Mehru Electrical & Engg. (P) Ltd vs. CIT (Rajasthan High Court) |
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| « ACG Associated Capsules Pvt. Ltd vs. CIT (Supreme Court)... | Welcome show of judicial muscle... » |
M/s Topman Exports vs. CIT (Supreme Court) |
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| February, 10th 2012 |
s. 80HHC/ 28(iiid): DEPB sale proceeds is not profits
The assessee sold the Duty Entitlement Pass Book (DEPB) which had accrued on export of its products. S. 28 (iiid) provides that any profit on the transfer of the DEPB shall be business profits. Under Explanation (baa) to s. 80HHC, 90% of the sum referred to in s. 28(iiid) has to be reduced from the business profits. Under the third Proviso to s. 80HHC (3), in the case of an assessee having an export turnover exceeding Rs. 10 crores, the profits referred to in s. 80HHC (3) can be increased by 90% of the sum referred to in s. 28 (iiid) only if two conditions are satisfied. If the said conditions are not satisfied, no relief on account of DEPB can be granted u/s 80HHC. In Topman Exports vs. ITO 318 ITR 87 (Mum)(SB)(AT) the Special Bench of the Tribunal held that the sum referred to in s. 28(iiid) meant only the profits on transfer of the DEPB and not the entire sale proceeds. The Tribunal held that the amount received on account of DEPB had to be bifurcated into the face value of the DEPB and the profit and that while the face value was assessable u/s 28(iiib), the profit was assessable u/s 28(iiid). The consequence was that only the profit suffered the rigors of the third Proviso to s. 80HHC (3) and not the face value. On appeal by the revenue, the High Court (CIT vs. Kalpataru Colours and Chemicals 328 ITR 421 (Bom)) reversed the Tribunal and held that the sale proceeds could not be bifurcated into profits and face value and the entire sale proceeds was profits for s. 80HHC r.w.s. 28(iiid). On appeal by the assessee, HELD reversing the High Court:
DEPB is cash assistance receivable against exports under the scheme of the Government. While the face value of the DEPB falls under clause (iiib) of s. 28, the difference between the sale value and the face value of the DEPB (the profit) will fall under clause (iiid) of s. 28. The High Court was not right in taking the view that the entire sale proceeds of the DEPB realized on transfer of the DEPB and not just the difference between the sale value and the face value of the DEPB represent profit on transfer of the DEPB. DEPB represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB is not utilized by the exporter but is transferred to another person, the DEPB continues to remain as a cost to the exporter. When DEPB is transferred, the entire sum received on such transfer does not become his profits. It is only the amount that he receives in excess of the DEPB which represents his profits on transfer of the DEPB.
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