Aaren Exports V. Commissioner of Income Tax-I

ITA/387/2011

AI Insights

The case involves M/s Aaren Exports, the appellant, contesting an order by the Income Tax Appellate Tribunal which had dismissed their appeal regarding the assessment year 2001-02. The core issue revolved around the treatment of DEPB/DFRC (Duty Entitlement Pass Book/ Duty Free Replenishment Certificate) under the Income Tax Act, specifically whether these had any incidence of cost that could affect the computation of profits as envisaged in clauses (iiid) and (iiie) of section 28. The Tribunal had relied on an earlier decision influenced by the Bombay High Court's view, which the appellant contested. The High Court of Punjab and Haryana, referencing a Supreme Court judgment, found in favor of the appellant, leading to the remand of the case for re-assessment in line with the Supreme Court's decision.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 677686 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 05-07-2012
• Assessment Year: misc
• Other Referred Cases: M/s Topman Exports v. Commissioner of Income Tax, Mumbai, M/s Turbo Impex v. Commissioner of Income Tax-II, Ludhiana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIVEK SETHI
• Assessee Lawyers: J S BHASIN
• Keywords: Assessment Year 2001-02; Income Tax; Profit computation; Remand order; DEPB/DFRC
• Section: 28; 80HHC; 260A

Judgement Text

"ITA No. 387 of 2011 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 387 of 2011 Date of Decision: 5.7.2012 M/s Aaren Exports ....Appellant. Versus Commissioner of Income Tax-I ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE G.S. SANDHAWALIA. PRESENT: Mr. J.S. Bhasin, Advocate for the appellant. Mr. Vivek Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 against the order dated 13.6.2011 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Amritsar Bench (in short “the Tribunal”) in ITA No. 378(ASR)/2010, for the assessment year 2001-02, claiming the following substantial questions of law:- i) Whether the ITAT was justified in summarily dismissing the assessee's appeal, by following its earlier decisions, taken on the basis of Hon'ble Bombay High Court's decision in M/s Kalapatru Colours & Chemicals supra, on a totally wrong ITA No. 387 of 2011 -2- premise that this Hon'ble Court, in its remand order dated 16.08.2010, had concurred with Bombay High Court's view, on the core issue that DEPB/DFRC had no incidence of cost capable to work out profits as envisaged in clauses (iiid) and (iiie) of section 28 of Income Tax Act, 1961? ii) Whether the ITAT was justified in not passing an order of its own, on the merits of the issue in dispute, dilating on the relevant provisions of law and the DEPB/DFRC Scheme, after giving proper opportunity of hearing to assessee, when this Hon'ble Court had remanded the matter to the ITAT for fresh decision in accordance with law, thereby rendering its impugned order unsustainable? iii) Whether the ITAT was justified in holding that the entire sale proceeds of DEPF/DFRC were to be construed as profits as envisaged in clause (iiid) & (iiie) of Section 28, there being no face value attributable to DEPB/DFRC to be further reduced from the sale proceeds, to arrive at the Profits on the transfer of DEPB/DFRC? iv) Whether the order of the Tribunal is legally sustainable and bad in law being perverse? 2. Learned counsel for the assessee relied upon judgment of the Apex Court in M/s Topman Exports v. Commissioner of Income Tax, Mumbai, (2012) 3 SCC 593, which was followed by this Court in ITA No. 387 of 2011 -3- the case of M/s Turbo Impex v. Commissioner of Income Tax-II, Ludhiana (ITA No.361 of 2011, decided on 20.3.2012) to contend that the substantial questions of law are required to be answered in terms of the aforesaid judgments. Learned counsel for the revenue did not controvert the contention that the issue involved herein stands concluded by the aforesaid judgments. 3. Accordingly, we allow the present appeal in the same terms. The impugned order dated 13.06.2011 (Annexure A.6) passed by the Tribunal is set aside. The matter is remanded back to the Assessing Officer with a direction to compute the deduction under Section 80HHC of the Act in accordance with law and in the light of judgment of the Hon'ble Supreme Court in the case of M/s Topman Exports (supra). (AJAY KUMAR MITTAL) JUDGE July 5, 2012 (G.S. SANDHAWALIA) gbs JUDGE "