ACIT, JODHPUR V. DINESH ENTERPRISES, JODHPUR

MA 115/JODH/2013

AI Insights

The case involves the Assistant Commissioner of Income-tax, Circle-1, Jodhpur as the applicant and M/s Dinesh Enterprises as the respondent. The revenue filed a miscellaneous application seeking rectification of an earlier Tribunal order dated 19/12/2012, which was in favor of the assessee. The revenue argued that the decision should be revisited in light of the Supreme Court's judgment in Topman Exports, which clarified the tax treatment of profits on the transfer of DEPB (Duty Entitlement Pass Book) under section 28 of the Income Tax Act. The Tribunal, however, found that revisiting the order would constitute a review, which is not permitted under the law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705689 (ITAT-JODHPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2004-2005
• Other Referred Cases: Topman Exports vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJENDRA JAIN; KARNI DAN
• Section: 28; 80HHC

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER M.A. 115/JODH/2013 (Arising out of ITA No.117/JU/2007) (Assessment year: 2004-05) Assistant Commissioner of Income-tax,Circle-1, Jodhpur vs M/s Dinesh Enterprises E-274, MIA, Basni 2nd Phase, Jodhpur PAN: AAAFD5645G APPLICANT RESPONDENT Assessee by : Shri Rajendra Jain, Advocate Respondent by : Shri Karni Dan, Addl. CIT (Sr. DR.) Date of hearing : 27/05/2025 Date of pronouncement : 30/06/2025 O R D E R Per Anikesh Banerjee (JM) : Vide this miscellaneous application, the revenue seeks rectification of the order dated 19/12/2012 passed by the Tribunal in ITA No.117/JU/2007 for A.Y. 2004-05, by stating as under:- “MAY IT PLEASE YOUR HONOUR 1. The above ITA 117/Ju/2007 was filed by the assessee against the order of the Id. Commissioner of Income Tax (Appeals), Jodhpur dated 22.12.2006. 2 MA 115/Mum/2013 Dinesh Enterprises 2. In the combined order of the ITAs 662/JU/2006 & 117/JU/2007, the Hon'ble Bench decided that \"9-------------------------------- 10------------------------ We are satisfied that the issue in question stands fully covered by the above decision of the Hon'ble Supreme Court rendered in the case of Topman Exports (supra) wherein it has been held than when DEPB is sold by a person, his profit on transfer of DEPB would be the sale value of DEPB less its face value which represents the cost of the DEPB and not the entire sum received him on such transfer, DEPB is chargeable as income under clause (iiib) of section 28 in the year in which such person applies for DEPB credit against the exports whereas the profit on transfer of DEPB by that person is chargeable as income under clause (iiid) of section 28 of the Act in the hands in the year in which he makes the transfer. Accordingly, by respectfully following the above Hon'ble Supreme Court decision, we have to allow this ground of appeal.\" 3. Whereas in the case of Topman Vs. CIT the Hon'ble Supreme Court of India has decided as under:- “20. Explanation (baa) under Section 80HHC states that \"profits of the business\" in the aforesaid formula means the profits of the business as computed under the head \"Profits and Gains of Business or Profession\" as reduced by (1) ninety per cent of any sum referred to in clauses (iiia), (ilib), (c), (iid) and (tie) of Section 28 or of any receipes by way of brokerage, commission, interest, rent, charges or any other receipt of similar nature including any such receipts and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situated outside India. Thus, ninety per cent of the DEPB which is \"cash assistance\" against exports and is covered under clause (iiib) of Section 28 will get excluded from the \"profits of the business\" of the assessee if such DEPB has accrued to the assessee during the previous year. Similarly, if during the same previous year, the assessee has transferred the DEPB and the sale value of such DEPB is more than the face value of the DEPB, the difference between the sale value of the DEPB and the face value of the DEPB will represent the profit on transfer of DEPB covered under clause (iiid) of Section 28 and ninety per cent of such profit on transfer of DEPB certificate will get excluded from \"profits of the business\". But, where the DEPB accrues to the assessee in the first previous year and the assessee transfers the DEPB certificate in the second previous year, as appears to have happened in the present batch of cases, only ninety per cent of the profits on transfer of DEPB covered under clause (id) and not ninety per cent of the entire sale value including the face value of the DEPB will get excluded from the \"profits of the business\". Thus, where the ninety per cent of the face value of the DEPB does not get excluded from \"profits of 3 MA 115/Mum/2013 Dinesh Enterprises the business\" under Explanation (baa) and only ninety per cent of the difference between the face value of the DEPB and the sale value of the DEPB gets excluded from \"profits of the business\", the assessee gets a bigger figure of \"profits of the business\" and this is possible when the DEPB accrues to the assessee in one previous year and transfer of the DEPB takes place in the subsequent previous year. The result in such case is that a higher figure of \"profits of the business\" becomes the multiplier in the aforesaid formula under subsection (3)(a) of Section 80HHC for arriving at the figure of profits derived from exports. 21. To the figure of profits derived from exports worked out as per the aforesaid formula under sub-section (3)(a) of Section 80HHC, the additions as mentioned in first, second third and fourth proviso under sub-section (3) are made to profits derived from export Under the first proviso, ninety per cent of the sum referred to in clauses (iiia), (iiib) and (iic) of Section 28 are added in the same proportion as export turnover bears to the total turnover of the business carried on by the assessee. In this first proviso, there is no addition of any sum referred to in clause (itid) or clause (iiie). Hence, profit on transfer of DEPB or DFRC are not to be added under the first proviso. Where therefore in the previous year no DEPB or DFRC accrues to the assessee, he would not be entitled to the benefit of the first proviso to sub-section (3) of Section 80HHC because he would not have any sum referred to in clause (iiib) of Section 28 of the Act. The second proviso to sub-section (3) of Section 80HHC states that in case of an assessee having export turnover not exceeding Rs. 10 crores during the previous year, after giving effect to the first proviso, the export profits are to be increased further by the amount which bears to ninety per cent of any sum referred to in clauses (iiid) and (iiie) of Section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. The third proviso to sub-section (3) states that in case of an assessee having export turnover exceeding Rs. 10 crores, similar addition of ninety per cent of the sums referred to in clause (iiid) of Section 28 only if the assessee has the necessary and sufficient evidence to prove that (a) he had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme. Therefore, if the assessee having export turnover of more than Rs. 10 crores does not satisfy these two conditions, he will not be entitled to the addition of profit on transfer of DEPB under the third proviso to sub-section (3) of Section 80HHC.\" 4. This MA is being filed against the above observation and decision (at para No. 9 of the order) of the Hon'ble Bench on following ground and for relief to incorporate the following sentence in the order that:- 4 MA 115/Mum/2013 Dinesh Enterprises The profit on sale of DEPB (sale value of DEPB minus face value of the DEPB) is covered under section 28(iiid) and as per decision of Hon'ble Supreme Court in the case of Topman Export, no deduction u/s 80HHC is allowable on this profit. 1. It is therefore, prayed that the order may be recalled and fresh order may be issued after considering the decision of Hon'ble Supreme Court in the case of Topman Export.” 2. We have heard the parties and perused the records. We find that the Tribunal decided the issues agitated in grounds 1 & 2 by following the order of the Tribunal, Jodhpur Bench assessee’s own case for A.Y. 2002-03 order dated 06/11/2012, decided the issue in favour of the assessee. The revenue now contends that in view of the judgement of the Hon’ble Supreme Court in the case of Topman Export, the order of the Tribunal needs to be revisited. In our opinion, this would amount to review of the order passed by the Tribunal, which is not permitted by law. Provisions of section 254(2) empowers the Tribunal to rectify any mistake apparent from record, amend any order passed by it under section 254(1); but does not empower the Bench to review its own order. In this view of the matter, the miscellaneous application filed by the revenue has to fail. 3. In the result, the miscellaneous application being M.A.No.115/Mum/2013 is dismissed. Order pronounced on 30th June 2025 in accordance with Rule 34(4) of the Income tax (Appellate Tribunal) Rules, 1963. Sd/- sd/- (DR. MITHA LAL MEENA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, िदनांक/Dated: 30/06/2025 Pavanan 5 MA 115/Mum/2013 Dinesh Enterprises Copy of the Order forwarded to: 1. अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकर आयु\u0014 CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 5. गाड फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "