CIT V. SPENTEX INDUSTRIES LTD

ITA/708/2010

AI Insights

The case involves multiple appeals by the Commissioner of Income Tax against various respondents, including Arjan Impex Pvt. Ltd., Spentex Industries Ltd., and others, concerning the interpretation and application of Section 80HHC of the Income Tax Act, particularly in relation to the profit on the sale of DEPB (Duty Entitlement Pass Book) credits. The primary legal question was whether the profit from the sale of DEPB credits should be considered as 'income' and thus taxable under the relevant provisions of the Income Tax Act. The Tribunal had previously followed the decision in Topman Exports, which held that the profit on the sale of DEPB is taxable. However, this decision was contested and led to appeals in the High Court.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 741336 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 18-02-2011
• Assessment Year: misc
• Other Referred Cases: Topman Exports Vs. Commissioner of Income Tax, Income Tax Vs. Kalpataru Colours, Commissioner of Income Tax Vs. Tapman Export
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: AJAY VOHRA; KAVITA JHA; SOMNATH SHUKLA; PRAKASH KUMAR; MANISH KUMAR; O P SAPRA; AMIT DAYAL; PANKAJ JAIN; D K GOYAL; VIJAY NAIR; MANISH CHAUDHARY; RAKESH GUPTA; R K AGGARWAL; POONAM AHUJA
• Assessee Lawyers: KAMAL SAWHNEY; ABHISHEK MARATHA; SURUCHI AGGARWAL; ANUPAM TRIPATHI; AMIT SRIVASTAVA
• Keywords: DEPB; Income Tax; Profit on Sale; Statutory provisions
• Section: 28; 80HHC

Judgement Text

"t. *INTHEHIGHcoURToFDELH|ATNEWDELI.|| + (1) trA,4O4|2OTO COMMISSIONER OF INCOME TAX I VERSUS ARJAN IMPEX PVT. LTD. (2) rTA 7O8|2OLO COMMISSIONER OF INCOME TAX VERSUS SPENTEX INDUSTRIES LTD. (3) trA 7e3lzoL0 COMMISSIONER OF INCOME TAX VERSUS PHILCO EXPORTS. (4) trA 927I2OLO COMMISSIONER OF INCOME TAX VERSUS PHILCO EXPORTS (s) rrA t o80/2oLO u coMrvilssloluER oF INCqME TAX VERSUS SPENTEX INDUSTRIES LTD. ..RESPONDENT (6) fTA L886/2OLO COMMISSIONER OF INCOME TAX . APPELLANT VERSUS NITIN KUMAR, SADH ' 'RESPONDENT rrA No, ITA 404120L0 & ors.connected matters 7 Judgment Reserved on: 1-0.02.20II Decision Delivered On: l8'02'2OII . . . APPELLANT . . .RESPONDENT . . . APPEI.LANT . . .RESPONDENT i t . . . APPEI-I.ANT .? . . .RESPONDENT IL . . APPELLANT ..RESPONDENT APPELLANT Page 1 of 5 Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified , (7) trA L887I?OLO COMMISSIONER OF INCOME TAX . ' APPELLANT VERSUS KAPOOR INDUSTRIES. (8) rrA L896/2010 COMMISSIONER OF INCOME TAX VERSUS FUL KANT JHA (e) rTA L899/2OLO COMMISSIONER OF INCOME TAX VERSUS PAL ENTERPR,ISES (L0) rTA L957I2OLO COMMISSIONER OF INCOME TAX VERSUS PRAVEEN INDUSTRIES PyT. LTD. (111 rrA L9s8/2OLO COMMISSIONER OF INCOME TAX ..RESPONDENT . .RESPONDENT . . APPELLANT ..RESPONDENT . . . APPEI.LANT VERSUS . . APPELLANT . . .RESPONDENT . . . APPELLANT . .RESPONDENT . . . APPELLANT . .R,ESPONDENT . . . APPELLANT . . .RESPONDENT t ZENELINI LEATHER WEAR (L2) rTA L959/2OLO COMMISSIONER OF INCOME TAX ' VERSUS RICHA APPARELS (13) Le60/20Lo COMMISSIONER OF INCOME TAX VERSUS KAPOOR INDUSTRIES re ruo. ITA 404120L0 & ors.connected matters Page 2 of 5 (14) ITA L98O/2Or,O COMMISSIONER OF INCOME TAX VERSUS AHUJA RADIOS ( 1S1 tTA 2O7 4|ZOLO COMMISSIONER, OF INCOME TAX VERSUS SHOREWALA OVERSEAS (L6) lrA 14l20lL . COMMISSIONER OF INCOME TAX VERSUS ' SANGEETA JAIN (17) ITA Lsl20L1 COMMISSIONER OF INCOME TAX VERSUS LEATHER TECI.I (I.8) lrA 67120L1 COMMISSIONER OF INCOME TAX VERSUS PUROLATOR INDIA LTD. (LgI ITA L77IZOLL COMMISSIONER OF INCOME TAX VERSUS BALDEV RAJ JAGGI rA No. fTA 404|2OLO & ors.connected matters T . . APPELLANT ..RESPONDENT I . . APPELLANT . . .RESPONDENT . . APPELLANT . . .RESPONDENT . . APPELLANT . . .RESPONDENT . . APPELLANT . . .RESP,ONDENT . . APPELLANT . . .R.ESPONDEIUT Page 3 of 5 Io t . (20r trA L78l20LL COMMISSiONER OF INCOME TAX . . APPELLANT VERSUS INDU GUPTA . \"RESPONDENT (21) lrA L8t/20LL COMMISSIONER OF INCOME TAX . . APPELLANT VERSUS SANGEETAJAIN ...REsPONDENT (221 trA L82|20LL , COMMISSIONER OF INCOME TAX , . APPELLANT VERSUS CLCCORPORATION ...RESPONDENT (23) lrA L84l20L1 COMMTSSIOruEN OF INCOME TAX . . APPELLANT VERSUS CLCCORPORATION ...RESPONDENT (241 trA L8sl20LL COMMISSIONER OF INCOME TAX . . APPELLANT VERSUS VIKASKALRA ...RESPONDENT (251 tTA L87|20LL COMMISSIONER OF INCOME TAX ' . APPELLANT VERSUS ANUJ GOEL 'RESPONDENT Judgment Reserved on: 10.02 .2OII Decision Delivered On: 18.02.20LL {zet rrA tzglzoog COMMI5SIONER OF INCOME TAX ... APPELLANT lrANo. ITA 4O4|2O1O & ors.connected matters Page 4 of 5 /t .VERSUS PRIYANKA OVERSEAS P. LTD. . . .RESPONDENT COUNSEL FOR THE REVENUE: Mr. Kamal Sawhney, Mr. Abhishek Maratha, Ms. Suruchi Aggarwal, Mr. Anupam Tripathi,Sr' Standing Counsel with Mr. Amit Srivastava, Advocate. COUNSELFORTHEASSESSEES:Mr. Ajay Vohra, Advocate with Mr. Kavita Jha, ' Mr. Somnath Shukla, Mr. Prakash Kumar and Mr. Manish Kumar, Mr. O'P. Sapra, ,Mr' Amit Dayal, Mr. Pankaj Jain, Mr' D.K. Goyal, Mr' Vijay Nair and Mr. Manish Chaudhary, Dr' Rakesh . Gupta, Advocate with Mr. RK. Aggarwal, Ms' Poonam Ahuja, Advocates. CORAM :- HON',BLE MR. JUSTICE A.K. SIKRI HON',BLE MR. JUSTICE M.L. MEHTA 1. Whether Reporters of Local newspapers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the Judgment should be reported in the Digest? A.K. StKRl, l. I 1. For orders, see irn rz of 2orl. 7-^-% lq.L.MEHrn) JUDGE FEBRUARY I.8, ?OLL, skb .K.SrKRl) JUDGE lrA No. ITA 404120L0 & ors.connected matters Page 5 of 5 I _l I I .l I I I 'ql * lN Tl-tE !-xlcl-{ co[,rRT oF DEq I I Judgm Decisi (1) rrA. r.2/2O11 COMMISSIONER OF IhXCOME -d'AX VERSUS PAR,AMOI.IhJT IMPEX PVT. [.TD. (2) trA. 4o4l2O1\"O COMMISSIOIUER, OF INCOME TAX VERSUS - AR.IAN IMPEX PVT. I-T',D. (3) ITA 708120L0 coMMtssno${ER oF lhlcoME -d'AX VERSUS SPENTEX XNDI,.ISTR.IES LTD. (4) rrA 793120L0 . COMMISSXONER. OF IIUCOME TAX VERSUS , PFIII.CO EXPORTS. (s) trA s27 naLo ^c-. COMMISSIONER OF IIUCOME TAX I VERSUS v Pl{lLco EXPOR,TS (6) rTA t 080/20L0 COMMISSIONER, OF INCOME TAX VERSUS SPENTEX INDUSTRIES LTD. (7) ITA ].886/20L0 COMMISSIONIER OF INCOME TAX ' trANo. ITA 12l2jll & ors.connected matters h!I AT NEW DELI-II nt Reserved on: 10.02.20l.I Delivered On: 18.02.2011 . . . APPEI-LAI T . . RESPONDEIUT . . . APPEI.LAI IT . . .RESPONIDENIT . . APPEL[.A[ IT , , .RESPONIDEhIT . . . APPEI.LAhIT . . .RESPONDENT' . . APPELLANIT . .R,EsPOT XDENT . . APPE!.I-ANT . .REsPOil[DENT . APPELLANT Page 1 of 6 l2- t.--_ VERSUS mlrtru KIIMAR SADI-tr (8) rTl r.887/2OLO COMMISSIOI IER, OF INCOME TAX VERSUS KAPOOR ISIDUSTRIES. (9) rTA L896/20L0 COMMISSXONER OF II{COME TAX F{,J!- KANT.trr-{A VERSUS (L0) rTA X899/2OLO COMMISSIONIER OF INCOME TAX VERSUS PAL ENTcnirntsns (L1) rrA r.957/20L0 COMMISSIOhIER OF INCOME TAX VERSUS PR.AVEEN INIDI'IST'RIE5 PVT. I.TD. (L2) rTA r.es8/20lo ilt coMMrssro*ER oF I*.'ME TAX VERSUS ZERIELINI LEATI.IER, WEAR 1la) rrA L9s9/2OLO COMMISSION IER, OF INCOME TAX . VERSUS RIChIA APPAREI.S (.14) ne60/201o nANo. ITA IZ|2OLL & ors.connected matters IQ t> ..RESPONDEIVT , . . APPEI.I.AIIT . .RESPOT{DENT . . APPELLANT . . .RESPOhNDEI{T . . . APPE!.LANXT ..RESPONDEIVT . . APPELI-ANT ..RESPONDEIUT . . . APPELLANT . Page2of6 COMMISSIONER OF IIUCOME TAX VERSUS KAPOOR IIIDI,.ISTRIES (1s) rTA Le8o/2CIL(} COMMI5SIOEUER, OF IhICOME TAX \"VERSUS Al-lvJA RADIOS (16) trfu 2A74|ZALO COMMISSIONER, OF IRICOME TAX VERSUS SI.[OREWALA OVER.SEAS (T7I ITA L4IZALT COMMISSIONER OF I]UCOME TNX VERSUS SANGEETA JAil I . (x.8) rTA L5/20X.L COMMNSSIORIER OF INCOME TAX VERSUS LEAThIER T'ECX-I (x9) rrA 67I2OXX COMMISSIONER. OF INCOME TAX . VERSUS PUROI.ATOR II{ DIA I.TD. (2Or tTA L77IZOLL COMMISSIONER OF XNCOME TAX VERSUS . tsALDEV RAJ.IAGGI (21) lrA L78/20n1 trA No. ITA I2|20II & ors.connected matters lr t7 /. . . . APPELI-ANT . . .nrspoNlDEhlT . . APPELI.ANT . .RESPOI IDEI IT . . APPELLAIUT . . .RESPOIVDEIUT . . APPELLAhIT . . .RESPOh[DE'VT . . APPE!-LAI{T . . .R,ESPONDE[VT' . . APPEI.I.ANT .- . .RESPOTSDENT . . APPELI.ANT . \" .RESPOI{DEIUT Page 3 of 6 COMMISSIOhIER, OF INCOME TAX II{DI.J GUPTA VERSUS I (22) rTA L8L/2On1 COMMISSXONER, OF IhJCOME TAX VERSUS SANGEETA jAnr{ (23) trA X82l20LL COMMIS5IONER OF INCOME TAX VERSUS c!-c coR,PoRATIon I (24) ITA LE4l2OLL COMMNSSIONilER, OF IhICOME TAX VERSUS \" CLC CORPORATIOIU (2s) lrA L8s/20Ll , COMMISSIONER, OF INCOME T'AX VERSUS VIKAS KAI.RA -- F (26) lrA X87l20L_L COMMISsIONER OF IhICOME TAX VERSUS ANUJ GOEL (271 lrA- 72312A09 COMMISSIOIINER OF INCOME TAX ffANo. ITA I2|2OLL & ors.connected matters Page 4 of 6 t/ l) \" . APPE!.LANT I Judgm6nt Reserved on: 10.02.2OI1 Decision Delivered On: 18.02.2017 . . .R,ESPONDEIIT . . APPELI-ANT ..RESPOIVDENIT . . APPELLANT . . .RESPOI IDE! IT . . APPELI.AIUT . . .RE5PO]UDEI IT . . APPE!.LANT . . .RESPOI !DENT . . APPELLAI IT' ..RESPONDENT , , APPELLAI IT , VERSUS PR,IVARIKA OVER,SEAS P. I.TD. COUNSEL FOR THE REVENUE: Mr. Kamal Ms. Suruchi Standing C Advocate. COUNSEL FOR THE ASSESSEES:Mr. Ajay Vo Mr. Somn Mr. Manish Dayal, Mr. P Nair and Mr Gupta, Advo Poonam Ahuj CORAM :- htoN'tsLE MR. JUSTICE A,K. SI HON',BLE MR. .!t STICE M.l-. ME 1. Whether Reporters of Local n to see the Judgment? To be referred to the Reporter Whether the Judgment should A.K. SIKRI, N. 1. All these appeals involved commo of convenience, we can reproduce the q these appeals:- \"(a) Whether on a correc relevant statutory provisions law in directing the Asse deduction under section 80H of \"profit\" on sale of DEPB? (b)Whether on the facts of was justified in law in im assessee would be entitled first proviso below sub-Secti respect of DEPB Credit utili 2. The orders passed by the Tribun because of the reasori that the Tribuna was supposed to) the decision of the ITA case of Tapman Export Vs. tfo flTA N dated 11'h August, 2009.1. By that judg 2. 3. ) ffANo. ITA L2|7OLL & ors.connected matters Page 5 of 6 l6 . . .RESPONIDENT hney, Mr. Abhishek Maratha, Tripathi,Sr. Srivastava, garwal, Mr. AnuPam unsel with Mr. Amit a, Advocate with Mr, Kavita Jha, Shukla, Mr. Prakash Kumar and' Kumar, Mr. O.P. SaPra, ,Mr. Amit kaj Jain, Mr. D.K. Goyal, Mr. VijaY Manish Chaudhary, Dr. Rakesh with Mr. RK. Aggarwal, Ms. , Advocates. papers may be allowed not? reported in the Digest? question of law. For the sake tions of law framed in one of interpretation of the Tribunal was justified n ing Officer to allow C of the Act in respect present case,. Tri bunal iedly holding that the o deduction as per the 3 of Section 80HHC in by the assessee?\" I in all these cases are brief has simply followed (wh.ich it Special Bench, Mumbai in the . 57691Vum.i2006 decided on ent, the Special Bench of the Tribunal (iiib) at DEPB is profit in over its sale. has held that the face value of D the time of accrual of income, th filed with the competent aut sale of DEPF representing the e face value ii; liable to be consider 3. The Revenue had filed the appeal i Bombay against the aforesaid decision of The Bombay High Coutt has reversed th the judgment of the Bombay High Court af Xncome Tax Vs. Kalpatarw Colours 4. Since the Tribunal had simply foll Topman Exports (supra) which stands order passed by the Tribunal in all these to the Tribunal to decide these appeal account factual position in all these cases These appeals stand disposed of on FEBRI.IARY n 8, 20LX., skb q, ila rA No. ITA Lzl2OlI & ors.connected matters )T PB is chargeable to tax uls 28 t is, when the application for pursuant to exports and ess of sale proceeds of DEPB d u/s 28(iiid) at the time of its the High Court Adjudicate at e Special Bench of the ITAT. decision of the Tribunal and reported as Cormrnissioner Chemicals, 328 ITR 457. Special Bench decision in over ruled, we set aside the ses and remit the cases bacl< on merits after taking into bove terms. JUDGE -6A-Q--P-, (M.L.MEFTTA) JUDGE Page 6 of 6 "