CIT-I, LDH V. M/S JACOB EXPORT HOUSE

ITA/620/2010

AI Insights

The case involves the Commissioner of Income Tax-I, Ludhiana as the appellant and M/s Jacob Export House as the respondent. The appeal was filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chandigarh Bench 'A', which pertained to the assessment year 2001-02. The core issues revolved around the interpretation and application of sections related to the profits of business under the Income Tax Act, particularly concerning the DEPB (Duty Entitlement Pass Book) scheme and its impact on the computation of profits for the purpose of deduction under section 80HHC. The substantial questions of law raised by the appellant included the treatment of DEPB amounts in profit calculations and the applicability of certain provisos and amendments introduced by the Taxation Laws (Amendment) Act, 2005.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 735566 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 19-11-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. M/s The Designer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: DEPB; Export Incentives; Profit computation; Taxation Laws (Amendment) Act, 2005
• Section: 80HHC; 260A; 28 (iiid); 28(iiie)

Judgement Text

"ITA No. 620 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 620 of 2010 Date of Decision: 19.11.2010 Commissioner of Income Tax-I, Ludhiana ....Appellant. Versus M/s Jacob Export House ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 31.8.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A” in ITA No. 346/CHANDI/2008, for the assessment year 2001- 02, proposing following substantial questions of law:- “(i) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in law in not holding that 90% amount of DEPB was rightly excluded while working “Profits of the Business” as per explanation (baa) to section 80HHC read with clause (iiid) and (iiie) of section 28 of the ITA No. 620 of 2010 -2- Income Tax Act, 1961 inserted by Taxation Laws (Amendment) Act, 2005? (ii) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in law in not holding that the whole amount of consideration of DEPB that the assessee received is profit, because of the cost of same is Nil to the assessee? (iii) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in law in not holding that 90% of profit on transfer of export incentives is not to be increased while computing profits u/s 80HHC(3)(a) as the assessee failed to fulfil the conditions as contained in Third or Fourth proviso inserted by the Taxation Laws (Amendment) Act, 2005 as the export turnover of the assessee company is more than Rs.10 crores? (iv) Whether on the facts and circumstances of the case, the ITAT is right in law in not holding that the total sale consideration inclusive of face value of DEPB and premium amount received thereof represents profit chargeable under sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961? ITA No. 620 of 2010 -3- (v) Whether on the facts and circumstances of the case, the ITAT is right in law in not holding that profit on transfer of DEPB entitlement represents the entire amount inclusive of premium of sale of such DEPB? (vi) Whether on the facts and circumstances of the case, the ITAT is right in law in holding that the word “profit” referred to in sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 means the difference between the sale price of DEPB and the face value of DEPB ignoring the fact that the entire amount represents the profit in the hands of assessee? (vii) Whether on the facts and circumstances of the case, the ITAT is right in law in deducting the fare value of DEPH from sale price of DEPB for calculating profit under sections 28(iiid) and 28 (iiie) of the Income Tax Act, 1961 as if the face value is the cost incurred by the assessee to acquire the DEPB? (viii) Whether on the facts and circumstances of the case, the ITAT is right in holding that the word profit referred to in sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 requires any artificial cost to be interpolated to the extent that the face value of DEPB/DFRC should be ITA No. 620 of 2010 -4- deducted from the sale proceed for the purpose of determination of deduction under section 80HHC of the Income Tax Act, 1961? (ix) Whether on the facts and circumstances of the case, the ITAT is right in law in not appreciating that deduction u/s 80HHC of the Income Tax Act, 1961 was rightly computed in accordance with amendment made by the Taxation Laws (Amendment) Act, 2005 with retrospective effect from 01.04.1998?” 3. Learned counsel for the revenue states the matter is covered by order of this Court dated 13.9.2010 in ITA No. 424 of 2010 (Commissioner of Income Tax v. M/s The Designer). 4. Accordingly, the appeal is disposed of in same terms. (ADARSH KUMAR GOEL) JUDGE November 19, 2010 (AJAY KUMAR MITTAL) gbs JUDGE "