COMMISSIONER OF INCOME TAX-I, LDH. V. M/S R.N. GUPTA & CO. LTD.

ITA/630/2010

AI Insights

The case involves an appeal by the Commissioner of Income-Tax-I, Ludhiana against M/s R.N. Gupta & Co. Ltd. concerning the assessment year 2004-05. The appeal was filed under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal, Chandigarh Bench. The core issues revolved around the interpretation and application of sections related to the computation of profits for the purpose of deduction under section 80HHC, particularly in relation to the treatment of DEPB (Duty Entitlement Pass Book) and export incentives. The High Court of Punjab and Haryana at Chandigarh decided to dispose of the appeal by aligning with the decision made in a similar case (ITA No.424 of 2010), thereby not delving into a detailed examination of the substantial questions of law raised.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 734800 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 16-12-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax Vs. M/s The Designer
• Laws Referred To: Income Tax Act, 1961, Taxation Laws (Amendment) Act, 2005
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Computation of profits; DEPB; Export Incentives; Premium amount; Sale Consideration; Profits of the business; Face value of DEPB
• Section: 80HHC; 260A; 28 (iiid); 28(iiie); 80HHC(3)(a)

Judgement Text

"Income-tax Appeal No.630 of 2010 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.630 of 2010 Date of decision: 16.12.2010 Commissioner of Income-Tax-I, Ludhiana ...Appellant Versus M/s R.N.Gupta & Co. Ltd. ...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 ( Oral) . 1. This order will dispose of ITA Nos.630, 631, 632, 634, 635, 636, 637, 638, 640, 644, 647, 648, 649, 650, 653, 656 and 668 of 2010. 2. ITA No.630 of 2010 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), Chandigarh in ITA No.55/CHANDI/2008 dated 31.8.2009, for the assessment year 2004-05, proposing following substantial questions of law:- “1. 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 Income-tax Appeal No.630 of 2010 -2- **** 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 Income Tax Act, 1961 inserted by Taxation Laws (Amendment) Act, 2005? 2. 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? 3. 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 90HHC(3)(a) as the assessee failed to fulfill 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? 4. 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 Income-tax Appeal No.630 of 2010 -3- **** represents profit chargeable under sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961? 5. 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? 6. 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? 7. Whether on the facts and circumstances of the case, the ITAT is right in law in deducting the face value of DEPB 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? 8. 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) Income-tax Appeal No.630 of 2010 -4- **** 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 deducted from the sale proceed for the purpose of determination of deduction under section 80HHC of the Income Tax Act, 1961? 9. 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 1.4.1998? 10. Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in setting aside the issue to the file of the Assessing Officer for re-adjudication with the directions to the Assessing Officer to decide the issue keeping in mind the decision of the Special Bench in the case of M/s Topman Exports & others whereas the Assessing Officer had correctly reduced the amount of sale of scrap from the 'profits of the business' and from total turnover?” 3. Learned counsel for the revenue states that the matter is covered by order of this Court dated 13.9.2010 in ITA No.424 of Income-tax Appeal No.630 of 2010 -5- **** 2010 (Commissioner of Income-Tax Vs. M/s The Designer). 4. Accordingly, these appeals are disposed in same terms. 5. A copy of this order be placed on the file of each connected case. (Adarsh Kumar Goel) Judge December 16,2010 (Ajay Kumar Mittal) Pka Judge "