COMMISSIONER OF INCOME TAX-I JALANDHAR V. M/S VICTOR FORGINGS

ITA/301/2010

AI Insights

The case involves the Commissioner of Income Tax, Jalandhar as the appellant and M/s Victor Forgings as the respondent, concerning the assessment year 2003-04. The core legal issues revolved around the interpretation of profit concerning the sale of DEPB (Duty Entitlement Pass Book) and its implications under sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961. The appellant challenged the decision of the Income Tax Appellate Tribunal, Amritsar Bench, which had previously ruled on similar matters. The High Court of Punjab and Haryana decided to dispose of the appeal by referencing a prior judgment in a related case, thereby not delving into the specifics of the current appeal.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 737407 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 16-08-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-tax v. M/s F.C. Sondhi & Company (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: ROHIT SUD; PANKAJ JAIN
• Assessee Lawyers: VIVEK SETHI
• Keywords: Assessment Year; DEPB; Income Tax; Profit; Sale Consideration
• Section: 80HHC; 260A; 28 (iiid); 28(iiie)

Judgement Text

"ITA No. 301 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 301 of 2010 Date of Decision: 16.8.2010 Commissioner of Income Tax, Jalandhar ....Appellant. Versus M/s Victor Forgings ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Vivek Sethi, Advocate for the appellant. Mr. Rohit Sud, Advocate for the respondent, in ITA Nos. 299, 307, 325 and 367 of 2010. Mr. Pankaj Jain, Advocate for the respondent, in ITA Nos. 306, 327, 337, 338 and 359 of 2010. ADARSH KUMAR GOEL, J. 1. This order will dispose of ITA Nos. 273, 274, 301, 302, 303, 304, 306, 307, 309, 322, 324, 325, 327, 328, 329, 330, 331, 332, 333, 334, 335, 336, 337, 338, 339, 340, 358, 359, 363, 364 and 367 of 2010 as common questions are involved therein. 2. ITA No. 301 of 2010 has been filed by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 12.10.2009 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short “the Tribunal”) in ITA No. 611(ASR)/2008 for ITA No. 301 of 2010 -2- the assessment year 2003-04 proposing to raise the following substantial questions of law:- “I. Whether on the facts and circumstances of the case the ITAT was 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? II. Whether on the facts and circumstances of the case the ITAT was 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? III. Whether on the facts and circumstances of the case the ITAT was right in law in holding that the word “profit” referred to in section 28(iiid) and 28(iiie) of 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? IV. Whether on the facts and circumstances of the case the ITAT was right in law in deducting the face value of DEPB from sale price of DEPB for calculating profit under section 28(iiid) and ITA No. 301 of 2010 -3- 28(iiie) of Income Tax Act, 1961 as if the face value is the cost incurred by the assessee to acquire the DEPB? V. Whether on the facts and circumstances of the case the ITAT was right in law 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 deducted from the sale proceed for the purpose of determination of deduction under section 80HHC of the Income Tax Act, 1961? VI. Whether on the facts and circumstances of the case, the ITAT has failed to appreciate that deduction u/s 80HHC of the Income Tax Act, 1961 was rightly computed in accordance with amendment made by the Taxation Law (Amendment) Act, 2005 with retrospective effect from 01.04.1998?” 3. Learned counsel for the parties in ITA Nos. 91, 299, 306, 307, 325, 327, 337, 338, 359 and 367 of 2010 are agreed that the matter is covered by order dated 16.8.2010 passed in ITA No. 299 of 2010 (Commissioner of Income-tax v. M/s F.C. Sondhi & Company (P) Ltd.). 4. No notice has been issued in ITA Nos. 273, 274, 301, 302, ITA No. 301 of 2010 -4- 303, 304, 309, 322, 324, 328 to 336, 339, 340, 358, 363 and 364 of 2010. Since the matter is covered, we are of the view that notice to assessee will be a futile exercise. Accordingly, all the appeals are disposed of in same terms with liberty to the respondents wherever they are unrepresented to move this Court if they are so advised. 5. Parties may appear before the Tribunal for further proceedings on December 20, 2010. 6. A photo copy of this order be placed on the files of the connected cases. (ADARSH KUMAR GOEL) JUDGE August 16, 2010 (AJAY KUMAR MITTAL) gbs JUDGE "