Purolator India Ltd., V. DCIT, Circle-14(1),

ITA 1927/DEL/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53355 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-12-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 29-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GARG
• Keywords: Business income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH G DELHI ] BEFORE SHRI I. P. BANSAL, JM & SHRI K. D. RANJAN, AM I. T. APPEAL NO. 1927 (DEL) OF 2006. ASSESSMENT YEAR : 2002-03. M/S. PUROLATER INDIA LTD. [NOW KNOWN AS DY. COMM ISSIONER OF INCOME-TAX, MAHLE FILTER SYSTERM INDIA LIMITED] VS. C I R C L E : 14 (1), 1 SRI AUROBINDO MARG, N E W D E L H I. N E W D E L H I 110 016. P A N / G I R NO. AAA CP 5890 Q. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ROHIT GARG, C. A.; DEPARTMENT BY : SHRI RAJESH GARG, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 02-03 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-X, NEW DELHI. 2. IN THIS CASE, ITAT, DELHI BENCH G NEW DELHI VI DE ORDER DATED 18 TH FEBRUARY, 2010 DECIDED THE APPEAL IN RESPECT OF BOTH THE ISSUES I. E.(I) EXCLUSION OF DEPB CREDIT TO THE EXTENT OF 90 PER CENT THEREOF FROM THE PROFITS OF BUSINESS FO R THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80-HHC OF THE ACT AND (II) THE ISSUE RELAT ING TO TREATMENT OF INTEREST INCOME AS TO WHETHER THE SAME WAS ASSESSABLE AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES. THE REVENUE SOUGHT RECTIFICATION OF THE ORDER IN RESPEC T OF EXCLUSION OF DEPB CREDIT TO THE EXTENT OF 2 I. T. APPEAL NO. 1927 (DEL) OF 2006. 90 PER CENT THEREOF ON THE GROUND THAT THE DECISION OF THE ITAT, SPECIAL BENCH, MUMBAI IN THE CASE OF TOPMAN EXPORTS VS. INCOME-TAX OFFICER 33 SO T 337 (MUM.) (SPECIAL BENCH), WHICH WAS RELIED UPON BY THE ITAT WAS OVER-RULED BY CIT V S. KALPTARU COLOURS & CHEMICALS 328 ITR 451 (BOM). WE HAVE RECALLED THE ORDER DATED 18 TH FEBRUARY, 2010 IN RESPECT OF DEPB ISSUE. AFTER RECALLING THE ORDER DATED 18 TH FEBRUARY, 2010 IN RESPECT OF DEPB RECEIPTS, WE HEA RD THE APPEAL ALSO ON THE SAME DATE. 3. IN ASSESSMENT YEAR 2001-02 THE REVENUE PREFERRED APPEAL BEFORE HONBLE DELHI HIGH COURT ON DEPB ISSUE. HONBLE DELHI COURT SET ASIDE THE MATTER TO THE FILE OF THE ITAT WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS. THE SE T ASIDE APPEAL FOR ASSESSMENT YEAR 2001-02 WAS HEARD BY THE ITAT, DELHI BENCH G, NEW DELHI. DURI NG THE COURSE OF HEARING THE LD. AR OF THE ASSESSEE CONCEDED THAT THE ISSUE WAS SQUARELY COVER ED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CH EMICALS (SUPRA). IN VIEW OF THESE FACTS THE ITAT DELHI BENCH G VIDE ORDER DATED 26 TH AUGUST, 2011 SET ASIDE THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER BY OBSERVING AS UNDER :- 5. WE FIND THAT THIS ISSUE IS COVERED BY THE DEC ISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS KALPATARU COLOURS & CHEMICALS (SUPRA). HONBLE BOMBAY HIGH COURT HAS HELD THAT THE AMOUNT RECEIVED ON TRANSFER OF DEPB CREDIT INCLUDING THE FACE VALUE OF THE DEPB CREDIT WOULD CONSTITUTE PROFITS O F BUSINESS UNDER SECTION 28(IIID) OF THE ACT AND, THEREFORE, THE ENTIRE AMOUNT OF DEPB RECEI VED HAS TO BE EXCLUDED UNDER CLAUSE (BAA) OF EXPLANATION TO SECTION 80-HHC OF THE ACT. HONBLE HIGH COURT WHILE ARRIVING AT THIS DECISION OBSERVED THAT WHEN SECTION 28(III D) SPECIFICALLY DEALS WITH PROFITS REALIZED ON TRANSFER OF DEPB CREDIT, IT WOULD BE IM PERMISSIBLE AS A MATTER OF FIRST PRINCIPLE TO BIFURCATE THE FACE VALUE OF THE DEPB AND THE AMOUNT RECEIVED IN EXCESS OF FACE VALUE OF DEPB. SINCE THE ISSUE IS NOW COVERED BY THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS KALPATARU COLOURS & CHE MICALS (SUPRA) WE SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH TH E DIRECTION TO DECIDE THE ISSUE RELATING TO EXCLUSION OF DEPB CREDITS INCLUDING PROFITS THEREON AS PER THE DECISION OF HONBLE 3 I. T. APPEAL NO. 1927 (DEL) OF 2006. BOMBAY HIGH COURT CIT VS KALPATARU COLOURS & CHEMIC ALS (SUPRA) AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. SINCE IDENTICAL ISSUE IS INVOLVED IN ASSESSMENT YEA R 2002-03, WE SET ASIDE THE ISSUE RELATING TO DEPB RECEIPTS TO THE FILE OF THE ASSESSING OFFICER WITH THE SIMILAR DIRECTIONS. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED, FOR STATISTICAL PURPOSES, IN RESPECT OF DEPB RECEIPTS. ORDER PRONOUNCED IN THE OPEN COURT ON : 30 TH NOVEMBER, 2011. SD/- SD /- [ I. P. BANSAL ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH NOVEMBER, 2011 . *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT RE GISTRAR, ITAT.