Prafful Exports, New Delhi V. ACIT circle-29 (1), New Delhi

ITA 3225/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5767 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 29-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 27-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Competent authority; Reassessment proceedings
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NOS.3224/DEL/2008 TO 3227/DEL/2008 ASSESSMENT YEARS : 2001-02 TO 2004-05 M/S PRAFFUL EXPORTS, 184, KATRA NAWAB, CHANDNI CHOWK, DELHI 110 006. PAN NO.AAAFP4057A. VS. ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE-29(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : DR.RAKESH GUPTA, ADVOCATE. RESPONDENT BY : SHRI H.K.LAL, SR.DR. ORDER PER BENCH : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(A) DATED 4 TH SEPTEMBER, 2008, FOR AY 2001-02 TO 2004-05, IN THE MATTER OF ORDER PASSED U/S 143(3)/148 OF THE IT ACT. 2. COMMON GRIEVANCE OF THE ASSESSEE IN ALL THE YEAR S RELATES TO NOT ALLOWING CLAIM OF DEDUCTION U/S 80HHC IN RESPECT OF THE EXPO RT INCENTIVES RECEIVED IN THE FORM OF DEPB RECEIPTS. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, THE IS SUE WITH REGARD TO ALLOWING CLAIM OF DEDUCTION IN RESPECT OF DEPB RECEIPTS IS S QUARELY COVERED BY THE DECISION OF THE ITAT MUMBAI SPECIAL BENCH IN THE CASE OF TOP MAN EXPORTS 318 ITR 87 (AT) WHEREIN FOLLOWING WAS THE OBSERVATION:- ITA-3224 TO 3227/DEL/2008 2 89. THE QUESTION RAISED BEFORE THE SPECIAL BENCH H AS TWO PARTS. IN SO FAR AS THE FIRST PART : WHETHER THE ENTIRE AMOU NT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PROFIT CHARGEABLE U NDER SECTION 28(IIID) OF THE INCOME TAX ACT, IS CONCERNED, WE A NSWER IT IN NEGATIVE AND THE SECOND PART OF THE QUESTION : OR THE PROFIT REFERRED TO THEREIN REQUIRES ANY ARTIFICIAL COST TO BE INTER POLATED? IS REPLIED IN AFFIRMATIVE TO THE EXTENT THAT THE FACE VALUE OF DE PB SHALL BE DEDUCTED FROM THE SALE PROCEEDS. AS REGARDS THE GR OUNDS RAISED IN THESE APPEALS AGAINST THE DENIAL OF DEDUCTION U/S 8 0HHC, IN FULL OR PART, WE FIND THAT THE COMPUTATION OF PROFITS DERIV ED FROM EXPORTS AND THE RESULTANT AMOUNT OF DEDUCTION UNDER THIS SE CTION CAN BE MADE ONLY WHEN THE DECISION IS TAKEN ON THE AMOUNT AND T HE TIMING OF TAXABILITY OF THE FACE VALUE OF DEPB AND THE PROFIT ON ITS SALE. ON THIS ISSUE WE HOLD THAT THE FACE VALUE OF DEPB IS C HARGEABLE TO TAX U/S 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DEPB IS FILED WITH THE COMPETENT AU THORITY PURSUANT TO EXPORTS AND PROFIT ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OVER ITS FACE VALUE IS LIABLE TO B E CONSIDERED U/S 28(IIID) AT THE TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB SHALL ALSO HOLD GOOD FOR DFRC, ON BOTH ITS COMPONENTS, VI Z., THE FACE VALUE OF DFRC AND PROFIT ON ITS TRANSFER, EXCEPT FO R THE FACT THAT THE PROFIT ON SALE OF DFRC SHALL BE CHARGED TO TAX U/S 28(IIIE). THERE IS NO DISPUTE ABOUT THE DUTY DRAWBACK, WHICH SHALL BE CHARGEABLE TO TAX AT THE TIME OF ACCRUAL OF INCOME U/S 28(IIIC) WHEN APPLICATION IS FILED WITH THE COMPETENT AUTHORITY AFTER MAKING EXPORTS. SINCE THE NECESSARY FACTS FOR THE DETERMINATION OF THE QUANTU M OF DEDUCTION U/S 80HHC, AS DISCUSSED ABOVE, ARE NOT AVAILABLE ON RECORD. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDERS AND DIRECT THE AO TO ITA-3224 TO 3227/DEL/2008 3 COMPUTE THE AMOUNT OF RELIEF IN ACCORDANCE WITH THE VIEW EXPRESSED BY US HERE IN ABOVE. 4. AS THE FACTS AND CIRCUMSTANCES DURING THE YEARS UNDER CONSIDERATION ARE IN PARI-MATERIA, THE MATTER IS RESTORED BACK TO THE AO FOR RECOMPUTING THE CLAIM OF DEDUCTION IN RESPECT OF DEPB RECEIPT IN TERMS OF TH E PROPOSITION LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS MENTION ED HEREINABOVE. WE DIRECT ACCORDINGLY. 5. THE LEGAL GROUND TAKEN IN THE APPEALS REGARDING VALIDITY OR OTHERWISE OF REASSESSMENT PROCEEDINGS WERE NOT PRESSED BY THE LE ARNED AR DURING THE COURSE OF HEARING. THE SAME ARE THEREFORE DISMISSED IN-LIMIN E. 6. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED IN PART, IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH, 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :29.03.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-3224 TO 3227/DEL/2008 4