DALPAT LODHA, MUMBAI V. DCIT RG 24(1), MUMBAI

ITA 3365/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2085 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: I P RATHI
• Keywords: Competent authority
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO. 3365/MUM/2008 ASSESSMENT YEAR-2004-05 DALPAT LODHA, (PROP OF LODHA IMPEX), LAXMI BLDG., 11, SUBHASH ROAD, JOGESHWARI (E), MUMBAI-400 060 PAN - AAAP13459N VS. THE DCIT, RANGE 24(1), PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI I.P. RATHI RESPONDENT BY: SHRI T.T. JACOB O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT. 17.3.2008 PASSED BY THE LD. CIT(A)-XXIV, MUMBAI FOR THE ASSESSMENT YEAR 2004-05. 2. THE ONLY GROUND IN THIS APPEAL IS AGAINST THE CO MPUTATION OF DEDUCTION U/S. 80HHC VIS-A-VIS DEPB. 3. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON OF THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF M/S. TO PMAN EXPORTS VS ITO IN ITA NO.5769/MUM/2006 : ASST. YEAR: 2002-2003 . 4. THE QUESTION REFERRED TO THE SPECIAL BENCH WAS: WHETHER THE ENTIRE AMOUNT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PROFIT CHARGEABLE UNDER SEC TION 28(III)(D) OF THE INCOME TAX ACT OR THE PROFIT REFE RRED TO THEREIN REQUIRES ANY ARTIFICIAL COST TO BE INTERPOLATED? ITA NO. 3365/M/08 2 5. AFTER CONSIDERING COMPREHENSIVELY ALL ASPECTS OF THE MATTER, THE SPECIAL BENCH ANSWERED THE QUESTION AS UNDER:- THE QUESTION RAISED BEFORE THE SPECIAL BENCH HAS T WO PARTS. IN SO FAR AS THE FIRST PART: `WHETHER THE ENTIRE AM OUNT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PROFIT CHAR GEABLE UNDER SECTION 28(IIID) OF THE INCOME TAX ACT, IS C ONCERNED, WE ANSWER IT IN NEGATIVE AND THE SECOND PART OF THE QU ESTION: `OR THE PROFIT REFERRED TO THEREIN REQUIRES ANY ARTIFIC IAL COST TO BE INTERPOLATED? IS REPLIED IN AFFIRMATIVE TO THE EX TENT THAT THE FACE VALUE OF DEPB SHALL BE DEDUCTED FROM THE SALE PROCEEDS. AS REGARDS THE GROUNDS RAISED IN THESE APPEALS AGAI NST THE DENIAL OF DEDUCTION U/S 80HHC, IN FULL OR PART, WE FIND THAT THE COMPUTATION OF PROFITS DERIVED FROM EXPORTS AND THE RESULTANT AMOUNT OF DEDUCTION UNDER THIS SECTION CA N 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 PRO FIT ON ITS SALE. ON THIS ISSUE WE HOLD THAT THE FACE VALUE OF DEPB IS CHARGEABLE TO TAX U/S 28(IIIB) AT THE TIME OF ACCRU AL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DEPB IS FILED WIT H THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFI T ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DE PB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28(II ID) AT THE TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB, SHALL ALS O HOLD GOOD FOR DFRC, ON BOTH ITS COMPONENTS, VIZ, THE FACE VAL UE OF DFRC AND PROFIT ON ITS TRANSFER, EXCEPT FOR THE FACT THA T 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 CHA RGEABLE TO TAX AT THE TIME OF ACCRUAL OF INCOME U/S 28(IIIC ) WHEN APPLICATION IS FILED WITH THE COMPETENT AUTHORITY A FTER MAKING EXPORTS. SINCE THE NECESSARY FACTS FOR THE DETERMIN ATION OF THE QUANTUM OF DEDUCTION U/S 80HHC, AS DISCUSSED ABOVE, ARE NOT AVAILABLE ON RECORD, WE, THEREFORE, SET ASIDE T HE IMPUGNED ORDERS AND DIRECT THE AO TO COMPUTE THE AMOUNT OF R ELIEF IN ACCORDANCE WITH THE VIEW EXPRESSED BY US HERE IN AB OVE. ITA NO. 3365/M/08 3 RESPECTFULLY FOLLOWING THE RATIO OF THE SPECIAL BE NCH IN THE CASE OF TOPMAN EXPORTS SUPRA , WE DIRECT THE AO TO REWORK THE RELIEF U/S 80HHC IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS DAY OF MAY, 2010 (R.S. SYAL) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED .. MAY, 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI DATE INITIALS 1 DRAFT DICTATED ON: 6.5.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 6. 5 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/ PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______ ITA NO. 3365/M/08 4