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

ITA 5685/DEL/2004

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52620 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 29-12-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• 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. 5685 (DEL) OF 2004. ASSESSMENT YEAR : 2001-02. M/S. PUROLATER INDIA LTD. [NOW KNOWN AS DY. COMM ISSIONER OF INCOME-TAX, MAHLE FILTER SYSTEM 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 NEERAJ JAIN, C. A. ; & SHRI ROHIT GARG, C. A.; DEPARTMENT BY : SHRI A. K. MONGA, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 01-02 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-XVII, NEW DELHI. 2. IN THIS CASE ITAT, DELHI BENCH G VIDE ORDER CO NSOLIDATED DATED 18 TH FEBRUARY, 2011 IN ITA. NO. 5685 (DEL) OF 2004 AND 1927 (DEL) OF 2006 FOR ASSESSMENT YEARS 2001-02 AND 2002-03 DECIDED THE APPEALS. ONE OF THE ISSUES RELATED TO TREATMENT OF DEPB RECEIPTS FOR THE PURPOSE OF ASSESSMENT. ITAT FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS VS. ITO 33 SOT 337 (MUM.) [SB] HELD THAT THE AMOUNT OF DEPB CREDIT 2 I. T. APPEAL NO. 5685 (DEL) OF 2004. RECEIVED / RECEIVABLE WILL BE CHARGEABLE TO TAX UND ER SECTION 28(IIID) OF THE ACT. THE ASSESSING OFFICER WAS DIRECTED TO EXCLUDE ONLY THE PROFIT ON TRANSFER OF DEPB FROM THE PROFITS OF BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTIO N 80-HHC OF THE ACT. 3. THE ASSESSEE APPEALED AGAINST THE ORDER OF THE I TAT BEFORE HONBLE DELHI HIGH COURT. HONBLE DELHI HIGH COURT VIDE THEIR ORDER DATED 22/ 03/2011 HAD SET ASIDE THE MATTER TO THE FILE OF THE ITAT BY HOLDING THAT THE DECISION OF SPECIAL BE NCH IN THE CASE OF TOPMAN EXPORTS (SUPRA) STANDS OVER-RULED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS [2010] 328 ITR 451 (B OM.) WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS AFTER TAKING INTO ACCOUNT ACTUAL P OSITION OF THE CASE. 4. DURING THE COURSE OF HEARING THE LD. AR OF THE A SSESSEE CONCEDED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS (SUPRA). ON THE OTHE R HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). IT WAS ALSO SUBMITTED TH AT THE ENTIRE AMOUNT OF DEPB RECEIPTS WILL BE TAXABLE AS BUSINESS INCOME AND, THEREFORE, NO DEDUC TION UNDER CLAUSE (BAA) TO SECTION 80-HHC OF THE ACT WILL BE AVAILABLE. HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CH EMICALS (SUPRA). 5. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON 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 OF BUSINESS UNDER SECTION 28(IIID) OF THE ACT AND, THEREFORE, THE ENTIRE AMOUNT OF DEPB RECEIVED HAS TO BE EXCLUDED UNDER CL AUSE (BAA) OF EXPLANATION TO SECTION 80- HHC OF THE ACT. HONBLE HIGH COURT WHILE ARRIVING AT THIS DECISION OBSERVED THAT WHEN SECTION 28(IIID) SPECIFICALLY DEALS WITH PROFITS REALIZED ON TRANSFER OF DEPB CREDIT, IT WOULD BE IMPERMISSIBLE AS A MATTER OF FIRST PRINCIPLE TO BIF URCATE THE FACE VALUE OF THE DEPB AND THE AMOUNT RECEIVED IN EXCESS OF FACE VALUE OF DEPB. S INCE THE ISSUE IS NOW COVERED BY THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS KALPATARU COLOURS & CHEMICALS (SUPRA) 3 I. T. APPEAL NO. 5685 (DEL) OF 2004. WE SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSI NG OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE RELATING TO EXCLUSION OF DEPB CREDITS INCLUDING PRO FITS THEREON AS PER THE DECISION OF HONBLE BOMBAY HIGH COURT CIT VS KALPATARU COLOURS & CHEMIC ALS (SUPRA) AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 26 TH AUGUST, 2011. SD/- SD/- [ I. P. BANSAL ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH AUGUST, 2011 . *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. SR. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.