M/s Fitex Industries Ltd., Ludhiana V. ACIT, Ludhiana

ITA 956/CHANDI/2006

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5348 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 22-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KHEMWAL; S K MITTAL
• Keywords: Business income; Retrospective amendment
• Section: 80HHC; 28; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER I.T.A.NO.956/CHD/2006 ASSESSMENT YEAR : 2003-04 M/S FITEX INDUSTRIES, V A.C.I.T. - V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.143/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S FITEX INDUSTRIES, V J.C.I.T. RANGE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.1080/CHD/2008 ASSESSMENT YEAR : 2000-01 M/S JACOB EXPORT HOUSE, V ITO (OSD)-II, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.402/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S T.R.B. EXPORTS P.LTD., V J.C.I.T. RANGE-IV, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR 2 I.T.A.NO.10/CHD/2007 ASSESSMENT YEAR 2003-04 M/S JINDAL FINE IND., V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.141/CHD/2009 ASSESSMENT YEAR 2004-05 M/S JINDAL FINE IND., V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.245/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S SAMEER EXPORTS V A.C.I.T. CIRCLE-I, INTERNATIONAL, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.5/CHD/2008 ASSESSMENT YEAR : 2004-05 SHRI AMAN SINGHAL, V A.C.I.T. CIRCLE-I, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.741/CHD/2006 ASSESSMENT YEAR : 2003-04 M/S SOVEREIGN EXPORTS, V D.C.I.T. CIRCLE-IV, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR 3 I.T.A.NO.347/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S SOVEREIGN EXPORTS, V J.C.I.T.RANGE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.192/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S SOVEREIGN EXPORTS, V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.484/CHD/2006 ASSESSMENT YEAR 2003-04 M/S PERFECT FORGING, V D.C.I.T. CIRCLE-IV, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.209/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S TURBO IMPEX, V J.C.I.T. RANGE-VI, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.190/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S TURBO IMPEX, V A.C.I.T. CIRCLE-I, LUDHIANA. LUDHIANA. 4 APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.346/CHD/2008 ASSESSMENT YEAR : 2001-02 M/S JACOB EXPORT HOUSE, V A.C.I.T. CIRCLE-II, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.308/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S PERFECT FORGINGS, V J.C.I.T. RANGE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.332/CHD/2008 ASSESSMENT YEAR : 2004-05 A.C.I.T., V M/S PERFECT FORGINGS, CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NO.749/CHD/2006 ASSESSMET YEAR 2003-04 M/S T.R.B. EXPORTS P.LTD., D.C.I.T. CIRCLE-IV, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEM WAL, DR I.T.A.NOS.1043 & 1044/CHD/2007 ASSESSMENT YEAR : 2003-04 & 2004-05 5 M/S TIPSON CYCLES PVT. LTD. V A.C.I.T-III, LUDHIANA. LUDHIANA. PAN : AAACT-6543-Q APPELLANT BY: SHRI S.K.MUKHI & MS. JYOTI RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHE MWAL,DR I.T.A.NO.61 /CHD/2010 ASSESSMENT YEAR : 2001-02 A.C.I.T, CIRCLE-I, V M/S TIPSON CYCLES LTD. LUDHIANA. LUDHIANA. PAN : AAACT6543Q APPELLANT BY: SHRI S.K.MUKHI & MS. JYOTI RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHE MWAL,DR I.T.A.NO.69 /CHD/2011 ASSESSMENT YEAR : 2002-03 M/S TIPSON CYCLES PVT. LTD. V A.C.I.T, CIRCLE-I, LUDHIANA. LUDHIANA. PAN : AAACT6543Q APPELLANT BY: SHRI S.K.MUKHI & MS. JYOTI RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHE MWAL,DR I.T.A.NO.768/CHD008 ASSESSMENT YEAR : 2004-05 M/S KANIN (INDIA) LTD., V J.C.I.T. RANGE-I, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI S.K.MUKHI & MS. JYOTI RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHE MWAL,DR I.T.A.NO.55/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S R.N. GUPTA & CO. LTD., V J.C.I.T. RANGE-I, LUDHIANA. LUDHIANA. 6 APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.124/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S R.N. GUPTA & CO. LTD., V A.C.I.T. CIRCLE-I, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.834/CHD/2006 ASSESSMENT YEAR 2003-04 M/S HERO EXPORTS, V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.124/CHD/2008 ASSESSMENT YEAR : 2003-04 M/S HIGHWAY CY. INDUSTRIES V A.C.I.T. CIRCLE-V, LTD., LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.89/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S ANAND CONCAST LTD., V J.C.I.T. RANGE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.38 TO 40/CHD/2009 ASSESSMENT YEAR : 2000-01 TO 2002-03 7 M/S GREATWAY P. LTD., V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.227/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S AVON CYCLE LTD., V D.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR C.O.NO.45/CHD/2006 IN I.T.A.NO. 816/CHD/2006 ASSESSMENT YEAR 2003-04 M/S AVON CYCLES LTD., V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.104/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S HERO EXPORTS, V D.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.836/CHD/2008 ASSESSMENT YEAR : 2000-01 M/S HERO EXPORTS, V A.C.I.T. CIRCLE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR 8 I.T.A.NO.264/CHD/2008 ASSESSMENT YEAR : 2004-05 M/S HERO EXPORTS, V J.C.I.T. RANGE-V, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.487/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S EASTMAN INTERNATIONAL, V A.C.I.T. CIRCLE-I, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.319/CHD/2009 ASSESSMENT YEAR : 2004-05 M/S EASTMAN IMPEX LTD., V J.C.I.T. RANGE-I, LUDHIANA. LUDHIANA. I.T.A.NO.214/CHD/2009 ASSESSMENT YEAR : 2004-05 M/S EASTMAN INTERNATIONAL, V J.C.I.T. RANGE-I, LUDHIANA. LUDHIANA APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.955/CHD/2006 ASSESSMENT YEAR 2003-04 M/S EASTMAN IMPEX, V A.C.I.T. RANGE-I, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR 9 I.T.A.NO.64/CHD/2007 ASSESSMENT YEAR 2002-03 M/S EASTMAN IMPEX, V A.C.I.T. RANGE-I, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.673 /CHD/2007 ASSESSMENT YEAR 2003-04 M/S KING EXPORTS, V A.C.I.T. CIRCLE-II, LUDHIANA. LUDHIANA. APPELLANT BY: SHRI ASHOK KUMAR JUNEJA RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR I.T.A.NO.1072/CHD/2007 ASSESSMENT YEAR : 2004-05 M/S KING EXPORTS, V A.C.I.T. CIRCLE-I, LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHOK KUMAR JUNEJA RESPONDENT BY: S/SHRI S.K.MITTAL, CIT & S.S.KHEMWA L,DR O R D E R PER BENCH : THE PRESENT BUNCH OF APPEALS WERE LISTED FOR HEARI NG PURSUANT TO THE ORDER/S PASSED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN SETTING ASIDE TO THE FILE OF THE TRIBUNAL THE ISSUE OF COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE INCOME TAX ACT VIS--VIS THE INCOME FROM DEPB, DBK AND DFRC, WHICH ARE TO BE TRE ATED AS BUSINESS INCOME. 10 2. ALL THE ABOVE-SAID APPEALS RELATING TO DIFFERENT ASSESSEES INVOLVING SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DI SPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ISSUE ARISING IN THE CAPTIONED APPEALS RELAT ES TO THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE INCOME TAX ACT ON ACCOUNT OF INCOME BY WAY OF DUTY ENTITLEMENT PAS S BOOK(DEPB), DUTY DRAW BACK (DBK) AND DUTY FREE REMISSION SCHEME (DFRC). THE ISSUE WAS DECIDED BY THE CHANDIGARH BENCH OF THE TR IBUNAL VIDE ORDER DATED 31.8.2009 FOLLOWING THE DECISION OF A SPECIAL BENCH OF MUMBAI TRIBUNAL IN M/S TOPMAN EXPORTS VS. ITO (2009) 29 DT R 153 (MUMBAI) AND THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO BE ADJUDICATED AFRESH CONFORMITY WITH THE AFORESAID DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL. 4. THE REVENUE FILED APPEALS BEFORE THE HON'BLE HIG H COURT. THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW WERE RAISED BEFORE THE HON'BLE HIGH COURT : I. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ITAT WAS RIGHT IN LAW IN NOT HOLDING THAT THE TOTAL SALE CONSIDERATION INCLUSIVE FACE VALUE OF DEPB AND PREMIUM AMOUNT RECEIVED THEREOF REPRESENTS PROFIT CHARGEABLE UNDER SECTION 28(IIID) AND 28(IIIE) OF THE INCOME TAX ACT, 1961? II. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ITAT WAS RIGHT IN LAW IN NOT HOLDING THAT PROFI T ON TRANSFER OF DEPB ENTITLEMENT REPRESENTS THE ENTIRE AMOUNT INCLUSIVE OF PREMIUM OF SALE OF SUCH DEPB? 11 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(III E) 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 C ASE 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 28(IIIE) OF INCOME TAX ACT, 1961 AS IF THE FACE VAL UE IS THE COST INCURRED BY THE ASSESSEE TO ACQUIRE THE DEPB? V. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE ITAT WAS RIGHT IN LAW IN HOLDING THAT THE WORD PROFIT REFERRED TO IN SECTION 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? 5. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN I.T.A .NO. 299 OF 2010 IN CIT VS. F.C.SONDHI & COMPANY (P) LTD. VIDE ITS JUDGMENT DATED 16.8.2010, IN RESPECT OF THE ISSUE RAISED WITH REGA RD TO TREATMENT OF RECEIPTS OF DEPB/DFRC ENTITLEMENTS AND DEDUCTION AL LOWABLE ON SUCH RECEIPTS UNDER SECTION 80HHC OF THE ACT, OBSERVED A FTER HEARING THE RIVAL CONTENTIONS OF THE PARTIES, THAT THE VIEW TAK EN BY THE MUMBAI TRIBUNAL HAS BEEN REVERSED BY THE HON'BLE BOMBAY HI GH COURT IN CIT VS. KALPATARU COLOURS AND CHEMICALS, (2010) 42 DTR (BOM ) 193/328 ITR 451 (BOM). THE HON'BLE COURT HELD AS UNDER : 12 6. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE BOMBAY HIGH COURT AND ARE OF THE VIEW THAT THE INCOME FROM DBK, DEPB AND DFRC HAS TO BE TREATED AS BUSINESS INCOME AND HAS TO BE TAKEN INTO ACCOUNT FOR DEDUCTION UNDER SECTION 80HHC. THE QUESTIONS PROPOSED ARE ANSWERED ACCORDINGLY AND MATTER IS REMANDED TO THE ITAT FOR FRESH DECISION IN ACCORDANCE WITH LAW. 6. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V S. VICTOR FORGINGS IN I.T.A.NO. 301 OF 2010 VIDE ITS JUDGMENT DATED 16.8.2010 OBSERVED THAT ITS ORDER WOULD DISPOSE OFF VARIOUS C APTIONED ITAS AS COMMON QUESTIONS WERE INVOLVED THEREIN. THE HON'BL E HIGH COURT HAS HELD THAT THE ISSUE STANDS COVERED BY THE ORDER PAS SED IN I.T.A.NO. 299 OF 2010 IN CIT VS. F.C.SONDHI & COMPANY (P) LTD. (O RDER DATED 16.8.2010). 7. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF VARIOUS ASSESSEES INCLUDING CIT VS. M/S TIPSON CYCLES PVT. LTD. BEFORE US HAVE REMITTED THE MATTER BACK TO THE TRIBUNAL FOR FRESH DECISION IN ACCORDANCE WITH LAW BY OBSERVING AS UNDER : 2. LEARNED COUNSEL FOR THE APPELLANT STATES THAT T HE MATTER IS COVERED IN FAVOUR OF THE REVENUE BY ORDER S OF THIS COURT DATED 16.8.2010 IN I.T.A.NO.301 OF 2010 CIT V. M/S VICTOR FORGINGS AND I.T.A.NO.299 OF 2010 CIT V. F.C.SONDHI, WHEREIN AFTER NOTICING THE JUDGMENT OF THE BOMBAY HIGH COURT IN CIT V. KALPARARU COLOURS & CHEMICALS 2010 (42) DTR 193, THE MATTER WAS REMANDED TO THE TRIBUNAL FOR FRESH DECISION IN ACCORDANCE WITH LAW. 3. SINCE WE FIND THAT THE MATTER IS COVERED BY EARL IER ORDERS OF THIS COURT, WE DISPOSE OF THIS APPEAL IN SAME TERMS. FOR THIS PURPOSE, WE HAVE NOT 13 CONSIDERED IT NECESSARY TO ISSUE NOTICE TO THE RESPONDENT, BUT WE GIVEN LIBERTY TO THE RESPONDENT TO MOVE THIS COURT IF THEY HAVE ANY GRIEVANCE AGAINST THIS ORDER. IN VIEW OF THEAFORESAID DIRECTIONS, ALL THE CAPTIO NED APPEALS WERE LISTED FOR HEARING BEFORE THE TRIBUNAL AND THE LEAR NED ARS REPRESENTING DIFFERENT ASSESSEE PUTFORTH THEIR CONTENTIONS. 8. MR. SUDHIR SEHGAL, THE LEARNED AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE IN I.T.A.NO.956/CHD/2006 & OTHERS MADE ELABORATE ARGUMENTS ABOUT THE COMPUTATION OF DEDUCTION UNDER SECTION 80 HHC VIS--VIS THE RECEIPTS OF DEPB & DFRC AND ALSO FILED WRITTEN SUBM ISSIONS. AS PER THE LEARNED A.R., SECTION 80HHC WAS MEANT TO ENCOURAGE THE EXPORTS AND WAS BENEFICIAL PROVISION AND, ACCORDINGLY THE INTERPRETATION OF THIS SECTION READ WITH VARIOUS OTHER PROVISO HAD TO BE I NTERPRETED FAVOURABLY . HE FURTHER SUBMITTED THAT THE DEPB SCHEME WAS BROUG HT TO NEUTRALIZE THE INCIDENCE OF CUSTOM/IMPORT DUTIES LEVIED /PAID ON I MPORT CONTENTS OF RAW MATERIAL AND OTHER INPUTS OF THE EXPORT PRODUCT. T HUS, DEPB WAS NOTHING BUT QUANTIFICATION OF IMPORT/CUSTOM DUTIES LEVIED ON RAW MATERIAL/INPUTS CONSUMED IN EXPORT PRODUCT AND THE SAID COST STANDS DEBITED TO P & L ACCOUNT AS RAW MATERIAL COST, WHIC H WAS PRE- DETERMINED BY ISSUING AUTHORITY, BASED ON SPECIFIC DATA RELATING TO EXPORT PRODUCT, WHICH WAS IN SUBSTANCE THE COST OF DEPB LICENSES. HE FURTHER STATED THAT AMOUNT TO BE RECOUPED ON ACCOUN T OF CUSTOM /IMPORT DUTIES LEVIED ON RAW MATERIAL OF THE EXPORT PRODUCT WAS FACE VALUE (COST) OF THE DEPB LICENSE AND THE SAME WAS ILLUSTRATED BY FOLLOWING EXAMPLE IN THE WRITTEN SUBMISSIONS: I) SALE PRICE OF EXPORT PRODUCT 100.00 II) RAW MATERIAL AND OTHER INPUTS 60.00 III) IMPORT DUTY LEVIED ON RAW/MATERIAL AND OTHER INPUTS 6.00 14 66.00 OTHER MANUFACTURING EXPENSES 20.00 86.00 PROFIT 14.00 DEPB LICENSE ENTITLEMENT (BEING IMPORT DUTY) 6.00 AS PER THE LEARNED A.R., DEPB LICENSE HAVING FACE VALUE OF RS. 6/- WAS ISSUED BY THE GOVT. AUTHORITIES, WHICH IN OTHE R WORDS, WAS REIMBURSEMENT OF IMPORT DUTY COST, WHICH WAS ALREAD Y DEBITED IN THE TRADING ACCOUNT UNDER THE HEAD RAW MATERIAL AND O THER INPUTS COST. THE CLAIM OF LEARNED A.R. WAS THAT FACE VALUE OF TH E LICENSE REPRESENTS THE REIMBURSEMENT/NEUTRALIZATION OF CUSTOM/IMPORT D UTY COST AND CLAUSE (IIID) OF SECTION 28 OF THE ACT COMES INTO PLAY WHE N DEBP CREDIT OF RS. 6/- WAS TRANSFERRED AND WHEN THE SAID LICENSE HAVIN G VALUE OF RS. 6/- WAS TRANSFERRED IN THE MARKET AT RS. 7/-, ONLY RS. 1/- WAS THE PROFIT TO THE EXPORT ON SUCH TRANSFER OF DEPB LICENSE, AS ENVISAG ED IN CLAUSE (IIID) OF SECTION 28 OF THE ACT. RELIANCE WAS PLACED ON THE SPEECH OF FINANCE MINISTER, WHILE INTRODUCING THE BILL TO SHOW THAT T HE INTENTION OF THE STATUTE WAS TO TAX ONLY THE PROFITS/PREMIUM ARISING ON THE TRANSFER OF DEPB. FURTHER RELIANCE WAS PLACED ON CALCUTTA CO. LTD. VS. CIT, 37 ITR 1 (SC) AND VANIA SILK MILLS (P) LTD. VS. CIT (1 9 ITR 647 (SC)) AND OTHERS THAT TRANSFER PRESUMES EXISTENCE OF ASSET AN D OF TRANSFEREE TO WHOM IT IS TRANSFERRED AND DEPB LICENCE IS AN ASSET HAVING VALUE, WHICH IS TRANSFERRED. 9. THE LEARNED A.R. THUS SUBMITTED THAT THE EXPRESS ION PROFIT SIGNIFIES SALE PRICE OVER AND ABOVE THE FACE VALUE OF DEPB LICENSE AND THE SAME WAS CONTEMPLATED UNDER CLAUSE ((IIID) OF S EC 28 OF THE ACT AND 90% OF SUCH PROFITS ONLY WERE TO BE REDUCED TO CALC ULATE PROFITS OF THE BUSINESS AS PER CLAUSE (BAA) OF THE EXPLANATION TO SUB-SEC 4 OF SECTION 15 80HHC, FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 80HHC OF THE ACT. 10. IT WAS FURTHER POINTED OUT BY THE LEARNED A.R. THAT UNDER CLAUSE/S (IIIA), (IIIB), (IIIC) AND CLAUSE (IV) AND (V) OF S ECTION 28 OF THE ACT THAT WHEREVER, LEGISLATURE WANTED THAT ONLY PROFIT ELEME NT WAS TO BE CONSIDERED, THE WORD PROFIT HAD BEEN USED AND WHE REVER THE WHOLE AMOUNT HAS TO BE CONSIDERED, DIFFERENT LANGUAGE HAD BEEN USED. 11. THE LEARNED A.R. EXPLAINED THAT WHEN SECTION 2 8(IIIA), (IIIB) & (IIIC) OF THE ACT WERE BROUGHT INTO EXISTENCE BY TH E FINANCE ACT 1990, THE DEFINITION OF INCOME AS APPEARING IN CLAUSE ( 24) OF SEC 2 WAS ALSO AMENDED TO BRING THE SAID RECEIPT/S IN THE AMBIT OF INCOME. ALSO WHEN THE AMENDMENTS OF CLAUSE (IV) & (V) OF SECTION 28 W ERE MADE IN THE YEAR 1964 AND 1992 RESPECTIVELY, EVEN AT THAT TIME, THE DEFINITION OF INCOME WAS AMENDED ACCORDINGLY. HOWEVER, WHEN THE PROVISI ONS OF SECTION 28 (IIID) & (IIIE) WERE INSERTED BY THE TAXATION LAWS (AMENDMENT) ACT, 2005, NO CORRESPONDING CHANGES WERE BROUGHT IN THE DEFINITION OF INCOME TO BRING THEM INTO THE PURVIEW OF INCOME . AS PER THE LEARNED A.R., THE FINDINGS AS GIVEN BY THE HON'BLE BOMBAY H IGH COURT IN THE CASE OF CIT V. KALAPATARU COLOURS AND CHEMICALS (32 8 ITR 451(BOM)), DOES NOT GIVE THE CORRECT INTERPRETATION OF THE SAI D CLAUSES (IIID) & (IIIE) OF SECTION 28, AS ONLY PROFIT ELEMENT I.E. SALE PRO CEEDS MINUS FACE VALUE OF CUSTOM DUTY CREDIT UNDER DEPB SCHEME, WERE ENVIS AGED IN SECTION 28 (IIID) OF THE ACT, WHICH VIEW FURTHER GETS STREN GTHENED THAT IF DEPB WAS NOT TRANSFERRED AS ENVISAGED IN CLAUSE (IIID) O F SECTION 28, THEN IT HAD TO BE PLACED UNDER CLAUSE (IIIB) OF SECTION 28 AS RIGHTLY HELD BY THE HON'BLE SPECIAL BENCH IN THE CASE OF M/S TOPMAN EXP ORTS IN PARA 39 OF THE ORDER. 16 12. THE NEXT PLEA OF THE LEARNED A.R. WAS EVEN IF D EDUCTION U/S 80HHC HAD TO BE RESTRICTED IN CASE OF EXPORTERS HAVING EX PORT TURNOVER EXCEEDING 10 CRORES, ONLY THE PREMIUM EARNED ON TRA NSFER OF THE LICENCE WAS TO BE BROUGHT TO TAX AND NOT THE WHOLE OF THE R ECEIPTS ON ACCOUNT OF SUCH LICENSES. HE CONCLUDED BY SUBMITTING THAT EV EN 90% OF PROFIT ON TRANSFER OF DUTY CREDIT UNDER DEPB SCHEME I.E. TRAN SFER PRICE MINUS FACE VALUE OF DEPB ALSO BECOMES A PART OF EXPORT PR OFIT, IF THE FOLLOWING TWO CONDITIONS ARE SATISFIED. (A) HE HAD AN OPTION TO CHOOSE EITHER THE DUTY DRAW BACK OR THE DUTY ENTITLEMENT PASS BOOK SCHEME, BEING THE DUTY R EMISSION SCHEME. (B) THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER EH DUTY ENTITLEMENT PASS BOOK SCHEME, BEING THE DUTY REMISS ION SCHEME. 13. THE LEARNED A.R. POINTED OUT THAT IN THE JUDGME NT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF KALAPTARU COLOURS & CHEMICALS(SUPRA), THOUGH THE REFERENCE HAS BEEN MAD E TO THE SPEECH OF THE FINANCE MINISTER, BUT THE INTENTION OF THE FINA NCE MINISTER, HAS NOT BEEN DISCUSSED AT ALL AND THE BARE READING OF THE S PEECH OF THE FINANCE MINISTER IS ABSOLUTELY CLEAR THAT ONLY PREMIUM I.E. THE PROFIT HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF CLAUS E (IIID) OF SEC 28 OF THE ACT. 14. SHRI S.K.MUKHI APPEARING IN I.T.A.NOS. 1043 & 1 044/CHD/2007, I.T.A.NO. 61/CHD/2010 AND I.T.A.NO. 69/CHD/2011 RE LYING ON THE SUBMISSIONS MADE BY SHRI SUDHIR SEHGAL, MADE FURTHE R SUBMISSIONS AND 17 ALSO FILED WRITTEN SUBMISSIONS, WHICH ARE PLACED ON RECORD. AS PER THE LEARNED A.R. THE ISSUE TO BE CONSIDERED BY THE TRIB UNAL WAS TO DECIDE WHETHER DEPB HAD ANY VALUE OR NOT. THE LEARNED A.R . STATED THAT THOUGH THE HON'BLE HIGH COURT HAD AGREED WITH THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN CIT VS. KALAPATARU COLOURS & CHEMICAL S (SUPRA), TO THE EXTENT THAT THE INCOME FROM DBK, DEPB AND DFRC HAS TO BE TREATED AS BUSINESS INCOME AND HAS TO BE TAKEN INTO ACCOUNT FO R DEDUCTION UNDER SECTION 80HHC, BUT HON'BLE HIGH COURT HAS LEFT THE SECOND ISSUE TO TRIBUNAL - I.E., TO DECIDE THAT WHETHER DEPB ETC. H AS ANY VALUE OR NOT WHICH IS THE MAIN ISSUE IN DISPUTE. 15. THE SECOND LIMB OF ARGUMENTS OF THE LEARNED A.R . WAS THAT THE FINDINGS OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS . KALAPATARU COLOURS & CHEMICALS (SUPRA) WERE AGAINST THE FACTS, EXPRESS PROVISIONS OF LAW AND FINDINGS OF SPECIAL BENCH IN THE CASE OF M/S TOPMAN EXPORTS (SUPRA). THE LEARNED A.R. STRESSED THE FINDINGS OF THE HON'BLE BOMBAY HIGH COURT NEED RECONSIDERATION AS THESE WERE WITHO UT CONSIDERING THE FACT OF THE INSERTION BEING MADE VIDE CLAUSE (IIID) & (IIIE) OF SECTION 28 OF THE INCOME TAX ACT BY THE TAXATION LAWS (AMENDME NT) ACT, 2005, THOUGH NO AMENDMENT WAS MADE TO THE DEFINITION OF I NCOME IN SECTION 2(24) OF THE ACT. RELIANCE WAS PLACED ON THE RATIO LAID DOWN IN CIT VS. AMBIKA FORGINGS IN I.T.A.NO. 302 OF 2010 WHEREIN TH E ORDER WAS PASSED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT REMANDIN G THE ISSUE TO THE TRIBUNAL IN VIEW OF THE ORDER PASSED BY THE HON'BLE BOMBAY HIGH COURT, WHERE THE REVENUE HAD ITSELF ADMITTED IN ITS GROUND S OF APPEAL BEFORE THE HON'BLE HIGH COURT THAT THERE IS NO COST OF DEPB I NCENTIVE TO THE ASSESSEE THOUGH IT CERTAINLY HAS VALUE. THE LEARN ED A.R. PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPR EME COURT IN YASHA OVERSEAS VS. CST & OTHERS (2008) 17 VST 182 (SC), I N WHICH IT HAS 18 BEEN HELD THAT DEPB HAS AN INTRINSIC VALUE THAT MA KES IT A MARKET COMMODITY. AS PER THE HON'BLE APEX COURT DEPB LI KE REP LICENCE QUALIFIES AS GOODS WITHIN THE MEANING OF THE SALES TAX LAWS OF DELHI, KERALA AND MUMBAI AND ITS SALE WAS EXIGIBLE TO TAX. THE LEARNED A.R. STRESSED THAT WHERE TWO VIEWS ARE POSSIBLE THEN THE ONE WHICH IS IN FAVOUR OF THE ASSESSEE MUST BE ADOPTED AS LAID DOWN IN UOI & OTHERS VS. ONKAR S.KANWAR & OTHERS, 258 ITR 761 (SC). RELIANC E WAS ALSO PLACED ON THE FINDINGS OF THE SPECIAL BENCH IN THE CASE OF M/S TOPMAN EXPORTS VS. ITO (SUPRA) SPECIALLY PARA-29 OF THE ORDER AND IT WAS POINTED OUT THAT THE DEPB AND DFRC ARE THOUGH CHARGEABLE TO TAX AT THE TIME OF ACCRUAL OF INCOME, BUT FOR THE PURPOSES OF COMPUTIN G THE DEDUCTION UNDER SECTION 80HHC OF THE ACT IT WAS ONLY THE PROF ITS ARISING ON ACCOUNT OF SALE OF THE SAID ITEMS WHICH ARE TO BE C ONSIDERED. STRESS WAS LAID ON THE OBSERVATIONS OF THE SPECIAL BENCH ON TH E MEANING OF WORD PROFIT AS ENVISAGED UNDER SECTION 28(IIID) OF THE ACT AND RATIONALE BEHIND SECTION 28(IIIB), NON-INCLUSION OF 28(IIID) IN DEFINITION OF INCOME UNDER SECTION 2(24) OF THE INCOME TAX ACT. THE LE ARNED A.R. RELYING ON THE PLEADINGS OF THE REVENUE IN CIT VS. M/S ROADWAY S OVERSEAS, JALANDHAR IN I.T.A.NO. 466 OF 2010 POINTED OUT THAT THE REVENUE HAD STATED THAT THERE WAS SOME CONSIDERATION OF DEPB A ND IT WAS ALSO PLEADED IN ITS GROUNDS THAT IF THE DEPB CREDITS ARE CONSUMED THE COST INCURRED BY THE ASSESSEE ON IMPORT DUTY WILL BE LOW ER TO THAT EXTENT. THE LEARNED A.R. THUS POINTED OUT THAT ONLY THE PRO FIT ON TRANSFER HAD TO BE CONSIDERED FOR 90% EXCLUSION UNDER EXPLANATION ( BAA) TO SUB-SECTION 4C TO SECTION 80HHC OF THE ACT. IT WAS REITERATED THAT THE FACE VALUE OF DEPB WAS TO BE TAKEN AS COST FOR ARRIVING AT PROFIT ALLOWABLE TO BE TAXED UNDER SECTION 28(IIID) OF THE INCOME TAX ACT. THE LEARNED A.R. IN THE SECOND ROUND OF ARGUMENTS POINTED OUT THAT THE PROV ISO TO SECTION 80HHC (3) OF THE ACT WAS INSERTED BY THE TAXATION L AWS (2 ND 19 AMENDMENT) ACT, 2005 WITH W.R.E.F. 1.4.1998 WHEREI N SUCH PROVISO WAS MADE APPLICABLE TO ALL EXPORTERS HAVING TURNOVER EX CEEDING RS.10 CRORES. IT WAS FAIRLY ADMITTED BY THE LEARNED A.R. THAT ALL THE ASSESSEES BEFORE US WERE THOSE WHERE THE TURNOVER EXCEEDED RS.10 CRORES . THE LEARNED A.R. POINTED OUT THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE BUNCH OF APPEALS HAD SET ASIDE THE MATTER TO THE TRIBUNAL FOR DECIDING THE ISSUE OF DETERMINATION OF VALUE OF DEPB AS PER THE PROVIS IONS OF LAW AS PER PARA-6 OF THE MAIN JUDGMENT IN THE CASE OF F.C.SOND HI (SUPRA) AND IT WAS POINTED OUT THAT THE JUDGMENT IN THE CASE OF CIT VS . KALAPATARU COLOURS & CHEMICALS (SUPRA) WAS OF NON-JURISDICTIONAL HIGH COURT. THE LEARNED A.R. STRESSED THAT THOUGH THE DECISION OF THE HIGH COURT WAS BINDING BUT THE SAME WAS DISTINGUISHABLE ON FEATURES AND HENCE NOT APPLICABLE. THE LEARNED A.R. ALSO POINTED OUT THAT THE WRIT PETITIO NS WERE FILED BEFORE THE HON'BLE HIGH COURT AGAINST THE RETROSPECTIVE AM ENDMENT BY ALLEGING THAT THE PROVISIONS WERE ULTRA VIRUS WHICH WERE TRA NSFERRED TO THE HON'BLE SUPREME COURT AND ARE PENDING BEFORE THE AP EX COURT. 16. SHRI SUBHASH AGGARWAL APPEARING IN I.T.A.NO. 67 8/CHD/2006 OF R.N.GUPTA & CO. & OTHERS POINTED OUT THAT THE DEPB HAS A COST IN VIEW OF THE RATIO LAID DOWN BY THE APEX COURT IN YASHA O VERSEAS VS. CST & OTHERS (SUPRA). 17. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THE ARGUMENTS OF THE LEARNED A.R. FOR DIFFERENT ASSESSEES WERE OF TH REE FOLDS ; A) PROFITS UNDER SECTION 28(IIID) OF THE ACT WAS THE PREMIUM E ARNED ON SALE OF DEPB/DFRC, WHICH IN TURN HAD A COST; B) THE SPEECH OF THE HON'BLE FINANCE MINISTER AT THE TIME OF INTRODUCING THE SAI D BILL WAS NOT CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT IN CIT VS. KALAPATARU COLOURS & CHEMICALS (SUPRA); AND C) THE DECISION IN CIT VS. KALAPATARU 20 COLOURS & CHEMICALS (SUPRA) BEING NON JURISDICTIONA L HIGH COURT WAS NOT APPLICABLE TO THE PRESENT BUNCH OF CASES. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT ALL THE ARGUMENTS RAISED B Y DIFFERENT LEARNED A.RS. FOR THE ASSESSEE/S WERE REPETITION OF THE AR GUMENTS BEFORE THE SPECIAL BENCH IN M/S TOPMAN EXPORTS (SUPRA) WHICH H AS BEEN OVERRULED BY THE HON'BLE BOMBAY HIGH COURT. 18. OUR ATTENTION WAS DRAWN TO PARA 89 OF THE DECIS ION OF SPECIAL BENCH IN M/S TOPMAN EXPORTS (SUPRA) WHEREIN THE TRI BUNAL HAD HELD THAT THE DEPB HAS A FACE VALUE AND ON ITS SALES PROFITS ARE TO BE DETERMINED. THE LEARNED D.R. FOR THE REVENUE DREW OUR ATTENTION TO THE QUESTION RAISED BEFORE THE HON'BLE HIGH COURT, THE ARGUMENTS OF THE REVENUE BEFORE THE HON'BLE BOMBAY HIGH COURT AND THE ARGUME NTS RAISED ON BEHALF OF THE ASSESSEE AND AFTER TAKING US THROUGH THE VARIOUS PARAS OF THE SAID JUDGMENT POINTED OUT THAT THE ISSUE HAS BE EN ELABORATELY CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT EVEN TA KING INTO CONSIDERATION THE RATIO LAID DOWN BY THE APEX COURT IN K. RAVINDRANATHAN NAIR, 295 ITR 228 (SC). IT WAS POIN TED OUT BY THE LEARNED D.R. THAT THE CONTENTION OF THE LEARNED A.R . THAT THE SPEECH OF THE FINANCE MINISTER AT THE TIME OF INTRODUCTION OF THE BILL WAS NOT CONSIDERED, IS MISPLACED AS IN PARA 32 OF ITS JUDGM ENT, THE SAID ISSUE HAS BEEN CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT. 19. THE LEARNED D.R. FOR THE REVENUE FURTHER POINTE D OUT THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN F.C.SONDHI ( SUPRA) DECIDED THE FIRST ISSUE THAT THE RECEIPTS ON SALE OF DEPB/DFRC WERE BUSINESS INCOME AND NOT EXPORT INCOME AND THEREAFTER THE JURISDICTI ONAL HIGH COURT HAD CONCURRED WITH THE RATIO LAID DOWN BY THE HON'BLE B OMBAY HIGH COURT AND ON ITS ACCEPTANCE, THE SAID VIEW OF THE HIGH CO URT WAS TO BE APPLIED. 21 IT WAS THE CONTENTION OF THE LEARNED D.R. THAT THE DECISION IN CIT VS. KALAPATARU COLOURS & CHEMICALS (SUPRA) BEING SINGLE DECISION ON THE QUESTION, THOUGH BY A DIFFERENT HIGH COURT BUT APPL IED BY THE JURISDICTIONAL HIGH COURT, WAS BINDING ON THE PERSO NS UNDER ITS JURISDICTION. RELIANCE WAS ALSO PLACED ON THE DECI SIONS OF THE BOMBAY HIGH COURT IN CIT VS. GODAVARIDEVI SARAF, 113 ITR 5 89(BOM) AND CIT VS. SMT.NIRMALABAI K.DAREKAR, 186 ITR 242 (BOM). 20. IN REJOINDER THE LEARNED A.R. FOR THE ASSESSEE REFERRED TO PARA-25 OF THE JUDGMENT IN CIT VS. KALAPATARU COLOURS & CHE MICALS (SUPRA) AND POINTED OUT THAT THE COURT COMPARED THE DEPB RECEIP TS WITH LICENCE AND UNDER SECTION 28(IIIA) PROFIT ON SALE OF LICENCE IS EXCLUDIBLE AS BUSINESS INCOME AND UNDER SECTION 29(IIID) PROFIT ON TRANSFE R OF DEPB IS TO BE INCLUDED AS BUSINESS INCOME. IT WAS POINTED OUT TH AT THE DEPB HAS VALUE, WHICH IS SPECIFIC AND THE CREDIT FOR THE SAM E IS TO BE ALLOWED. FURTHER REFERENCE WAS MADE TO THE OBSERVATIONS IN P ARA-29 OF THE JUDGMENT IN CIT VS. KALAPATARU COLOURS & CHEMICALS (SUPRA) BY THE LEARNED A.R. AND IT WAS POINTED OUT THAT DEPB IS AN INCOME WHICH IS CHARGEABLE WHEN THE ASSESSEE USES IT BUT ONCE THE S AME IS SOLD ON PREMIUM, SUCH PREMIUM IS TAXABLE PROFIT. 21. THE LEARNED A.R. STRESSED THAT THE HON'BLE JURI SDICTIONAL HIGH COURT IN F.C.SONDHI (SUPRA) VIDE PARA-6 HAD DECIDED THE ISSUE THAT THE DEPB WAS BUSINESS INCOME, BUT THE SECOND ISSUE OF C OMPUTATION OF DEDUCTION UNDER SECTION 80HHC VIS--VIS PROFITS ON SALE OF DEPB LICENCE WAS NOT DECIDED BY THE COURT AND THE MATTER WAS REM ANDED BACK TO THE TRIBUNAL. THE LEARNED A.R. FURTHER POINTED OUT THA T THE ENTIRE VALUE OF THE RECEIPTS ON SALE OF DEPB WERE NOT TO BE EXCLUDE D WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. 22 22. ANOTHER SET OF APPEALS WERE HEARD BY US ON 12.5 .2011. IN I.T.A.NO. 768/CHD/2008 SHRI S.K.MUKHI PLACED RELIAN CE ON HIS SUBMISSIONS MADE EARLIER AND FILED THE COMPENDIUM O F THE WRITTEN SUBMISSIONS AND THE VARIOUS CASE LAWS RELIED UPON. SHRI ASHOK KUMAR JUNEJA APPEARING IN THE CASE OF KING EXPORTS IN I.T .A.NOS.673 & 1022/CHD/2007 & OTHERS POINTED OUT THAT WHERE THERE WAS A LOSS ON SALE OF DEPB I.E. THE LOSS BEING ATTRIBUTABLE TO THE FAC E VALUE MINUS SALE VALUE, NOTHING HAD TO BE EXCLUDED . IT WAS POINTED OUT THAT THERE WAS NO MERIT IN THE ARGUMENTS THAT THE DEPB HAD A FACE VAL UE WHICH MERITS TO BE CONSIDERED WHILE COMPUTING THE DEDUCTION UNDER S ECTION 80HHC OF THE ACT. 23. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT THE AMENDMENT INTRODUCED IN SECTION 80HHC OF THE ACT DENIES RETRO SPECTIVELY DEDUCTION TO EXPORTERS HAVING TURNOVER OF MORE THAN 10 CRORES AND IMPOSITION OF SUCH CONDITIONS WAS ULTRAVIRUS AND AGAINST THE PRIN CIPLES OF PROMISSORY ESTOPPEL. IT WAS POINTED OUT THAT THE PRESENT ASSE SSEE IN I.T.A.NO. 673/CHD/2007 HAD SUFFERED A LOSS OF RS.11,98,827/-. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANCE ON THE SUBMISSIONS MADE BY THE LEARNED A.RS. FOR OTHER ASSESSEES. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BEFORE US IN THE CAPTIONED APPEALS HE ARD ON DIFFERENT DATES PURSUANT TO THE JUDGMENT PASSED BY THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN VARIOUS CASES OF THE ASSESSEES BEFORE US W AS IN CONNECTION WITH THE ASSESSABILITY OF THE SALE CONSIDERATION OF DEPB ENTITLEMENT/DFRC AND ITS TREATMENT WHILE COMPUTING THE DEDUCTION UND ER SECTION 80HHC OF THE ACT. 23 25. THE FIRST ISSUE WHETHER THE INCOME FROM DEPB/DF RC IS TO BE TREATED AS BUSINESS INCOME UNDER SECTION 28(IIID) A ND 28(IIIE) OF THE ACT HAS BEEN ANSWERED IN THE AFFIRMATIVE BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. F.C.SONDHI & CO. PVT. LTD. (S UPRA) VIDE JUDGMENT DATED 16.8.2010 AND FOLLOWING THE SAME IN THE CASES OF ALL THE ASSESSEES BEFORE US SAME RATIO HAS BEEN LAID DOWN BY THE HON' BLE PUNJAB & HARYANA HIGH COURT. THE HON'BLE HIGH COURT HAD RE LIED ON THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN CIT V S. KALAPATARU COLOURS & CHEMICALS (SUPRA) AND HAS REMANDED THE IS SUE OF ITS TREATMENT OF THE SAID RECEIPTS WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT BACK TO THE TRIBUNAL FOR A DECISION IN A CCORDANCE WITH LAW. 26. ELABORATE SUBMISSIONS WERE MADE BY BOTH THE PAR TIES, WHICH HAVE BEEN REFERRED TO BY US IN THE PARAS HEREINABOVE. W E PROCEED TO DEAL WITH THE SAME IN PARAS HEREUNDER. 27. THE ISSUES TO BE ADDRESSED IN THE PRESENT APPEA LS ARE IN CONNECTION WITH THE PROVISIONS OF SECTION 28 I.E. INCOMES CHAR GEABLE UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND THE CORRESPONDING DEDUCTION OF PROFITS RECEIVED FROM EXPORTS UNDER THE PROVISIONS OF SECTI ON 80HHC OF THE ACT. SECTION 28 OF THE INCOME TAX ACT READS AS UNDER : 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME- TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSI ON, (I) THE PROFITS AND GAINS OF ANY BUSINESS OR PROFE SSION WHICH WAS CARRIED ON BY THE ASSESSEE AT ANY TIME DURING THE P REVIOUS YEAR ; 24 (II)ANY COMPENSATION OR OTHER PAYMENT DUE TO OR REC EIVED BY, (A) ANY PERSON, BY WHATEVER NAME CALLED, MANAGING THE WHOLE OR SUBSTANTIALLY THE WHOLE OF THE AFFAIRS OF AN IND IAN COMPANY, AT OR IN CONNECTION WITH THE TERMINATION O F HIS MANAGEMENT OR THE MODIFICATION OF THE TERMS AND CON DITIONS RELATING THERETO; (B) ANY PERSON, BY WHATEVER NAME CALLED, MANAGING THE WHOLE OR SUBSTANTIALLY THE WHOLE OF THE AFFAIRS IN INDIA OF ANY OTHER COMPANY, AT OR IN CONNECTION WITH THE TERMINA TION OF HIS OFFICE OR THE MODIFICATION OF THE TERMS AND CON DITIONS RELATING THERETO ; (C) ANY PERSON, BY WHATEVER NAME CALLED, HOLDING AN AGENCY IN INDIA FOR ANY PART OF THE ACTIVITIES RELATING TO TH E BUSINESS OF ANY OTHER PERSON, AT OR IN CONNECTION WITH THE TERMINATION OF THE AGENCY OR THE MODIFICATION OF TH E TERMS AND CONDITIONS RELATING THERETO ; [(D) ANY PERSON, FOR OR IN CONNECTION WITH THE VES TING IN THE GOVERNMENT, OR IN ANY CORPORATION OWNED OR CONTROLL ED BY THE GOVERNMENT, UNDER ANY LAW FOR THE TIME BEING IN FORCE, OF THE MANAGEMENT OF ANY PROPERTY OR BUSINESS ;] (III) INCOME DERIVED BY A TRADE, PROFESSIONAL OR S IMILAR ASSOCIATION FROM SPECIFIC SERVICES PERFORMED FOR ITS MEMBERS ; [(IIIA) PROFITS ON SALE OF A LICENCE GRANTED UNDER THE IMPORTS (CONTROL) ORDER, 1955, MADE UNDER THE IMPORTS AND EXPORTS (CO NTROL) ACT, 1947 (18 OF 1947) ;] [(IIIB) CASH ASSISTANCE (BY WHATEVER NAME CALLED) RECEIVED OR RECEIVABLE BY ANY PERSON AGAINST EXPORTS UNDER ANY SCHEME OF THE GOVERNMENT OF INDIA ;] [(IIIC) ANY DUTY OF CUSTOMS OR EXCISE RE-PAID OR R E-PAYABLE AS DRAWBACK TO ANY PERSON AGAINST EXPORTS UNDER THE CU STOMS AND CENTRAL EXCISE DUTIES DRAWBACK RULES, 1971 ;] 28. CLAUSES (IIIA), (IIIB) AND (IIIC) OF SECTION 28 WERE INSERTED BY THE FINANCE ACT, 1990 THOUGH WITH RETROSPECTIVE EFFECT FROM DIFFERENT DATES. AS PER THE SAID CLAUSES OF SECTION 28 OF THE INCOME TAX ACT, THE 25 INCENTIVES GIVEN TO THE EXPORTERS WERE HELD TO BE T AXABLE AS PROFITS OF BUSINESS COMPRISING OF THREE CATEGORIES I.E. I) CAS H COMPENSATORY SCHEME; II) DUTY DRAW BACK; AND III) IMPORT ENTIT LEMENT LICENCE. BY THE AFORESAID AMENDMENT OF THE ACT, PROFITS ON SALE OF IMPORT LICENCE, CASH ASSISTANCE UNDER ANY SCHEME OF THE CENTRAL GOV ERNMENT AND DRAWBACK ON DUTY OF CUSTOMS OR EXCISE WOULD CONSTIT UTE INCOME CHARGEABLE TO TAX UNDER THE HEAD PROFITS & GAINS O F BUSINESS. FURTHER DEPB SCHEME WAS INTRODUCED BY THE GOVERNMENT OF IND IA IN THE EXIM POLICY, W.E.F. 1.4.1997. THE SAID SCHEME WAS INTRO DUCED TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EXPORT PRODUCT. THE QUANTIFICATION FOR SAID BENEFIT IS ON THE FOB VALUE OF EXPORTS IN CONVERTIBLE FOREIGN EXCHANGE. UNDER THE SCHEME CREDIT IS CALCULATED BY IDENTIFYING THE ELEMENT OF CUSTOMS DU TY INCLUDED IN THE IMPORT CONTENT OF THE EXPORT MADE BY THE EXPORTERS. THE GOVERNMENT HAS FIXED THE RATES FOR GRANT OF DEPB CREDIT ON THE EXP ORT PRODUCTS. THE SAID DEPB CREDIT IS ALLOWED AFTER EXPORTS ARE MADE. AS PER THE FOREIGN TRADE POLICY, MERE FACT OF EXPORTING THE GOODS OR M ERCHANDISE DOES NOT ENTITLE THE EXPORTERS TO GRANT OF DEPB/DUTY DRAWBAC K. ONLY AFTER MAKING THE EXPORTS, WHEN THE EXPORTER MAKES APPLICA TION FOR GRANT OF DEPB, HE ACQUIRES THE RIGHT TO SUCH DEPB/DUTY DRAWB ACK. 29. THE PARLIAMENT HAD INTRODUCED AMENDMENTS VIDE T AXATION LAWS (AMENDMENT) ACT 2005, UNDER WHICH INSERTION OF CLAU SES (IIID) AND (IIIE) TO SECTION 28 OF THE INCOME TAX ACT WERE MADE, WHIC H READS AS UNDER : [(IIID) ANY PROFIT ON THE TRANSFER OF THE DUTY EN TITLEMENT PASS BOOK SCHEME, BEING THE DUTY REMISSION SCHEME U NDER THE EXPORT AND IMPORT POLICY FORMULATED AND ANNOUNC ED UNDER SECTION 5 OF THE FOREIGN TRADE (DEVELOPMENT A ND REGULATION) ACT, 1992 (22 OF 1992);] 26 [(IIIE) ANY PROFIT ON THE TRANSFER OF THE DUTY FREE REPLENISHMENT CERTIFICATE, BEING THE DUTY REMISSION SCHEME UNDER THE EXPORT AND IMPORT POLICY FORMULATE D AND ANNOUNCED UNDER SECTION 5 OF THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992 (22 OF 1992) ;] 30. AS PER CLAUSE (IIID) TO SECTION 28 OF THE ACT A NY PROFIT ON TRANSFER OF DEPB SCHEME IS CHARGEABLE TO TAX AS PROFITS OF B USINESS. SIMILARLY, ANY PROFIT ON TRANSFER OF DFRC IS CHARGEABLE TO TAX AS PROFITS OF BUSINESS UNDER CLAUSE (IIIE) TO SECTION 28(1) OF THE ACT. 31. THE HON'BLE BOMBAY HIGH COURT IN CIT VS. KALAPA TARU COLOURS & CHEMICALS (SUPRA) WHILE DECIDING THE ISSUE OF CHARG EABILITY OF DEPB CREDIT, THE PROFITS ON ITS TRANSFER AND ITS TREATME NT UNDER SECTION 80HHC OF THE ACT HAD ELABORATELY ADDRESSED THE ISSUE. TH E HON'BLE BOMBAY HIGH COURT HAD CONSIDERED THE PROPOSITION OF SECTIO N 28 IN PARAS 9 AND 10 OF ITS JUDGMENT AND THEREAFTER HAD ELABORATED UP ON DEPB SCHEME FORMULATED UNDER THE EXIM POLICY IN PARAS 11 AND 12 OF ITS JUDGMENT. THEREAFTER A REFERENCE WAS MADE TO THE AMENDMENT OF 2005 BY WHICH CLAUSES (IIID) AND (IIIE) OF SECTION 28 OF THE ACT WERE INSERTED. THE HON'BLE COURT REFERRED TO THE CIRCUMSTANCES UNDER W HICH THE SAID INSERTIONS WERE MADE TO THE STATUTE, VIDE PARA 19 & 20; THE HON'BLE COURT OBSERVED AS UNDER : 19. CLAUSE (IIID) CONTEMPLATES THAT ANY PROFIT ON THE TRANSFER OF THE DUTY ENTITLEMENT PASS BOOK SCHEME WOULD BE C HARGEABLE TO INCOME-TAX AS A BUSINESS PROFIT. THE CIRCUMSTANC ES IN WHICH THE AMENDMENT WAS BROUGHT ABOUT WOULD HAVE A BEARIN G ON THE SUBJECT-MATTER OF THE CONTROVERSY IN THE PRESENT CA SE AND WILL, THEREFORE, NEED SOME ELABORATION. IN P & G ENTERPRI SES [2005] 93 ITD 138 (DELHI) A BENCH OF THE INCOME-TAX APPELL ATE TRIBUNAL AT DELHI CONSIDERED THE CASE OF AN EXPORTE R TO WHOM A CREDIT WAS AVAILABLE UNDER THE DUTY ENTITLEMENT PAS S BOOK SCHEME. THE DEPB CREDIT WAS TRANSFERRED AND THE REC EIPTS WERE SHOWN AS BUSINESS RECEIPTS UNDER SECTION 28(IIIA). THE ASSESSING OFFICER HELD THAT THE RECEIPTS UPON THE TRANSFER OF THE DEPB ENTITLEMENT FELL FOR CLASSIFICATION UNDER SECTION 2 8(IV) AND BE EXCLUDED NINETY PER CENT. OF THOSE RECEIPTS UNDER S ECTION 80HHC. THE COMMISSIONER (APPEALS) HELD THAT THE REC EIPTS WERE 27 IN THE NATURE OF REVENUE RECEIPTS AND THE ENTIRETY OF THOSE RECEIPTS WAS ASSESSABLE AS BUSINESS RECEIPTS UNDER SECTION 28(IV). THE COMMISSIONER (APPEALS) HELD THAT THOSE RECEIPTS WERE NOT DERIVED FROM EXPORT THOUGH THEY MAY HAVE B EEN ATTRIBUTABLE TO THAT BUSINESS AND UPHELD THE ACTION OF THE ASSESSING OFFICER IN EXCLUDING NINETY PER CENT. OF THE DEPB RECEIPTS UNDER EXPLANATION (BAA). BEFORE THE TRIBUN AL THERE WAS NO DISPUTE ABOUT THE FINDING THAT THE DEPB RECEIPTS WERE IN THE NATURE OF REVENUE AND THAT THE ENTIRETY OF THOSE RE CEIPTS WAS CHARGEABLE TO TAX UNDER SECTION 28(IV). THE TRIBUNA L HELD THAT SECTION 28(IV) WAS NOT REFERRED TO IN EXPLANATION ( BAA) AND THE OMISSION TO INCLUDE THAT PROVISION SUGGESTED THAT T HE LEGISLATURE DID NOT INTEND THE EXCLUSION OF NINETY PER CENT. OF THOSE INCOMES WHICH FELL WITHIN THE PURVIEW OF SECT ION 28(IV). THE TRIBUNAL WAS ALSO OF THE VIEW THAT THE DEPB REC EIPTS DID NOT CONSTITUTE A 'RECEIPT OF A SIMILAR NATURE' WITH IN THE MEANING OF EXPLANATION (BAA) AND WERE NOT, THEREFORE, LIABL E TO BE REDUCED IN COMPUTING THE PROFITS OF BUSINESS. THE J UDGMENT OF THE TRIBUNAL WOULD, THEREFORE, SHOW THAT (I) THE EN TIRETY OF THE DEPB RECEIPTS WERE TREATED AS OF A REVENUE NATURE ; (II) THE DEPB RECEIPTS WERE HELD TO FALL WITHIN THE PURVIEW OF SECTION 28(IV) ; AND (III) SUCH RECEIPTS WERE HELD NOT TO B E SUSTAINABLE TO A REDUCTION OF NINETY PER CENT UNDER EXPLANATION (BAA). 20. IT IS IN THIS BACKGROUND THAT PARLIAMENT STEPPE D IN BY AMENDING SECTION 28 AND CORRESPONDINGLY, EXPLANATIO N (BAA), SO AS TO SPECIFICALLY BRING IN THE DEPB RECEIPTS WITHI N THE FOLD OF TAXABILITY UNDER SECTION 28. THE FACT THAT THE ENTI RETY OF THE DEPB RECEIPTS WAS TAXABLE WAS ELUCIDATED IN THE JUD GMENT OF THE TRIBUNAL. THE TRIBUNAL HAD, HOWEVER, HELD THAT SUCH RECEIPTS WERE NOT LIABLE TO SUSTAIN A REDUCTION OF NINETY PE R CENT. UNDER EXPLANATION (BAA). PARLIAMENT CONSIDERED IT APPROPR IATE TO AMEND SECTION 28 BY BRINGING IN A SPECIFIC PROVISIO N THAT WOULD COVER THE DEPB RECEIPTS ON THE ONE HAND AND BY CLAR IFYING THROUGH THE AMENDMENT OF EXPLANATION (BAA) THAT THE DEPB RECEIPTS ALSO CONSTITUTE INCENTIVE PROFITS WHICH WE RE LIABLE TO SUSTAIN A REDUCTION OF NINETY PER CENT. 32. THE HON'BLE HIGH COURT FURTHER HELD VIDE ITS OB SERVATION IN PARA 27 THAT AFTER THE INSERTION OF THE CLAUSE (IIID) TO SE CTION 28 OF THE ACT PROFITS ON TRANSFER OF DEPB WAS INCOME CHARGEABLE U NDER THE HEAD PROFITS & GAINS OF BUSINESS &PROFESSION. THE HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF THE DIFFERENT ASS ESSEES BEFORE US HAVE HELD THAT THE PROFITS ARISING ON TRANSFER OF DEPB A RE BUSINESS PROFITS IN THE HANDS OF THE ASSESSEE. THUS THERE IS NO CONTRO VERSY REGARDING THE ASPECT OF THE SAID RECEIPTS RECEIVED BY THE EXPORTE R ON TRANSFER OF DEPB CREDIT TO BE INCLUDED AS BUSINESS PROFITS OF THE SA ID CONCERN. 28 33. THE CONSEQUENTIAL ISSUE ARISING IN THE CAPTIONE D APPEALS BEFORE US IS ITS TREATMENT UNDER THE PROVISIONS OF SECTION 80 HHC OF THE ACT. UNDER SUB-SECTION (1) TO SECTION 80HHC OF THE ACT D EDUCTION IS ALLOWED TO THE ASSESSEE IN RESPECT OF PROFITS DERIVED FROM EXPORT. THE FORMULA FOR DETERMINING THE EXPORT PROFITS IS LAID DOWN IN SUB-SECTION (3) TO SECTION 80HHC OF THE ACT, WHICH DEALS WITH EXPORT O F GOODS MANUFACTURED OR PROCESSED BY THE ASSESSEE IN CLAUSE (A); EXPORT OF TRADING GOODS IN CLAUSE (B) AND EXPORT OF GOODS MAN UFACTURED/PROCESSED AND OF TRADING GOODS IN CLAUSE (C). THE EXPRESSION PROFITS DERIVED FROM EXPORT IS DEFINED IN CLAUSE (A) OF SUB-SECTION (3) TO SECTION 80HHC OF THE ACT, AS THE AMOUNT WHICH BEARS TO THE PROFITS O F THE BUSINESS, THE SAME PROPORTION AS BETWEEN THE EXPORT TURNOVER TO T HE TOTAL TURN OVER OF THE BUSINESS. THE HON'BLE BOMBAY HIGH COURT VIDE P ARA 14 OBSERVED IN OTHER WORDS, THE PROPORTION BETWEEN THE EXPORT TURN OVER TO TOTAL TURNOVER OF THE BUSINESS IS APPLIED TO THE PROFITS OF THE BU SINESS AND THE RESULT CONSTITUTES EXPORT PROFITS. HOWEVER, IN RESPECT O F BUSINESS OF TRADING OF GOODS UNDER CLAUSE (B) THE PROFITS DERIVED FROM SUCH EXPORT WOULD BE THE EXPORT TURN OVER AS REDUCED BY DIRECT COST AND INDIRECT COST ATTRIBUTABLE TO SUCH EXPORT. VARIOUS TERMS REFERR ED TO IN SECTION 80- HHC OF THE ACT HAVE BEEN DEFINED AS PER THE CLAUSES OF EXPLANATION UNDER SECTION 80HHC OF THE ACT. CLAUSE (AA) DEFINE S CONVERTIBLE FOREIGN EXCHANGE OUT OF INDIA, CLAUSE (BA) DEFINES EXPORT T URN OVER AND CLAUSE (BAA) DEFINES PROFITS OF BUSINESS. THE HON'BLE BOM BAY HIGH COURT HAVE REFERRED TO CLAUSE (BAA) OF EXPLANATION TO SECTION 80HHC OF THE ACT AND VIDE PARAS 15,16 & 17 HELD AS UNDER : 15. IN THE APPLICATION OF THE FORMULA TO A MANUFAC TURER EXPORTER, CLAUSE (A) REFERS TO THE PROFITS OF THE B USINESS. THE EXPRESSION 'PROFITS OF THE BUSINESS' IS ELUCIDATED IN 29 EXPLANATION (BAA) TO SECTION 80HHC. EXPLANATION (BA A) IS TO THE FOLLOWING EFFECT : '(BAA) `PROFITS OF THE BUSINESS' MEANS THE PROFITS OF THE BUSINESS AS COMPUTED UNDER THE HEAD `PROFITS AND GA INS OF BUSINESS OR PROFESSION' AS REDUCED BY- (1) NINETY PER CENT. OF ANY SUM REFERRED TO IN CLAU SES (IIIA), (IIIB), (IIIC), (IIID) AND (IIIE) OF SECTION 28 OR OF ANY RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT, CHARG ES OR ANY OTHER RECEIPT OF A SIMILAR NATURE INCLUDED IN SUCH PROFITS ; AND (2) THE PROFITS OF ANY BRANCH, OFFICE, WAREHOUSE OR ANY OTHER ESTABLISHMENT OF THE ASSESSEE SITUATE OUTSIDE INDIA ;' 16. THE EXPRESSION 'PROFITS OF THE BUSINESS' MEANS PROFITS AS COMPUTED UNDER THE HEAD OF 'PROFITS AND GAINS OF BU SINESS OR PROFESSION' UNDER SECTIONS 28 TO 44D AND THEY ARE T HEREUPON TO BE REDUCED TO THE EXTENT PROVIDED BY CLAUSES (1) AND (2). CLAUSE (1) AS IT NOW STANDS IS BIFURCATED IN TWO PA RTS. THE FIRST CONSISTS OF THE SUMS REFERRED TO IN CLAUSES (IIIA), (IIIB), (IIIC), (IIID) AND (IIIE) OF SECTION 28 ; AND THE SECOND CO NSISTS OF RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE IN CLUDED IN SUCH PROFITS. THE FIRST PART OF CLAUSE (1) PROVIDES FOR THE EXCLUSION OF NINETY PER CENT. OF 'INCENTIVE PROFITS ' (THOSE REFERRED TO IN CLAUSES (IIIA) TO (IIIE) OF SECTION 28) AND 'INDEPENDENT INCOMES' WHICH ARE NOT RELATABLE TO EX PORTS. RATIONALE FOR EXCLUSION OF INDEPENDENT INCOMES AND INCENTIVE PROFITS 17. THE RATIONALE FOR THIS EXCLUSION IS EXPLAINED I N THE JUDGMENT OF THE SUPREME COURT IN THE CIT V. K. RAVINDRANATHAN NAIR [2007] 295 ITR 228 (SC). THE SUPREME COURT HELD THAT THE EXPRESSION 'DERIVED FROM' THAT IS USED IN SUB-SECTION (1) OF SECTION 80HHC IS NARROWER IN ITS AMBIT THAN THE WORDS 'ATTRIBUTABLE TO' AND CONSEQUENTLY, IT IS ONLY PROFITS THAT ARE DERIVED FROM EXPORT THAT QUALIFY FOR A DED UCTION. THE SECOND IMPORTANT FACET OF THE JUDGMENT OF THE SUPRE ME COURT IS IN EXPLAINING THE PROVISIONS OF EXPLANATION (BAA ). THE SUPREME COURT HAS OBSERVED THAT WHAT THE EXPLANATIO N POSTULATES IS THAT THOUGH INCENTIVE PROFITS AND IND EPENDENT INCOMES CONSTITUTE A PART OF THE GROSS TOTAL INCOME , THEY HAVE TO BE EXCLUDED FROM THE GROSS TOTAL INCOME BECAUSE SUCH RECEIPTS HAVE NO NEXUS WITH THE EXPORT TURNOVER. I N REFERRING TO 'INCENTIVE PROFITS' THE SUPREME COURT HAD IN CON TEMPLATION CLAUSES (IIIA) TO (IIIE) OF SECTION 28. SIMILARLY, THE INDEPENDENT INCOMES TO WHICH A REFERENCE HAS BEEN MADE IN THE J UDGMENT OF THE SUPREME COURT ARE RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT, CHARGES AND ANY OTHER R ECEIPT OF A SIMILAR NATURE INCLUDED IN THE PROFITS OF THE BUSIN ESS. 34. THE HON'BLE BOMBAY HIGH COURT FURTHER TOOK NOTE OF VARIOUS PROVISIONS OF SUB-SECTION (3) OF SECTION 80HHC OF T HE ACT AND VIDE PARA 30 21 HELD AS UNDER : 21. PARLIAMENT INCORPORATED SEVERAL PROVISOS TO SUB -SECTION (3) OF SECTION 80HHC. UNDER THE FIRST PROVISO, THE PROFITS COMPUTED UNDER CLAUSE (A), (B) OR (C) OF SUB-SECTIO N (3) HAVE TO BE INCREASED BY THE AMOUNT WHICH BEARS TO NINETY PER CENT. OF ANY SUM REFERRED TO ANY CLAUSES (IIIA), (IIIB) A ND (IIIC) OF SECTION 28, THE SAME PROPORTION AS THE EXPORT TURNO VER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. THE SECOND AND THIRD PROVISOS TO SUB-SECT ION (3) ARE OF SOME SIGNIFICANCE IN THE PRESENT CASE AND THEY R EAD AS FOLLOWS : 'PROVIDED FURTHER THAT IN THE CASE OF AN ASSESSEE H AVING EXPORT TURNOVER NOT EXCEEDING RUPEES TEN CRORES DURING THE PREVIOUS YEAR, THE PROFITS COMPUTED UNDER CLAUSE (A) OR CLAU SE (B) OR CLAUSE (C) OF THIS SUB-SECTION OR AFTER GIVING EFFE CT TO THE FIRST PROVISO, AS THE CASE MAY BE, SHALL BE FURTHER INCRE ASED BY THE AMOUNT WHICH BEARS TO NINETY PER CENT. OF ANY SUM R EFERRED TO IN CLAUSE (IIID) OR CLAUSE (IIIE), AS THE CASE MAY BE, OF SECTION 28, THE SAME PROPORTION AS THE EXPORT TURNOVER BEAR S TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE AS SESSEE : PROVIDED ALSO THAT IN THE CASE OF AN ASSESSEE HAVIN G EXPORT TURNOVER EXCEEDING RUPEES TEN CRORES DURING THE PRE VIOUS YEAR, THE PROFITS COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION OR AFTER GIVING EFFECT TO T HE FIRST PROVISO, AS THE CASE MAY BE, SHALL BE FURTHER INCRE ASED BY THE AMOUNT WHICH BEARS TO NINETY PER CENT. OF ANY SUM R EFERRED TO IN CLAUSE (IIID) OF SECTION 28, THE SAME PROPORTION AS THE EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE, IF THE ASSESSEE HAS NEC ESSARY AND SUFFICIENT EVIDENCE TO PROVE THAT, (A) HE HAD AN OP TION TO CHOOSE EITHER THE DUTY DRAWBACK OR THE DUTY ENTITLE MENT PASS BOOK SCHEME, BEING THE DUTY REMISSION SCHEME, AND (B) THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER THE DUTY ENTITLEMENT PASS BOOK SCHEME, BEING THE DUTY REMISS ION SCHEME.' 35. IN VIEW OF PROVISIONS OF SUB-SECTION (3) TO 80H HC OF THE ACT, AND THE PROVISIONS THEREUNDER, FOR COMPUTING THE DEDUCT ION UNDER SECTION 80HHC OF THE ACT, THE EXPORT TURNOVER OF THE BUSINE SS CARRIED ON BY THE ASSESSEE HAS A RELEVANCE. THE PARLIAMENT HAS DRAW N A DISTINCTION BETWEEN THE ASSESSEE HAVING EXPORT TURN OVER NOT EX CEEDING RS.10 CRORES AND THOSE HAVING TURN OVER EXCEEDING RS.10 CRORES W HILE COMPUTING THE PROFITS OF BUSINESS. UNDER SUB-SECTION (3) OF SECT ION 80HHC OF THE ACT 31 WHERE THE TURN OVER OF THE EXPORTERS WAS LESS THAN RS.10 CRORES, IT HAS BEEN PROVIDED THAT THE PROFITS WOULD FURTHER BE INC REASED BY AN AMOUNT WHICH BEARS TO 90% OF THE SUM REFERRED IN CLAUSE (I IID) OR (IIIE) OF SECTION 28, IN THE SAME PROPORTION AS EXPORT TURNOV ER BEARS TO THE TOTAL TURN OVER. HOWEVER, IN THE CASES OF EXPORTERS WITH TURNOVER IN EXCESS OF RS.10 CRORES, THE SAID BENEFIT IS TO BE ALLOWED ON FULFILLMENT OF TWO CONDITIONS REFERRED THEREUNDER. ADMITTEDLY, IN THE GROUP OF CAPTIONED APPEALS BEFORE US TOTAL EXPORT TURNOVER IN ALL CASE S EXCEEDS RS.10 CRORES AND THE CONDITIONS THEREIN ARE NOT FULFILLED AND AS SUCH THE PROVISIONS OF THIRD PROVISO UNDER SUB-SECTION (3) TO SECTION 80HH C OF THE ACT ARE APPLICABLE. THE LEARNED A.RS FOR DIFFERENT ASSESS EES BEFORE US HAVE ADMITTED TO THE SAID ASPECT BUT HAD FURTHER MADE EL ABORATE SUBMISSIONS ON THE QUANTUM OF EXCLUSION OF THE DEPB PROFITS FRO M THE PROFITS OF BUSINESS WHILE COMPUTING THE DEDUCTION UNDER SECTIO N 80HHC OF THE ACT. THE CONTENTION OF THE ASSESSEE BEFORE US IS THAT TH E WORDS USED IN SECTION 28 (IIID) OF THE ACT ARE THE PROFITS ON TRANSFER O F DEPB/DFRC SCHEME. ELABORATE SUBMISSIONS WERE MADE THAT THE PROFITS AM OUNTS TO DIFFERENCE BETWEEN SALE CONSIDERATION AND THE FACE VALUE OF DE PB CREDIT, WHICH HAVE BEEN TRANSFERRED. THE CONTENTION OF THE LEARN ED A.R. IS THAT THE FACE VALUE OF DEPB CREDIT IS TAXABLE ON ITS ACCRUAL I.E. THE DATE ON WHICH APPLICATION IS MOVED BEFORE THE AUTHORITIES AFTER T HE EXPORTS HAVE BEEN MADE, ENTITLING THE EXPORTERS TO CLAIM DEPB/DFRC CR EDIT, WHICH AS PER THE ASSESSEE IS CHARGEABLE TO TAX IN THE YEAR OF IT S ACCRUAL UNDER SECTION 28(IIID) OF THE ACT. 36. THE SECOND LIMB OF ARGUMENTS IS THAT WHEN THE S AID DEPB CREDIT IS TRANSFERRED IN ANY RELEVANT YEAR, THEN ONLY THE PRO FIT/S ARISING ON SUCH TRANSFER OF DEPB IS TO BE CONSIDERED FOR EXCLUSION WHILE COMPUTING THE PROFITS OF BUSINESS UNDER EXPLANATION (BAA) TO SECT ION 80HHC OF THE ACT. 32 37. THE SAID ISSUE OF CHARGEABILITY OF DEPB RECEIPT S ON ITS TRANSFER WAS DELIBERATED UPON BY THE HON'BLE BOMBAY HIGH COU RT IN CIT VS. KALAPATARU COLOURS & CHEMICALS (SUPRA) AND SIMILAR CONTENTIONS AS RAISED BEFORE US WERE PUTFORTH BEFORE THE HON'BLE C OURT. THE HON'BLE COURT VIDE PARA 24 COMPARED VARIOUS EXPORT INCENTIV ES RECEIVED BY THE EXPORTERS AND OBSERVED AS UNDER : 24. EXPORT INCENTIVES, SUCH AS IMPORT LICENCES, CA SH ASSISTANCE, DUTY DRAWBACK, DEPB CREDIT, OR DUTY FRE E REPLENISHMENT CERTIFICATES ARE ALL INTENDED TO ENCO URAGE EXPORTS. THE OBJECT OF THESE INCENTIVES IS TO NEUTR ALIZE THE INCIDENCE OF CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EXPORT PRODUCT. UNDER THE INCOME-TAX ACT, 1961, NOT ONLY T HE PROFITS ON SALE OF AN IMPORT LICENCE AND PROFITS ON TRANSFE R OF THE DEPB CREDIT/DFRC, BUT ALSO THE DUTY DRAWBACK RECEIV ED BY AN ASSESSEE ARE CONSIDERED AS PROFITS OF BUSINESS. DUT Y DRAWBACK IS NOTHING BUT RECEIVING BACK THE AMOUNT OF DUTY AC TUALLY PAID BY THE ASSESSEE. SIMILARLY, THE DEPB CREDIT IS A CR EDIT TO BE UTILIZED IN PAYING THE CUSTOMS DUTY ON GOODS TO BE IMPORTED. WHEN THE DUTY DRAWBACK RECEIVED BY THE ASSESSEE CON STITUTES PROFITS OF BUSINESS, THEN, IT IS OBVIOUS THAT THE A MOUNT REALIZED ON TRANSFER OF THE DEPB CREDIT WOULD ALSO BE BUSINE SS PROFITS. THUS, THE AMOUNT RECEIVED ON TRANSFER OF THE DEPB C REDIT WOULD BE PROFITS OF BUSINESS COVERED UNDER SECTION 28(IIID). 38. THE TREATMENT OF VARIOUS EXPORT INCENTIVES AS P ER CLAUSES (IIIA) TO (IIIE) TO SECTION 28 OF THE ACT WERE COMPARED BY TH E HON'BLE COURT AND VIDE PARA 25 IT WAS OBSERVED AS UNDER : 25. CLAUSE (IIIA) TREATS AS INCOME CHARGEABLE TO T AX, PROFITS ON THE SALE OF AN IMPORT LICENCE. WHEN THE LICENCE IS SOLD, THE ENTIRE AMOUNT IS RECEIVED AS PROFIT. THE ENTIRE AMO UNT THAT IS RECEIVED ON THE SALE OF A LICENCE IS CONSIDERED AS PROFITS OF BUSINESS UNDER SECTION 28(IIIA). SIMILARLY, THE ENT IRE AMOUNT OF CASH ASSISTANCE RECEIVED OR RECEIVABLE BY ANY PERSO N AGAINST EXPORTS UNDER A SCHEME OF THE GOVERNMENT OF INDIA I S TREATED AS INCOME FOR THE PURPOSES OF CHARGEABILITY TO TAX. BY CLAUSE (IIIC) THE ENTIRE DUTY OF CUSTOMS OR EXCISE REPAID OR REPAYABLE AS DRAWBACK AGAINST EXPORTS IS ALSO TREATED AS INCO ME THAT WOULD BE SUBJECT TO TAX. UNDER THE EXIM POLICY, THE SCHEME RELATING TO THE DEPB ENTITLEMENT IS IN THE NATURE O F AN OPTION WHICH IS MADE AVAILABLE TO AN EXPORTER WHO DOES NOT WISH TO GO THROUGH THE LICENSING PROCEDURE. THE TRANSFER OF A DEPB 33 CREDIT IS SIMILAR TO TRADING IN A LICENCE. AS WE HA VE NOTED, WHEN A LICENCE IS SOLD, THE HOLDER RECEIVES THE ENT IRE AMOUNT AS PROFIT WHICH IS TREATED BY THE LEGISLATURE AS PR OFITS OF BUSINESS WITHIN THE MEANING OF SECTION 28. LOGICALL Y AND AS A MATTER OF FIRST PRINCIPLE, THERE WOULD BE NO JUSTIF ICATION FOR THIS COURT TO TREAT THE AMOUNT WHICH IS RECEIVED BY AN EXPORTER ON THE TRANSFER OF THE DEPB CREDIT ANY DIFFERENTLY THAN THE PROFITS WHICH ARE MADE ON THE SALE OF AN IMPORT LIC ENCE UNDER CLAUSE (IIIA). BOTH WOULD HAVE TO BE TREATED AS PRO FITS OF BUSINESS UNDER CLAUSE (IIID). 39. THE HON'BLE COURT THUS HELD THAT UNDER CLAUSE ( IIID) TO SECTION 28, OF THE ACT THE PROFITS ON TRANSFER OF DEPB I.E. THE AMOUNT RECEIVED ON TRANSFER OF DEPB IS INCOME CHARGEABLE TO TAX UNDER THE HEAD PROFITS & GAINS OF BUSINESS & PROFESSION. WITH REGARD TO T HE DEDUCTION CLAIMED UNDER SECTION 80HHC OF THE ACT, THE HON'BLE COURT I N PARA 27 HELD THAT THE LEGISLATURE SUBSTITUTED EXPLANATION (BAA) IN S ECTION 80HHC SO AS TO EXCLUDE 90 PER CENT. OF THE PROFITS RECEIVED ON TRANSFER OF DEPB FROM THE PROFITS OF BUSINESS FOR THE PURPOSES OF SECTION 80HHC AND INSERTED THE SECOND AND THIRD PROVISOS TO SECTION 80HHC(3). BY THE SECOND PROVISO, IT WAS PROVIDED THAT IN THE CASE OF AN ASS ESSEE HAVING AN EXPORT TURNOVER NOT EXCEEDING RS. 10 CRORES, THE PROFITS C OMPUTED UNDER SECTION 80HHC(3) SHALL BE INCREASED BY 90 PER CENT. OF THE SUM REFERRED TO IN SECTION 28(IIID). BY THE THIRD PROVISO, IT WAS PROV IDED THAT IN THE CASE OF AN ASSESSEE HAVING AN EXPORT TURNOVER EXCEEDING RS. 10 CRORES, THE PROFITS COMPUTED UNDER SECTION 80HHC(3) SHALL BE IN CREASED BY 90 PER CENT. OF THE SUM REFERRED TO IN SECTION 28(IIID) SU BJECT TO THE TWO CONDITIONS SET OUT THEREIN. THE HON'BLE COURT FURTHER OBSERVED THAT IN ORDER TO GET OVER THIS DIFFICULTY OF THIRD PROVISO TO SECTION 80HHC(3) OF THE ACT, THE ASSESSEE CONTENDS THAT THE PROFITS ON TRANSFER OF DEPB IN SECTION 28(IIID) WOULD NOT INCLUDE THE FACE VALUE O F DEPB, SO THAT THE ASSESSEE GETS A DEDUCTION OF FACE VALUE OF DEPB UND ER SECTION 80HHC OF THE ACT. THE HON'BLE COURT HELD THAT THERE WAS NO MERIT IN THE SAID CONTENTION OF THE ASSESSEE FOR THE FOLLOWING REASON S :- 34 (PARA 29 PART) (A) WHAT IS RECEIVED ON TRANSFER OF THE DEPB CREDI T IS THE PROFIT, BECAUSE DEPB CREDIT UNDER THE DEPB SCHEME I S GIVEN AT A PERCENTAGE OF THE FOB VALUE OF THE EXPOR TS, SO AS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EXPORT PRODUCT. THE DEPB CREDIT IS A LSO GIVEN TO AN EXPORTER WHO HAS EXPORTED GOODS WITHOUT IMPOR TING RAW MATERIALS REQUIRED FOR THE EXPORT. DEPB CREDIT IS GIVEN FOR PAYING CUSTOMS DUTY ON IMPORT OF GOODS WHICH MA Y OR MAY NOT BE UTILIZED IN THE EXPORT OF GOODS. WHEN T HE DEPB CREDIT IS NOT UTILIZED FOR PAYING CUSTOMS DUTY BUT IS TRANSFERRED FOR ANY SUM, THEN SUCH SUM WOULD BE PRO FITS ON TRANSFER OF THE DEPB COVERED UNDER SECTION 28(IIID) ; (B) EVEN THE ASSESSEE HAS NOT DISPUTED BEFORE THE C OURT THAT THE ENTIRE AMOUNT RECEIVED ON TRANSFER OF THE DEPB IS BUSINESS INCOME CHARGEABLE TO TAX AS PROFITS OF BUS INESS. HOWEVER, IT IS CONTENDED THAT THE FACE VALUE OF THE DEPB WOULD NOT BE COVERED UNDER SECTION 28(IIID) BECAUSE IT IS A CREDIT EARNED BY THE ASSESSEE. WHERE THE DUTY PAID IS RECEIVED BACK AS DUTY DRAWBACK IT IS ALSO AN AMOUNT EARNED BY THE ASSESSEE, BUT SUCH A RECEIPT IS STILL CONSID ERED AS PROFITS OF BUSINESS. SIMILARLY, THE AMOUNT REALIZED ON TRANSFER OF THE DEPB, BE IT EQUIVALENT TO THE FACE VALUE OF THE DEPB ; MORE THAN THE FACE VALUE OF THE DEPB ; O R LESS THAN THE FACE VALUE OF THE DEPB, WOULD BE PROFIT ON TRANSFER OF THE DEPB COVERED UNDER SECTION 28(IIID) ; (C) THE FACT THAT THE ASSESSEE HAD ACCOUNTED FOR TH E DEPB CREDIT IMMEDIATELY AFTER MAKING AN APPLICATION SEEK ING THE DEPB CREDIT WOULD MAKE NO DIFFERENCE TO THE TAXABIL ITY OF THE ENTIRE AMOUNT RECEIVED ON TRANSFER OF THE DEPB CREDIT UNDER SECTION 28(IIID). WHAT CONSTITUTES 'PROFITS' UNDER SECTION 28(IIID) IS THE AMOUNT RECEIVED ON TRANSFER OF THE DEPB CREDIT AND NOT THE AMOUNT OF CREDIT WHICH THE ASSESSEE WAS ENTITLED TO UNDER THE DEPB SCHEME. IN OTHER WORDS, THE AMOUNT EQUIVALENT TO THE FACE VALUE OF T HE DEPB AS WELL AS THE AMOUNT RECEIVED IN EXCESS OF THE DEP B WOULD CONSTITUTE PROFITS OF BUSINESS UNDER SECTION 28(III D) AND MERELY BECAUSE, A PART OF SUCH PROFITS OF BUSINESS (FACE VALUE) WAS OFFERED TO TAX IN THE YEAR IN WHICH THE CREDIT ACCRUED TO THE ASSESSEE WOULD NOT BE A GROUND TO HO LD THAT SUCH PROFIT WAS NOT COVERED UNDER SECTION 28(IIID). WHERE THE FACE VALUE OF THE DEPB CREDIT IS OFFERED TO TAX AS BUSINESS PROFITS UNDER SECTION 28(IIID) IN THE YEAR IN WHICH THE CREDIT ACCRUED TO THE ASSESSEE, THEN ANY FURTHE R PROFIT ARISING ON TRANSFER OF THE DEPB CREDIT WOULD BE TAX ED AS PROFITS OF BUSINESS UNDER SECTION 28(IIID) IN THE Y EAR IN WHICH THE TRANSFER OF THE DEPB CREDIT TOOK PLACE. T HEREFORE, THE ARGUMENT OF THE ASSESSEE THAT IF THE FACE VALUE OF THE DEPB CREDIT IS HELD TO BE COVERED UNDER SECTION 28 (IIID), IT WOULD AMOUNT TO DOUBLE TAXATION IS WITHOUT ANY MERI T. 35 40. THE HON'BLE COURT FURTHER OBSERVED THAT THE DEP B CREDIT IS A FORM OF AN EXPORT INCENTIVE, WHICH IS MADE AVAILABLE TO THE EXPORTER AND THERE IS NO COST THAT IS ATTACHED TO THE GRANT OF THE INC ENTIVES. THE HON'BLE COURT VIDE PARA 30 OBSERVED THAT THE INCENTIVE, AS HAVE ALREADY NOTED, IS CALCULATED AS A PERCENTAGE OF THE FOB VALUE OF THE GOODS EXPORTED. THE HON'BLE COURT ALSO TOOK NOTE OF THE OBSERVATIONS OF THE TRIBUNAL IN SPECIAL BENCH CASE IN PARA 48 OF ITS JUDGMENT THAT NO DOUBT, THE EXPORTER DOES NOT DIRECTLY PURCHASE DEPB FROM THE M ARKET BY INCURRING ANY COST. THE HON'BLE COURT THUS CONCLUDED THAT THERE WAS NO BASIS OR JUSTIFICATION IN THE ORDER OF THE TRIBUNAL IN HOLDI NG THAT CLAUSE (IIID) WOULD ONLY RESORT TO THE DIFFERENCE BETWEEN SALE CO NSIDERATION AND THE VALUE OF DEPB CREDIT. THE HON'BLE COURT ON THE ISS UE THUS HELD AS UNDER: 31. WE DO NOT FIND ANY LOGICAL JUSTIFICATION IN BI FURCATING THE VALUE OF THE SALE CONSIDERATION REALIZED BY THE EXPORTER ON THE TRANSFER OF THE DEPB CREDIT. FOR ONE THING CLAU SE (IIID) OF SECTION 28 MUST COVER WITHIN ITS PURVIEW, THE ENTIR ETY OF THE SALE CONSIDERATION WHICH IS REALIZED BY THE EXPORTE R ON THE TRANSFER OF THE DEPB CREDIT SINCE THAT REPRESENTS T HE PROFIT WHICH THE EXPORTER OBTAINS ON THE TRANSFER OF THE C REDIT. NO PART OF THE CREDIT THAT IS AVAILABLE UNDER THE DEPB SCHEME CAN FALL FOR CLASSIFICATION UNDER CLAUSE (IIIB) OF SECT ION 28 WHICH DEALS WITH CASH ASSISTANCE, RECEIVED OR RECEIVABLE AGAINST ANY SCHEME OF THE GOVERNMENT OF INDIA. AS THE LEGISLATI VE HISTORY OF THE PROVISION WOULD SHOW CLAUSE (IIIB) WAS ENACT ED BY PARLIAMENT AT A TIME WHEN THE EXPORT INCENTIVES THA T WERE AVAILABLE WERE (I) IMPORT ENTITLEMENT LICENCES ; (I I) CASH COMPENSATORY SUPPORT ; AND (III) DUTY DRAWBACK. THE DEPB SCHEME WAS NOT EVEN IN EXISTENCE WHEN CLAUSE (IIIB) CAME TO BE ENACTED INTO SECTION 28 BY THE FINANCE ACT OF 1990. THE DEPB SCHEME WAS BROUGHT INTO EXISTENCE WITH EFFECT FROM APRIL 1, 1997. CLAUSE (IIID) OF SECTION 28 WAS INSERTED BY T HE AMENDING ACT OF 2005 WITH EFFECT FROM APRIL 1, 1998. THE VAL UE OF THE DEPB CREDIT CAN BY NO MEANS BE REGARDED AS A CASH ASSISTANCE WHICH IS RECEIVED OR RECEIVABLE BY A PER SON AGAINST EXPORTS UNDER ANY SCHEME OF THE GOVERNMENT OF INDIA . 41. THE HON'BLE COURT FURTHER HELD VIDE PARA 30 OF ITS JUDGEMENT THAT DEPB CREDIT TO WHICH AN EXPORTER IS ENTITLE D IS A FORM OF 36 AN EXPORT INCENTIVE AND AS AN INCENTIVE MADE AVAILA BLE TO THE ASSESSEE, THERE IS NO COST ATTACHED TO THE GRANT OF INCENTIVE . THE SAID INCENTIVE IS CALCULATED AS A PERCENTAGE OF FOB VALUE OF THE GOOD S EXPORTED. 42. IN VIEW OF THE ABOVESAID RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN CIT VS. KALAPATARU COLOURS & CHEMICAL S (SUPRA) WE HOLD THAT THE EXPORT INCENTIVE RECEIVED BY THE EXPORTERS IN THE FORM OF DEPB HAS NO COST, AS THE SAME IS MADE AVAILABLE TO THE A SSESSEE AS A PERCENTAGE OF FOB VALUE OF THE GOODS EXPORTED. THE SAID EXPORT INCENTIVES RECEIVED IN THE FORM OF DEPB/DFRC ARE I NCLUDIBLE IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME UNDER SECT ION 28 (IIID) AND (IIIE) OF THE ACT. FURTHER NO COST IS ATTRIBUTABLE TO SUCH DEPB CREDIT AS THE SAME IS AWARDED TO THE EXPORTER AT A PERCENTAGE OF FOB VALUE OF THE EXPORT MADE, IN LINE WITH THE EXIM POLICY TO NEUTRA LIZE THE INCIDENCE OF CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EXPORT PR ODUCT. THE SAID DEPB IS ALLOWED TO AN EXPORTER IRRESPECTIVE OF WHET HER THE RAW MATERIALS WERE IMPORTED WHICH IN TURN WERE UTILIZED FOR THE E XPORTS OR WERE NOT IMPORTED. ACCORDINGLY, WHERE DEPB IS NOT UTILIZED AND TRANSFERRED, THE AMOUNT RECEIVED ON ITS TRANSFER IN ITS ENTIRETY IS TO BE CONSIDERED WHILE COMPUTING THE PROFITS ELIGIBLE FOR DETERMINING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT PROVIDED OTHER CONDITIONS STIPULATED BY SECTION 80HHC ARE ALSO SATISFIED. THE HON'BLE BOMB AY HIGH COURT IN CIT VS. KALAPATARU COLOURS & CHEMICALS (SUPRA) HAS ALSO HELD THAT WHAT CONSTITUTES PROFITS UNDER SECTION 28 (IIID) IS THE AMOUNT RECEIVED ON TRANSFER OF THE DEPB CREDIT AND NOT THE AMOUNT OF CREDIT WHICH THE ASSESSEE WAS ENTITLED TO UNDER DEPB SCHEM E, MEANING THEREBY THAT BOTH THE FACE VALUE OF THE DEPB AND THE AMOUNT RECEIVED IN EXCESS OF THE DEPB CREDIT CONSTITUTE PROFITS OF BUSINESS U NDER SECTION 28(IIID) OF THE ACT, WHERE THE FACE VALUE OF THE DEPB CREDIT HAS BEEN OFFERED TO 37 TAX IN THE YEAR IN WHICH THE CREDIT ACCRUED TO THE ASSESSEE, WOULD NOT BE A GROUND TO HOLD THAT SUCH PROFIT WAS NOT COVERED U NDER SECTION 28(IIID) OF THE ACT . THE HON'BLE BOMBAY HIGH COURT CLARIFIED WHERE TH E FACE VALUE OF DEPB CREDIT WAS OFFERED TO TAX AS BUSINESS PROFITS UNDER SECTION 28(IIID) IN THE YEAR IN WHICH THE CREDIT ACCRUED TO THE ASSESSEE, THEN FURTHER PROFIT ARISING ON ITS TRANSFER WOULD BE TAX ED AS PROFIT OF BUSINESS UNDER SECTION 28(IIID) IN THE YEAR IN WHICH THE TRA NSFER TAKES PLACE. FURTHER NO PART OF THE DEPB CREDIT WOULD ATTRACT CH ARGE UNDER SECTION 28(IIIB) OF THE ACT. AS IN THE CAPTIONED APPEALS EXPORT TURNOVER OF ALL THE ASSESSEES EXCEEDS RS.10 CRORES AND ADMITTEDLY T HE CONDITIONS STIPULATED IN THIRD PROVISO TO SECTION 80HHC OF THE ACT HAVE NOT BEEN FULFILLED BY THE ASSESSEE, AMOUNT RECEIVED ON TRANS FER OF DEPB SHALL BE EXCLUDED FROM THE PROFITS OF BUSINESS TO DETERMINE ELIGIBLE PROFITS UNDER EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. 43. DURING THE COURSE OF HEARING THE LEARNED A.R. D REW OUR ATTENTION TO THE SPEECH OF THE FINANCE MINISTER DURING THE DEBAT E IN LOK SABHA AT THE TIME OF PASSING THE ABOVE AMENDMENT BILL WHILE INTR ODUCING CLAUSE (IIID) & (IIIE) TO SECTION 28 AND ITS TREATMENT UNDER SEC TION 80HHC OF THE ACT AND POINTED OUT THAT THOUGH THE REFERENCE WAS MADE TO THE SPEECH OF THE FINANCE MINISTER BY THE HON'BLE BOMBAY HIGH COURT BUT THE INTENTION OF THE FINANCE MINISTER, HAS NOT BEEN DISCUSSED AT ALL AND THE BARE READING OF THE SPEECH OF THE FINANCE MINISTER IS ABSOLUTELY CLEAR THAT ONLY PREMIUM I.E. THE PROFIT HAS TO BE TAKEN INTO CONSID ERATION FOR THE PURPOSE OF CLAUSE (IIID) OF SEC 28 OF THE ACT. 44. THE RELEVANT PORTION OF THE SPEECH OF THE FINAN CE MINISTER REFERRED TO BY THE LEARNED A.R. READS AS UNDER : 38 WHAT IS DEPB CREDIT SALE? A DEBP CREDIT SALE IS T HAT ON YOUR DEPB PASSBOOK, IF YOU HAVE CERTAIN CREDIT IN YOUR F AVOUR, YOU CAN IMPORT ITEMS WITHOUT PAYING CREDIT. BUT YOU CAN AL SO SELL CREDIT TO ANOTHER IMPORTER. IF YOU ACTUALLY IMPORT IT IS PAR T OF IMPORT EXPORT. IF YOU SELL IT TO ANOTHER IMPORTER AND MAK E PROFIT ON THAT, PREMIUM IT IS NOT EXPORT PROFIT. 45. WE FIND NO MERIT IN THE SAID CONTENTION OF THE LEARNED A.R. FOR THE ASSESSEE AS THE HON'BLE BOMBAY HIGH COURT IN KALAPT ARU COLOURS & CHEMICALS(SUPRA) VIDE PARA 32 HAD REFERRED TO THE S PEECH MADE BY THE FINANCE MINISTER WHILE INTRODUCING THE SAID AMENDME NT IN 2005 AND HAD ALSO CONSIDERED THE REASONS FOR THE INTRODUCTION OF CLAUSE (IIID) IN SECTION 28 OF THE ACT IN VIEW OF THE DECISION OF DE LHI BENCH OF THE TRIBUNAL IN THE CASE OF P& G ENTERPRISES (93 ITD 13 8) (DEL) AND HAD OBSERVED AS UNDER : 32. THE TRIBUNAL HAS RELIED TO A CONSIDERABLE EXTE NT ON A SPEECH MADE BY THE THEN FINANCE MINISTER ON THE FLO OR OF PARLIAMENT IN SUPPORT OF ITS CONCLUSION THAT ONLY T HE PREMIUM REALIZED BY AN EXPORTER ON THE SALE OF THE DEPB CRE DIT WOULD FALL WITHIN THE PURVIEW OF CLAUSE (IIID) OF SECTION 28 AND NOT THE FACE VALUE OF THE DEPB. THE ENTIRE APPROACH OF THE TRIBUNAL IS WITH RESPECT MISCONCEIVED AND UNSUSTAIN ABLE. THE FINANCE MINISTER SOUGHT TO INTRODUCE CLAUSE (IIID) IN SECTION 28 IN VIEW OF THE DECISION OF THE DELHI BENCH OF TH E TRIBUNAL IN THE CASE OF P & G ENTERPRISES [2005] 93 ITD 138 (DELHI). THE DISPUTE IN THAT CASE RELATED TO TAXING THE ENTI RE AMOUNT RECEIVED ON THE TRANSFER OF THE DEPB CREDIT AND NOT THE AMOUNT THAT WAS RECEIVED IN EXCESS OF THE FACE VALU E OF THE DEPB CREDIT. AS A MATTER OF FACT IN THAT CASE THE A SSESSEE HAD CLAIMED THAT THE ENTIRE RECEIPT ON THE TRANSFER OF THE DEPB CREDIT INCLUDING THE FACE VALUE OF THE CREDIT AS PR OFITS UNDER SECTION 28(IIIA). THE TRIBUNAL IN THAT CASE HELD TH AT THE ENTIRETY OF THE AMOUNT WOULD BE COVERED BY SECTION 28(IV). HOWEVER, THE VIEW OF THE TRIBUNAL WAS THAT SINCE EX PLANATION (BAA) IN SECTION 80HHC DID NOT ENVISAGE THE EXCLUSI ON OF PROFITS COVERED BY SECTION 28(IV), SUCH PROFITS COU LD NOT BE EXCLUDED WHILE COMPUTING THE DEDUCTION UNDER SECTIO N 80HHC. HENCE, THERE WAS NO DISPUTE IN CONSIDERING THE ENTI RETY OF THE RECEIPTS ON THE TRANSFER OF THE DEPB CREDIT AS PROF ITS OF BUSINESS. THE DISPUTE WAS ONLY IN NOT TREATING THE RECEIPTS BY 39 WAY OF TRANSFER OF THE DEPB CREDIT AS EXPORT RECEIP TS WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC. CONSEQ UENTLY, THE ENTIRETY OF THE RECEIPTS ON THE TRANSFER OF THE DEPB CREDIT WHICH WAS SOUGHT TO BE INCLUDED IN SECTION 28(IV) W AS BROUGHT IN BY PARLIAMENTARY AMENDMENT IN THE FORM OF AN INS ERTION OF CLAUSE (IIID) IN SECTION 28 WITH RETROSPECTIVE EFFE CT. THERE WAS NO CONTROVERSY REGARDING THE TAXABILITY OF THE QUAN TUM OF RECEIPTS ON THE TRANSFER OF THE DEPB CREDIT. HENCE, FOR THESE REASONS WE ARE OF THE VIEW THAT IT CANNOT BE INFERR ED FROM THE SPEECH OF THE FINANCE MINISTER THAT THE INSERTION O F CLAUSE (IIID) IN SECTION 28 WAS MADE WITH A VIEW TO TAX ON LY THE AMOUNT WHICH HAS BEEN RECEIVED IN EXCESS OF THE FAC E VALUE OF THE DEPB CREDIT. 46. THE HON'BLE COURT FURTHER HELD AS UNDER : 33. THE SUBMISSION THAT PRIOR TO THE INSERTION OF CLAUSE (IIID) IN SECTION 28, THE FACE VALUE OF THE DEPB CR EDIT REALIZED ON THE TRANSFER OF SUCH CREDIT CONSTITUTED EXPORT PROFITS, BUT NOT THE AMOUNT REALIZED IN EXCESS OF T HE FACE VALUE OF THE DEPB IS SIMILARLY WITHOUT ANY BASIS. T HIS IS BECAUSE (I) THE OBJECT OF THE DEPB WAS TO FURNISH A N INCENTIVE TO EXPORTERS SO AS TO ADJUST THE CREDIT A GAINST THE CUSTOMS DUTY PAYABLE ON ANY GOODS IMPORTED INTO IND IA. HOWEVER, WHERE AN EXPORTER INSTEAD OF UTILIZING THE CREDIT TRANSFERS THE CREDIT AT A PREMIUM, IT CANNOT BE SAI D THAT THE EXPORTER HAS UTILIZED THE CREDIT ; (II) THE LEGISLA TURE CONSIDERS THAT THE CUSTOMS DUTY AND EXCISE DUTY PAI D ON RAW MATERIALS USED IN THE EXPORT PRODUCT, WHEN REPAID O R REPAYABLE AS DUTY DRAWBACK, WOULD NOT CONSTITUTE EX PORT PROFIT. SIMILARLY, WHEN THE DEPB CREDIT IS NOT UTIL IZED IN THE BUSINESS BUT IS TRANSFERRED FOR VALUE, THE AMOUNT R ECEIVED ON THE TRANSFER WOULD BE BUSINESS PROFITS AND NOT EXPO RT PROFITS IRRESPECTIVE OF WHETHER THE AMOUNT WHICH IS REALIZE D IS EQUAL TO, LARGER THAN OR LESS THAN THE FACE VALUE OF THE DEPB CREDIT. PARLIAMENT HAS CONSIDERED THAT THE ENTIRETY OF THE AMOUNT RECEIVED ON THE TRANSFER OF THE DEPB SHALL C ONSTITUTE PROFITS OF BUSINESS UNDER SECTION 28(IIID). SINCE S UCH PROFITS ARE NOT EXPORT PROFITS PARLIAMENT DIRECTED THAT NIN ETY PER CENT. OF THOSE PROFITS WOULD BE EXCLUDED WHILE COMP UTING THE DEDUCTION UNDER SECTION 80HHC ; (III) PARLIAMENT CONSIDERED THAT AN EXPORTER WHO INSTEAD OF UTILIZIN G THE DEPB CREDIT FOR PAYING CUSTOMS DUTY ON IMPORTED GOO DS, MAKES A PROFIT BY TRANSFERRING THE DEPB, WOULD FORM A SEPARATE CLASS AND SEEKS TO TAX THE RECEIPTS ON THE TRANSFER OF THE DEPB CREDIT AS BUSINESS PROFITS AND NOT EXPO RT PROFITS. EXPORTERS WHO TRANSFER THE DEPB CREDIT AND MAKE A PROFIT CANNOT BE PLACED ON PAR WITH THOSE EXPORTERS WHO UTILIZE THE CREDIT FOR PAYING THE CUSTOMS DUTY ON T HE IMPORTED GOODS ; (IV) THE FACT THAT PARLIAMENT DID NOT CONSIDER THE AMOUNT RECEIVED ON THE TRANSFER OF THE DEPB TO BE EXPORT PROFIT CANNOT BE A GROUND TO HOLD THAT TH E RECEIPTS ON THE TRANSFER OF DEPB CREDIT ARE NOT BUSINESS PRO FITS. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITS THAT THE 40 ENTIRE AMOUNT RECEIVED ON THE TRANSFER OF THE DEPB CREDIT IS BUSINESS PROFIT, BUT IT WAS CONTENDED THAT WHAT IS INCLUDED IN SECTION 28(IIID) IS THE AMOUNT RECEIVED ON THE T RANSFER OF THE DEPB CREDIT IN EXCESS OF THE FACE VALUE OF THE DEPB AND THE AMOUNT RECEIVED TO THE EXTENT OF THE FACE VALUE OF THE DEPB WOULD BE COVERED UNDER SECTION 28(IIIB). THERE IS NO MERIT IN THIS CONTENTION BECAUSE (A) THE DEPB CREDI T WAS NOT IN EXISTENCE WHEN SECTION 28(IIIB) WAS INSERTED BY THE FINANCE ACT OF 1990. DEPB CREDIT WAS INTRODUCED WIT H EFFECT FROM APRIL 1, 1997 WHICH WAS AFTER THE INSERTION OF CLAUSE (IIIB) IN SECTION 28 ; (B) SECTION 28(IIIB) REFERS TO CASH ASSISTANCE (BY WHATEVER NAME CALLED) RECEIVED BY TH E ASSESSEE FROM THE GOVERNMENT PURSUANT TO A SCHEME O F THE GOVERNMENT. THE AMOUNT RECEIVED ON THE TRANSFER OF THE DEPB CREDIT IS NOT RECEIVED BY THE ASSESSEE FROM TH E GOVERNMENT PURSUANT TO A SCHEME OF THE GOVERNMENT W ITHIN THE MEANING OF CLAUSE (IIIC) ; AND (C) WHEN SECTION 28(IIID) SPECIFICALLY DEALS WITH PROFITS REALIZED ON THE TRA NSFER OF THE DEPB CREDIT, IT WOULD BE IMPERMISSIBLE AS A MATTER OF FIRST PRINCIPLE TO BIFURCATE THE FACE VALUE OF THE DEPB A ND THE AMOUNT RECEIVED IN EXCESS OF THE FACE VALUE OF THE DEPB. 47. RESPECTFULLY FOLLOWING THE ABOVESAID RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN KALAPTARU COLOURS & CH EMICALS(SUPRA) WE FIND NO MERIT IN THE STAND OF THE ASSESSEE THAT DEPB CREDIT HAS A FACE VALUE AND WHILE DETERMINING THE PROFITS ELIGIBLE FO R DEDUCTION UNDER SECTION 80HHC OF THE ACT, ONLY THE PROFITS ARISING ON THE TRANSFER OF DEPB CREDIT ARE TO BE EXCLUDED. AS OBSERVED BY US IN PARA 42 ABOVE THE DEPB CREDIT BEING AN EXPORT INCENTIVE RECEIVED BY T HE ASSESSEE IN PROPORTION TO THE FOB VALUE OF ITS EXPORT HAS NO FA CE VALUE AND THE AMOUNT RECEIVED ON ITS TRANSFER IS TO BE CONSIDERED WHILE COMPUTING THE PROFITS ALLOWABLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. ADMITTEDLY, IN THE CASE OF THE ASSESSEES BEFORE US THE TURNOVER EXCEEDS RS.10 CRORES AND THE PROVISIONS OF THIRD PROVISO TO SUB-SECTION (3) OF SECTION 80HHC OF THE ACT ARE APPLICABLE AND THE ASS ESSEE HAVING NOT FULFILLED THE CONDITIONS LAID DOWN UNDER THE SAID P ROVISO, THE TOTAL AMOUNT RECEIVED ON TRANSFER OF DEPB CREDIT IS TO BE EXCLUDED FROM THE PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. HOWEVER, THE AMOUNT RECEIVED BY THE ASSESSEE ON THE TRANSFER OF DEPB CREDIT IS 41 INCLUDIBLE AS BUSINESS PROFIT IN THE HANDS OF THE A SSESSEE UNDER SECTION 28(IIID) OF THE ACT. 48. THE LEARNED A.R. FOR THE ASSESSEE STRESSED THAT THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN KALAPTARU COLOU RS & CHEMICALS(SUPRA) IS NOT APPLICABLE AS THE SAID DECI SION HAS BEEN RENDERED BY A NON-JURISDICTIONAL HIGH COURT, HAS NO MERIT AS THE HON'BLE PUNJAB & HARYANA HIGH COURT WHILE SETTING ASIDE THE ISSUE TO THE TRIBUNAL IN ITS LEAD ORDER IN F.C.SONDHI (SUPRA) HA S EXPRESSED ITS APPROVAL WITH THE VIEW TAKEN BY THE HON'BLE BOMBAY HIGH COURT IN KALAPTARU COLOURS & CHEMICALS(SUPRA). 49. FURTHER THE LEARNED A.RS FOR THE ASSESSEE HAVE POINTED OUT THAT DEPB CREDIT HAS VALUE AND SUCH VALUE IS TO BE DEDUC TED WHILE COMPUTING THE PROFITS ON THE TRANSFER OF DEPB CREDIT. WE FIN D NO MERIT IN THE SAID STAND OF THE ASSESSEE AS THOUGH THE DEPB CREDIT HAD A VALUE BUT THE COST OF SUCH VALUE IS ZERO IN THE HANDS OF THE ASSE SSEE AND IN THE ABSENCE OF ANY COST BORNE BY THE ASSESSEE, NO BENEFIT OF AN Y AMOUNT BEING THE COST OF DEPB CREDIT IS ALLOWABLE IN THE HANDS OF TH E ASSESSEE. IN ONE OF THE CAPTIONED APPEALS THE LEARNED A.R. HAD STRESSED THAT IT HAD INCURRED LOSS ON THE TRANSFER OF ITS DEPB CREDIT. IN VIEW O F OUR HOLDING THAT THE AMOUNT RECEIVED ON TRANSFER OF DEPB CREDIT IS TO B E CONSIDERED AS BUSINESS PROFITS UNDER SECTION 28(IIID) OF THE ACT AND THE SAID DEPB CREDIT HAS NO COST, THE LOSS OR PROFIT ARISING ON T HE TRANSFER OF DEPB CREDIT VIS--VIS ITS FACE VALUE ACCRUED ON APPLICAT ION BEING MADE, HAS NO RELEVANCE AND ONLY THE AMOUNT RECEIVED ON THE TRANS FER OF DEPB CREDIT IS INCLUDIBLE IN THE HANDS OF THE ASSESSEE UNDER SECTI ON 28(IIID) OF THE ACT AND SUCH AMOUNT IS TO BE EXCLUDED WHILE COMPUTING T HE PROFITS ELIGIBLE 42 FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT PROVID ED OTHER CONDITIONS STIPULATED BY SECTION 80HHC ARE SATISFIED. 50. IN VIEW OF OUR DECISION IN PARAS HEREINABOVE WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DEDUCTION UNDER SE CTION 80HHC OF THE ACT IN LINE WITH OUR DIRECTIONS IN THE PARAS HEREIN ABOVE. REASONABLE OPPORTUNITY SHALL BE ALLOWED TO THE ASSESSEE WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE CAPTIONED YEAR S. 51. ACCORDINGLY, THE CAPTIONED APPEALS OF DIFFERENT ASSESSEES ARE DISPOSED OFF AS INDICATED ABOVE FOLLOWING THE DECIS ION OF THE HON'BLE BOMBAY HIGH COURT IN KALAPTARU COLOURS & CHEMICALS( SUPRA), WHICH HAS SINCE BEEN APPROVED BY THE HON'BLE JURISDICTIONAL H IGH COURT. 52. IN THE RESULT, THE CAPTIONED APPEALS IN I.T.A.N OS REFERRED TO ABOVE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF JUNE, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH JUNE, 2011 RATI COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH