Raghu Exports India P. Ltd. V. Commissioner of Income Tax-I, Jalandhar

ITA/37/2012

AI Insights

The case involves M/s Raghu Exports India P. Ltd., the appellant, contesting an order by the Income Tax Appellate Tribunal which had dismissed their appeal regarding the assessment year 2004-05. The core issue revolved around the treatment of income from DEPB, DBK, and DFRC as business income and its implications for deductions under Section 80HHC of the Income Tax Act. The Tribunal had initially reversed its own earlier order based on a judgment from a Special Bench of the Mumbai ITAT, which was confirmed by the Bombay High Court. The appellant challenged this decision, arguing that the Tribunal did not allow proper consideration or rebuttal of the findings. The High Court of Punjab and Haryana, after reviewing the submissions and relevant precedents, including a Supreme Court judgment, decided in favor of the appellant, remanding the matter for re-assessment in line with the Supreme Court's decision.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796268 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 26-07-2012
• Assessment Year: misc
• Other Referred Cases: M/s Topman Exports v. Commissioner of Income Tax, Mumbai, M/s Turbo Impex v. Commissioner of Income Tax-II, Ludhiana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIVEK SETHI
• Assessee Lawyers: RAJIV SHARMA
• Keywords: Business income; DBK; Deduction; DEPB; Income Tax; Natural Justice; DFRC
• Section: 80HHC; 260A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 37 of 2012 (O&M) Date of Decision: July 26, 2012 M/s Raghu Exports India P. Ltd. …Appellant Versus Commissioner of Income Tax-I, Jalandhar …Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE G.S. SANDHAWALIA Present: Mr. Rajiv Sharma, Advocate, for Mr. S.K. Mukhi, Advocate, for the appellant-assessee. Mr. Vivek Sethi, Sr. Standing Counsel, for the respondent-revenue. AJAY KUMAR MITTAL, J. 1. This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (for brevity, ‘the Act’), against the order dated 24.12.2010 (Annexure A-6) passed by the Income Tax Appellate Tribunal, Amritsar Bench (for brevity, ‘the Tribunal’) in ITA No. 54 (ASR) 2009, for the assessment year 2004-05, claiming the following questions of law:- “i. Whether ITAT was justified in dismissing the appeal of the appellant and thereby reversing its own earlier order by following the judgment of Special Bench of Mumbai ITAT in the case of M/s Topman by blindly following and confirming the judgment of Hon’ble Bombay High Court without considering or even allowing the counsels to argue and rebut the ITA No. 37 of 2012 (O&M) 2 findings of the Hon’ble Bombay High Court which is against the principles of law and that of natural justice? ii. Whether ITAT was justified in dismissing the appeal of the appellant by observing that since Hon’ble Punjab and Haryana High Court has agreed with the findings of the Hon’ble Bombay High Court without properly appreciating the findings of this Hon’ble Court while setting aside the matter to the file of the ITAT wherein it was held that ‘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’ wherein this Hon’ble Court has only agreed with the findings of the Hon’ble Bombay High Court in part while as regards the main issue that whether DBK, DEPB and DFRC has any value or not was remanded to the ITAT for fresh decision in accordance with law, so that so the orders of the ITAT are perverse? iii. Whether ITAT was justified in dismissing the appeal of the appellant without considering or even allowing the counsels to argue and rebut the findings of the Hon’ble Bombay High Court by erroneously holding that since Hon’ble Punjab and Haryana High Court had agreed to the findings of ITA No. 37 of 2012 (O&M) 3 the Hon’ble Bombay High Court so there remains no scope with the ITAT to consider any argument or pleadings on the issue in dispute which is against the principles of law and that of natural justice, since this Hon’ble Court while setting aside the matter to the file of the ITAT Amritsar had in fact only agreed with the Hon’ble Bombay High Court in the case of M/s Kalpataru to the extent of the first issue i.e., whether the profit referred to therein u/s 28(iiid) requires any artificial cost to be interpolated while on the issue of the value of DEPB it had set aside the matter to the file of the ITAT for fresh consideration as per provisions of law? iv. Alternatively, whether the ITAT Amritsar was justified in concurring with the findings of Hon’ble Bombay High Court that the entirety of the sale consideration of DEBP falls within the purview of Section 28(iiid) there being no face value of DEPB to be reduced from the total sale consideration for arriving at the profits on the transfer of DEPB? v. Whether the orders of the Tribunal are legally unsustainable and bad in law and perverse?” 2. Notice of motion. 3. Mr. Vivek Sethi, learned standing counsel for the respondent-revenue, who is present in the Court, accepts notice. A copy of the complete paper book has been handed over to him by the learned counsel for the appellant-assessee. ITA No. 37 of 2012 (O&M) 4 4. Mr. Rajiv Sharma, learned counsel for the appellant- assessee contends that the matter is no longer res integra and the same is covered by the judgment of the Apex Court rendered in the case of M/s Topman Exports v. Commissioner of Income Tax, Mumbai, (2012) 3 SCC 593, which has been followed by this Court in the case of M/s Turbo Impex v. Commissioner of Income Tax-II, Ludhiana (ITA No. 361 of 2011, decided on 20.3.2012). Learned counsel has further stated that the substantial questions of law are required to be answered in terms of the aforesaid judgments. 5. After having gone through the paper book, learned counsel for the respondent-revenue has not been able to controvert the submission made by learned counsel for the appellant-assessee that the issue involved herein stands concluded by the aforesaid judgments. 6. Accordingly, we allow the present appeal in the same terms. The impugned order dated 24.12.2010 (Annexure A-6), passed by the Tribunal is set aside. The matter is remanded back to the Assessing Officer with a direction to compute the deduction under Section 80HHC of the Act in accordance with law and in the light of judgment of the Hon’ble Supreme Court in the case of M/s Topman Exports (supra). (AJAY KUMAR MITTAL) JUDGE (G.S. SANDHAWALIA) July 26, 2012 JUDGE Pkapoor "