SAGAR DRUGS & PHARMACEUTICALS LTD V. ASST.CIT

TAXAP/726/2011

AI Insights

The case involves Sagar Drugs & Pharmaceuticals Ltd., the appellant, contesting an ITAT decision which denied them a deduction under Section 80HHC on the sale of DEPB for the assessment year 2002-03. The ITAT had excluded the entire sale proceeds from the DEPB while computing deductions, contrary to the appellant's claim that only the profit should be excluded. The High Court's decision referenced the Supreme Court's ruling in Taxman Exports, which supported the appellant's position. Both parties' legal representatives acknowledged the applicability of the Supreme Court's decision, leading to the quashing of the ITAT's order.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 670505 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 03-12-2013
• Assessment Year: misc
• Other Referred Cases: Topman Exports vs. ITO, Topman Exports vs. Commissioner of Income Tax
• Laws Referred To: Section 80HHC of the Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PAURAMI SHETH
• Assessee Lawyers: SWATI SOPARKAR
• Keywords: Deduction; DEPB; Income Tax; ITAT; Special Bench; Supreme Court
• Section: 80HHC

Judgement Text

"O/TAXAP/726/2011 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 726 of 2011 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH ­sd/­ and HONOURABLE MR.JUSTICE R.P.DHOLARIA ­ sd/­ ============================================= 1. Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ============================================= SAGAR DRUGS & PHARMACEUTICALS LTD....Appellant(s) Versus ASST.CIT....Opponent(s) ============================================= Appearance: MRS SWATI SOPARKAR, ADVOCATE for the Appellant(s) No. 1 MS PAURAMI B SHETH, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA Date : 03/12/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Present Tax Appeal has been preferred by the assessee against the impugned judgment and order dated 26.11.2010 passed in ITA No.4042/AHD/2008 passed by the learned Income Appellate Tribunal (hereinafter referred to as the “ITAT”) for AY 2002­03. Page 1 of 3 O/TAXAP/726/2011 JUDGMENT At the time of admission, the Division Bench has framed the following substantial question of law. 1.Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the appellate was ineligible for deduction under Section 80HHC on sale of DEPB? 2.Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that while computing deducting under Section 80HHC what is required to be excluded was the gross sale price received on sale of DEPB and not the profit on such sale? 4.0. Shri S.N. Soparkar, learned Senior counsel for the assessee has vehemently submitted that the learned ITAT while passing the impugned judgment and order has relied upon the decision of the Special Bench of ITAT Bombay in the case of Topman Exports vs. ITO reported in 318 ITR 87. It is reported that the aforesaid decision of the special Bench has been confirmed by the Hon’ble Supreme Court in the case of Topman Exports vs. Commissioner of Income Tax reported in (2012) 342 ITR 49(SC). It is submitted that the decision of the Bombay High Court taking the contrary view has been set aside by the Hon’ble Supreme Court and the view taken by the Special Bench in the case of Taxman Export (supra) has been restored. In view of the above, it is requested to allow the present appeal. 5.0. Ms. Paurami Sheth, learned advocate for the revenue is not in a position to dispute the above. She has also not pointed out any contrary decision to the decision of the Hon’ble Supreme Court in the case of Taxman Exports (Supra) relied upon by the learned advocate for the assessee. 6.0. Having heard Ms. Paurami Sheth learned advocate for the Page 2 of 3 O/TAXAP/726/2011 JUDGMENT revenue and Shri S.N. Soparkar, learned Senior counsel for the assessee and the issue involved in the present appeals and the question raised / formulated, we are of the opinion that the aforesaid issue is now not res­ integra in view of the decision of the Hon’ble Supreme Court in the case of Taxman Exports(supra). In the aforesaid decision, it has been held that for allowance of relief under Section 80HHC(3)of the Act only the profit and not entire sales proceeds arising out of the DEPB is required to be reduced / considered. 7.0. Applying the law laid down by the Hon’ble Supreme Court in the case of Taxman Exports (supra), the question raised / formulated in the present appeals is answered in favour of assessee and the order passed by the ITAT in judgment and order dated 26.11.2010 passed in ITA No.4042/AHD/2008 is hereby quashed and set aside. Present appeal is allowed to the aforesaid extent. No costs. sd/­ (M.R.SHAH, J.) sd/­ (R.P.DHOLARIA,J.) Kaushik Page 3 of 3 "