Turbo Impex V. Commissioner of Income Tax-II, Ludhiana

ITA/361/2011

AI Insights

The case involves M/s Turbo Impex appealing against the orders of the Income Tax Appellate Tribunal, which denied them certain deductions under Section 80HHC of the Income Tax Act, 1961, related to export incentives like DEPB, DBK, and DFRC. The primary legal contention was whether the entire amount received from the sale of DEPB should be considered as profit under Section 28(iiid) of the Act. The Supreme Court's decision in Topman Exports, which overruled the Bombay High Court's earlier decision and clarified the tax treatment of DEPB, was pivotal in this case. The High Court of Punjab and Haryana, following the Supreme Court's precedent, set aside the Tribunal's orders and remanded the case for re-computation of deductions in line with the Supreme Court's judgment.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796294 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 20-03-2012
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Kalpataru Colours and Chemicals, Topman Exports v. Commissioner of Income Tax, Mumbai, Commissioner of Income Tax v. M/s F.C. Sondhi & Company (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH; SAVITA SAXENA; RAJESH SETHI
• Assessee Lawyers: S K MUKHI; PANKAJ JAIN
• Keywords: DBK; DEPB; DFRC; Export Incentives; Income tax deduction
• Section: 143(3); 143(1); 80HHC; 260A; 28(iiib); 28(iii)(d); 28 (iiid)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 361 of 2011 (O&M) and connected appeals Date of Decision: March 20, 2012 M/s Turbo Impex …Appellant Versus Commissioner of Income Tax-II, Ludhiana …Respondent CORAM: CORAM: CORAM: CORAM: HON’BLE MR. JUSTICE M.M. KUM HON’BLE MR. JUSTICE M.M. KUM HON’BLE MR. JUSTICE M.M. KUM HON’BLE MR. JUSTICE M.M. KUMAR AR AR AR HON’BLE MR. JUSTICE HON’BLE MR. JUSTICE HON’BLE MR. JUSTICE HON’BLE MR. JUSTICE ALOK SINGH ALOK SINGH ALOK SINGH ALOK SINGH Present: For the Appellant(s): Mr. S.K. Mukhi, Advocate. Mr. Pankaj Jain, Advocate. For the respondent(s): Mr. Rajesh Katoch, Advocate. Ms. Savita Saxena, Advocate. Mr. Rajesh Sethi, Advocate. 1. To be referred to the Reporters or not? 2. Whether the Judgment should be reported in the Digest M.M. KUMAR, J. M.M. KUMAR, J. M.M. KUMAR, J. M.M. KUMAR, J. 1. This order shall dispose of a bunch of appeals* * * * filed under Section 260A of the Income Tax Act, 1961 (for brevity, ‘the Act’) against the order(s)** ** ** ** passed by the Amritsar and Chandigarh Benches of the Income Tax Appellate Tribunal because common question of law and facts are involved. The primary issue in these appeals relates to computation of deduction under Section 80HHC of the Act on export incentive Duty Entitlement Pass Book (DEPB); Duty Draw Back (DBK); and Duty Free Remission Scheme (DFRC). The Tribunal following the view of the Bombay High Court in the case of Commissioner of Income Tax Commissioner of Income Tax Commissioner of Income Tax Commissioner of Income Tax v. v. v. v. Kalpataru Colours and Kalpataru Colours and Kalpataru Colours and Kalpataru Colours and ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 2 Chemicals Chemicals Chemicals Chemicals, (2010) 328 ITR 451 (Bom) , (2010) 328 ITR 451 (Bom) , (2010) 328 ITR 451 (Bom) , (2010) 328 ITR 451 (Bom), held that the entire amount received by an assessee on sale of DEPB represents profit on transfer of DEPB, under Section 28(iiid) of the Act. In Topman Topman Topman Topman Exports Exports Exports Exports v. v. v. v. Commissioner of Income Tax, Mumbai Commissioner of Income Tax, Mumbai Commissioner of Income Tax, Mumbai Commissioner of Income Tax, Mumbai, (2012) 3 SCC 593 , (2012) 3 SCC 593 , (2012) 3 SCC 593 , (2012) 3 SCC 593, Hon’ble the Supreme Court has, however, held that the entire amount received by the assessee less the face value of the DEPB would represent profit on transfer of DEPB by the assessee. The view taken by Bombay High Court stands overruled and the judgment of Bombay High Court in CIT CIT CIT CIT v. v. v. v. Topma Topma Topma Topman Exports n Exports n Exports n Exports [ITA No. [ITA No. [ITA No. [ITA No. (L) 3019 of 2009, decided on 29.6.2010] (L) 3019 of 2009, decided on 29.6.2010] (L) 3019 of 2009, decided on 29.6.2010] (L) 3019 of 2009, decided on 29.6.2010], has been reversed. It also follows that the view of this Court in Commissioner of Income Commissioner of Income Commissioner of Income Commissioner of Income- - - -tax tax tax tax v. v. v. v. M/s F.C. Sondhi & Company (P) Ltd. M/s F.C. Sondhi & Company (P) Ltd. M/s F.C. Sondhi & Company (P) Ltd. M/s F.C. Sondhi & Company (P) Ltd. (ITA No. 299 of 2010, decided on (ITA No. 299 of 2010, decided on (ITA No. 299 of 2010, decided on (ITA No. 299 of 2010, decided on 16.8.2010) 16.8.2010) 16.8.2010) 16.8.2010) and in any other connected matter would no longer holds the field and are deemed to be overruled since the view of this Court is based on the judgment of Bombay High Court in the case of Kalpataru Colours and Chemicals (supra) Kalpataru Colours and Chemicals (supra) Kalpataru Colours and Chemicals (supra) Kalpataru Colours and Chemicals (supra). 2. The facts are being referred from ITA No. 361 of 2011 wherein the common order, dated 30.6.2011, passed by the Chandigarh Bench of the Tribunal is subject matter of challenge. On 27.10.2004, the appellant-M/s Turbo Impex filed its return for the Assessment Year 2004-05, declaring the income at `1,72,90,748/-. It was processed under Section 143(1) and selected for scrutiny. Keeping in view retrospective amendment of Section 80HHC of the Act w.e.f. 1.4.1998, the Assessing Officer asked the assessee-appellant to justify its claim under that Section. The submission made by the assessee-appellant with regard to deduction under Section 80HHC of the Act on export incentive Duty Entitlement Pass Book (DEPB) was rejected and the assessment ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 3 order dated 26.12.2006 was passed (A-I). The appeal filed by the assessee-appellant was also rejected by the CIT(A), vide order dated 11.1.2008 (A-II). 3. The assessee-appellant then filed an appeal before the Chandigarh Bench of the Tribunal. On 31.8.2009, the aforementioned appeal along with a bunch of others appeals were disposed of in terms of the decision of a Special Bench of the Mumbai Tribunal, dated 11.8.2009, rendered in the case of M/s M/s M/s M/s Topman Exports, Mumbai Topman Exports, Mumbai Topman Exports, Mumbai Topman Exports, Mumbai v. v. v. v. Income Tax Officer (OSD), Income Tax Officer (OSD), Income Tax Officer (OSD), Income Tax Officer (OSD), 14(2), 14(2), 14(2), 14(2), Mumbai [29 DTR (MUM Mumbai [29 DTR (MUM Mumbai [29 DTR (MUM Mumbai [29 DTR (MUM- - - -SB) 153] SB) 153] SB) 153] SB) 153]. Accordingly, the Chandigarh Bench of the Tribunal set aside the orders of the CIT (Appeals) and remanded the matter to the Assessing Officer for fresh adjudication for the purpose of re-computing the deduction under Section 80HHC (A-III). 4. Feeling aggrieved, the revenue filed various appeals before this Court. The Division Bench of this Court rendered its judgment in the case of M/s F.C. Sondhi & Company (P) Ltd. ( M/s F.C. Sondhi & Company (P) Ltd. ( M/s F.C. Sondhi & Company (P) Ltd. ( M/s F.C. Sondhi & Company (P) Ltd. (supra) supra) supra) supra). On the issue of treatment of receipts of DEPB/DFRC entitlements and deduction allowable on such receipts under Section 80HHC of the Act, the Division Bench has found that the view taken by the Special Bench of the Mumbai Tribunal was reversed by the Bombay High Court in the case of Kalpataru Colours and Chemicals Kalpataru Colours and Chemicals Kalpataru Colours and Chemicals Kalpataru Colours and Chemicals (supra (supra (supra (supra) ) ) ). Bombay High Court formulated the following two substantial questions of law: “(a) Whether the Tribunal is justified in holding that the entire amount received on the sale of the Duty Entitlement Passbook does not represent profits chargeable under Section 28(iiid) of the Income ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 4 Tax Act, 1961 and that the face value of the Duty Entitlement Passbook shall be deducted from the sale proceeds? (b) Whether the Tribunal is justified in holding that the face value of the Duty Entitlement Passbook is chargeable to tax under Section 28(iiib) at the time of accrual of income i.e. when the application for Duty Entitlement Passbook is filed with the competent authority pursuant to the exports made and that the profits on the sale of Duty Entitlement Passbook representing the excess of the sale proceeds over the face value is liable to be considered under Section 28(iiid) at the time of sale? 5. In its judgment, on the first question of law formulated under (a), the Bombay High Court held that the Tribunal was not justified when it held that the entire amount received on the sale of the DEPB did not represent profits chargeable under Section 28(iiid) of the Act and that the face value of the DEPB shall be deducted from the sale proceeds of the DEPB. On the second question of law formulated under (b), the Bombay High Court in its judgment did not agree with the Tribunal that the face value of DEPB is to tax under Section 28(iiib) at the time of accrual of income of the Assessee. The High Court, thus, held that the entire sale consideration for transfer of DEPB would fall within the purview of Section 28(iiid) of the Act. In some of the cases, review petitions were filed before the Bombay High Court, but the same were dismissed. ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 5 6. Agreeing with the view taken by the Bombay High Court, the Division Bench of this Court answered the questions holding that the entire 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 matter was remanded to the Tribunal for fresh decision in accordance with law. Subsequently, the other appeals were also disposed of by the Division Bench following the decision rendered in M/s F.C. Sondhi & Comp M/s F.C. Sondhi & Comp M/s F.C. Sondhi & Comp M/s F.C. Sondhi & Company (P) Ltd. any (P) Ltd. any (P) Ltd. any (P) Ltd. (supra) (supra) (supra) (supra) and the matters were remanded back to the respective Benches of the Tribunal. 7. In view of the aforesaid directions issued by this Court, the appeals were listed before the Tribunal. After noticing the arguments of the parties; provisions of Section 28 and 80HHC of the Act; and various observations made by the Bombay High Court in the case of Kalapataru Colours and Chemicals (supra) Kalapataru Colours and Chemicals (supra) Kalapataru Colours and Chemicals (supra) Kalapataru Colours and Chemicals (supra), the Tribunal decided the issue of value of DEPB against the assessee, vide impugned order dated 30.6.2011. In para 47, the following observations have been made by the Chandigarh Bench of the Tribunal:- “47. Respectfully following the abovesaid ratio laid down by the Hon’ble Bombay High Court in Kalaptaru Colours & Chemicals (supra) we find no merit in the stand of the assessee that DEPB credit has a face value and while determining the profits eligible for 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 the assessee in ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 6 proportion to the FOB value of its export has no face 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 assesses 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 assessee having not fulfilled the conditions laid down under the said proviso, 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 includible as business profit in the hands of the assessee under section 28(iiid) of the Act.” 8. Eventually, the Tribunal directed the Assessing Officer to compute the deduction under section 80HHC of the Act in line with the aforementioned observations after affording reasonable opportunity to the assessee (A-6). 9. Having heard learned counsel for the parties at length and perusing the paper books with their able assistance, we are of the considered view that the matter is no longer res integra as the same has been finally settled by Hon’ble the Supreme Court in a recent judgment rendered in the case of Topman Exports Topman Exports Topman Exports Topman Exports (supra) (supra) (supra) (supra). 10. It would be profitable to first notice a few facts of the case of Topman Exports (supra) Topman Exports (supra) Topman Exports (supra) Topman Exports (supra). Topman Exports-assessee was a manufacturer and exporter of fabrics and garments. During the previous year relevant to Assessment Year 2002-03 it sold DEPB ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 7 and DFRC (Duty Free Replenishment Certificate), which had accrued on export of its products. The assessee filed a return for Assessment Year 2002-03 claiming a deduction of `83,69,303/- under section 80HHC of the Act. The Assessing Officer held that if the profit on transfer of the export incentives was deducted from the profits of the assessee, the figure would be a loss and there would be no positive income of the assessee from its export business and the assessee would not be entitled to any deduction under Section 80HHC of the Act. Aggrieved, the assessee filed an appeal before CIT (Appeals) contending that the profits on the transfer of DEPB and DFRC were not the sale proceeds of DEPB and DFRC amounting to `2,06,84,841/- and `1,65,616/- respectively, but only the difference between the sale value and face value of DEPB and DFRC amounting to `14,35,097/- and `19,902/- respectively and if these figures of profits on transfer of DEPB and DFRC were taken, the income of the assessee would be positive and the assessee would be entitled to the deduction under Section 80HHC of the Act. CIT (Appeals) rejected this contention of the assessee and held that the assessee had received an amount of `2,06,84,841/- on sale of DEPB and an amount of `1,65,612/- on sale of DFRC and the costs of acquisition of DEPB and DFRC are to be taken as nil and, hence, the entire sale proceeds of DEPB and DFRC realized by the assessee are to be treated as profits on transfer of DEPB and DFRC for working out the deduction under Section 80HHC of the Act and directed the Assessing Officer to work out the deduction under Section 80HHC of the Act accordingly. 11. Aggrieved, the Topman Exports-assessee filed an appeal before the Income Tax Appellate Tribunal. A Special Bench of the ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 8 Tribunal held that there was a direct relation between the entitlement under the DEPB Scheme and the customs duty component in the cost of imports used in the manufacture of the export product. The Tribunal further held that DEPB accrues to the exporter soon after export is made and application is filed for DEPB and DEPB is a “cash assistance” receivable by the assessee and is covered under Section 28(iii-b) of the Act, whereas profit on the transfer of DEPB takes place on a subsequent date when DEPB is sold by the assessee and is covered under Section 28(iii-d) of the Act. The Tribunal compared the language of Section 28(iii-b) of the Act in which the expression “cash assistance” is used, with the language of Sections 28(iii-a), (iii-d) and (iii-e) of the Act in which the expression “profit” is used and held that the words “profit on transfer” in sections 28(iii-d) and (iii-e) of the Act would not represent the entire sale value of DEPB but the sale value of DEPB less the face value of DEPB. With these reasons, the Tribunal set aside the orders of the Assessing Officer and CIT (Appeals) and directed the Assessing Officer to compute the deduction under Section 80HHC of the Act accordingly. 12. Against the judgment and orders of the Tribunal, CIT filed appeals in all the cases before the Bombay High Court, which disposed of the appeals in terms of the judgment rendered in the case of Ka Ka Ka Kalpataru Colours and Chemicals (supra) lpataru Colours and Chemicals (supra) lpataru Colours and Chemicals (supra) lpataru Colours and Chemicals (supra). The judgment rendered by the Bombay High Court was subject matter of challenge before Hon’ble the Supreme Court. Affirming the reasoning of the Tribunal and allowing the appeals of the assessee, their Lordships’ of Hon’ble the Supreme Court overruled the judgment of Bombay High Court rendered in the case of Kalpataru Kalpataru Kalpataru Kalpataru ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 9 Colours and Chemicals (supra) Colours and Chemicals (supra) Colours and Chemicals (supra) Colours and Chemicals (supra). After noticing paras 4.37 and 4.42 of the Handbook on DEPB issued by the Government of India and paras 7.14, 7.15, 716 and 7.38 of the Export and Import Policy, 1997-2002, as notified by the Central Government vide notification dated 31.3.2000, in para 17 of the judgment it has been observed as under: “17. …… the objective of DEPB scheme is to neutralize the incidence of customs duty on the import content of the export products. Hence, it has direct nexus with the cost of the imports made by an exporter for manufacturing the export products. The neutralization of the cost of customs duty under the DEPB scheme, however, is by granting a duty credit against the export product and this credit can be utilized for paying customs duty on any item which is freely importable. DEPB is issued against the exports to the exporter and is transferable by the exporter.” 13. Their Lordships’ of Hon’ble the Supreme Court then proceeded to consider the relevant provisions of Section 28 of the Act, for determining whether DEPB would fall under clause (iii-b) or under clause (iii-d) of Section 28 and in para 19 of the judgment it has been held as under: “19. It will be clear from the aforesaid provisions of Section 28 that under clause (iiib) cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India is by itself income chargeable to income tax under the head \"Profits and Gains of ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 10 Business or Profession\". DEPB is a kind of assistance given by the Government of India to an exporter to pay customs duty on its imports and it is receivable once exports are made and an application is made by the exporter for DEPB. We have, therefore, no doubt that DEPB is \"cash assistance\" receivable by a person against exports under the scheme of the Government of India and falls under Clause (iiib) of Section 28 and is chargeable to income tax under the head \"Profits and Gains of Business or Profession\" even before it is transferred by the Assessee.” 14. It has been further observed that under Section 28(iii-d) of the Act, any profit on transfer of DEPB is chargeable to income tax under the head “Profits and gains of business or profession” as an item separate from cash assistance under Section 28(iii-b). The word ‘profit’ means the gross proceeds of a business transaction less the costs of the transaction. ‘Profits’, therefore, imply a comparison of the value of an asset when the asset is acquired with the value of the asset when the asset is transferred and the difference between the two values is the amount of profit or gain made by a person. As DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above DEPB on transfer of DEPB would represent profit on the transfer of DEPB. It has been, thus, opined that while the face value of the DEPB would fall under Clause (iiib) of Section 28 of the Act, the difference between the sale value and the face value of the DEPB would fall under Clause (iiid) of Section 28 of the Act. It has been specifically observed by their Lordships’ ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 11 that the Bombay High Court was not right in taking the view that the entire sale proceeds of the DEPB realised on transfer of the DEPB and not just the difference between the sale value and the face value of the DEPB represent profit on transfer of the DEPB. In paras 24 and 25 of the judgment, Hon’ble the Supreme Court found following errors in the view taken by the Bombay High Court: “24. In taking the view that when the import license is sold the entire amount is treated as profits of business, the High Court has visualized a situation where the cost of acquiring the import license is nil. The cost of acquiring DEPB, on the other hand, is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB which accrues to a person against exports has a cost element in it. Accordingly, when DEPB is sold by a person, his profit on transfer of DEPB would be the sale value of the DEPB less the face value of DEPB which represents the cost of the DEPB. The second reason given by the High Court in the impugned judgment is that under the DEPB scheme, DEPB is given at a percentage of the FOB value of the exports so as to neutralize the incidence of customs duty on the import content of the export products, but the exporter may not himself utilize the DEPB for paying customs duty but may transfer it to someone else and therefore the entire sum received on transfer of DEPB would be covered under Clause (iiid) of Section 28. ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 12 25. The High Court has failed to appreciate that DEPB represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB is not utilized by the exporter but is transferred to another person, the DEPB continues to remain as a cost to the exporter. When, therefore, DEPB is transferred by a person, the entire sum received by him on such transfer does not become his profits. It is only the amount that he receives in excess of the DEPB which represents his profits on transfer of the DEPB.” 15. On the issue of computation of profit for different assessment years, where accrual value of DEPB differs from its transfer value, it has been held that if DEPB credits accrue and exporter earns profit on transfer of said DEPB in same previous year, face value of DEPB would qualify as business profits under Section 28(iii-b) of the Act and difference between sale value of DEPB and their face value would qualify as profits on transfer of DEPB under Section 28(iii-d) of the Act. In case, where DEPB credits accrue in one previous year and transfer of DEPB takes place in subsequent previous year, then DEPB would be chargeable as income of exporter for first assessment year under Section 28(iii-b) and difference between DEPB and sale value of DEPB would be income for subsequent assessment year under Section 28(iii-d). In this manner, the double taxation is avoided. 16. After elaborately discussing the relevant provisions of Section 80HHC, their Lordships’ finally made the following pertinent observations in paras 37 to 40 of the judgment: ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 13 “37. The aforesaid discussion would show that where an assessee has an export turnover exceeding Rs. 10 crores and has made profits on transfer of DEPB under Clause (d) of Section 28, he would not get the benefit of addition to export profits under third or fourth proviso to Sub-section (3) of Section 80HHC, but he would get the benefit of exclusion of a smaller figure from \"profits of the business\" under explanation (baa) to Section 80HHC of the Act and there is nothing in explanation (baa) to Section 80HHC to show that this benefit of exclusion of a smaller figure from \"profits of the business\" will not be available to an Assessee having an export turnover exceeding Rs. 10 crores. In other words, where the export turnover of an Assessee exceeds Rs. 10 crores, he does not get the benefit of addition of ninety per cent of export incentive under Clause (iiid) of Section 28 to his export profits, but he gets a higher figure of profits of the business, which ultimately results in computation of a bigger export profit. 38. The High Court, therefore, was not right in coming to the conclusion that as the assessee did not have the export turnover exceeding Rs. 10 crores and as the assessee did not fulfill the conditions set out in the third proviso to Section 80HHC (iii), the assessee was not entitled to a deduction under Section 80HHC on the amount received on transfer of DEPB and with a ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 14 view to get over this difficulty the assessee was contending that the profits on transfer of DEPB under Section 28(iiid) would not include the face value of the DEPB. 39. It is a well-settled principle of statutory interpretation of a taxing statute that a subject will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in explanation (baa) to Section 80HHC read with the words used in Clauses (iiid) and (iiie) of Section 28, the assessee was entitled to a deduction under Section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee. 40. The impugned judgment and orders of the Bombay High Court are accordingly set-aside. The appeals are allowed to the extent indicated in this judgment. The Assessing Officer is directed to compute the deduction under Section 80HHC in the case of the appellants in accordance with this judgment. There shall be no order as to costs.” 17. When the above principles enunciated in the case of Topman Exports (supra) Topman Exports (supra) Topman Exports (supra) Topman Exports (supra) are applied to the facts of present appeals, we find that the impugned order(s) passed by the Amritsar and Chandigarh Benches of the Tribunal are liable to be set aside because the same have been passed on the basis of the judgment of Bombay High Court rendered in the case of Kalpataru Colours and Kalpataru Colours and Kalpataru Colours and Kalpataru Colours and ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 15 Chemicals (supra) Chemicals (supra) Chemicals (supra) Chemicals (supra), which has been overruled by Hon’ble the Supreme Court. 18. As a sequel to the above discussion, these appeals are allowed in terms of the judgment of Hon’ble the Supreme Court rendered in the case of Topman Exports (supra) Topman Exports (supra) Topman Exports (supra) Topman Exports (supra). The impugned order(s)** passed by the Amritsar Bench and Chandigarh Bench of the Tribunal are hereby set aside. The matters are remanded back to the concerned Assessing Officer with a direction to compute the deduction under Section 80HHC of the Act in accordance with law and in the light of the judgment of Hon’ble the Supreme Court in the case of Topman Exports (supra) Topman Exports (supra) Topman Exports (supra) Topman Exports (supra). 19. A photocopy of this order be placed on the files of all the connected appeals. (M.M. KUMAR) (M.M. KUMAR) (M.M. KUMAR) (M.M. KUMAR) JUDGE JUDGE JUDGE JUDGE ( ( ( (ALOK SINGH ALOK SINGH ALOK SINGH ALOK SINGH) ) ) ) M M M March arch arch arch 2 2 2 20 0 0 0, 201 , 201 , 201 , 2012 2 2 2 JUDGE JUDGE JUDGE JUDGE PKapoor * * * * Arising out of Sr. No. ITA No. Title of the case Date of the impugned order** ** ** ** Name of the Bench of the ITAT which has passed the impugned order ITA No. before the Tribunal Assessment Year 1 335 of 2011 Aman Singal v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 5/CHD/2008 2004-05 2 378 of 2011 Charanjit Singh v. Commissioner of Income Tax-I, Jalandhar 24.12.2010 Amritsar Bench 120(ASR)2009 2004-05 3 123 of 2011 Kohinoor International v. Commissioner of Income Tax, Jalandhar 26.11.2009 Amritsar Bench 195(ASR)2009 2003-04 4 122 of 2011 Kohinoor International v. Commissioner of Income Tax, Jalandhar 26.11.2009 Amritsar Bench 219(ASR)2009 2004-05 5 399 of 2011 M/s Ambika Forgings v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 118(ASR)2009 2004-05 ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 16 6 398 of 2011 M/s Ambika Overseas v. Commissioner of Income Tax-I, Jalandhar 24.12.2010 Amritsar Bench 152(ASR)2009 2004-05 7 334 of 2011 M/s Eastman International v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 214/CHD/2009 2004-05 8 377 of 2011 M/s Fitex Industries Ltd. v. Commissioner of Income Tax-II, Ludhiana 30.6.2011 Chandigarh Bench 956/CHANDI/2006 2003-04 9 372 of 2011 M/s Fitex Industries Ltd. v. Commissioner of Income Tax-II, Ludhiana 30.6.2011 Chandigarh Bench 143/CHANDI/2008 2004-05 10 396 of 2011 M/s GDPA Fastners v. Commissioner of Income Tax-I, Jalandhar 24.12.2010 Amritsar Bench 114(ASR)2009 2001-02 11 397 of 2011 M/s GDPA Fastners v. Commissioner of Income Tax-I, Jalandhar 24.12.2010 Amritsar Bench 106(ASR)2009 2002-03 12 395 of 2011 M/s GDPA Fastners v. Commissioner of Income Tax-I, Jalandhar 24.12.2010 Amritsar Bench 115(ASR)2009 2003-04 13 349 of 2011 M/s GDPA Fastners v. Commissioner of Income Tax-I, Jalandhar 24.12.2010 Amritsar Bench 116(ASR)2009 2004-05 14 319 of 2011 M/s H.R. International v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 126(ASR)2009 2000-01 15 317 of 2011 M/s H.R. International v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 385(ASR)2009 2001-02 16 341 of 2011 M/s H.R. International v. Commissioner of Income Tax, Jalandhar 08.6.2011 Amritsar Bench 364(ASR)2010 2002-03 17 318 of 2011 M/s H.R. International v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 127(ASR)2009 2003-04 18 400 of 2011 M/s H.R. International v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 128(ASR)2009 2004-05 19 307 of 2011 M/s Jacob Export v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 1080/CHD/2008 2000-01 20 333 of 2011 M/s Jacob Export House v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 346/CHD/2008 2001-02 21 311 of 2011 M/s Jindal Fine Industries v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 141/CHANDI/2009 2004-05 22 308 of 2011 M/s King Exports v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 673/CHD/2007 2003-04 23 306 of 2011 M/s King Exports v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 1072/CHD/2007 2004-05 24 350 of 2011 M/s Om Sons International v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 332(ASR)2009 2000-01 25 385 of 2011 M/s Om Sons International v. Commissioner of Income Tax-I, Jalandhar 21.6.2011 Amritsar Bench 334(ASR)2009 2003-04 26 383 of 2011 M/s Om Sons International v. Commissioner of Income Tax-I, Jalandhar 21.6.2011 Amritsar Bench 335(ASR)2009 2004-05 ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals ITA No. 361 of 2011 (O&M) & connected appeals 17 27 336 of 2011 M/s Perfect Forgings v. Commissioner of Income Tax-II, Ludhiana 30.6.2011 Chandigarh Bench 308/CHANDI/2008 2004-05 28 388 of 2011 M/s Regular Exports v. Commissioner of Income Tax-I, Ludhiana 30.6.2011 Chandigarh Bench 1076/CHANDI/2007 2004-05 29 342 of 2011 M/s Tipson Cycles Pvt. Ltd. v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 61/CHD/2010 2001-02 30 343 of 2011 M/s Tipson Cycles Pvt. Ltd. v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 69/CHD/2011 2002-03 31 340 of 2011 M/s Tipson Cycles Pvt. Ltd. v. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 1043/CHD/2007 2003-04 32 339 of 2011 M/s Tipson Cycles Pvt. Ltd. V. Commissioner of Income Tax, Ludhiana 30.6.2011 Chandigarh Bench 1044/CHD/2007 2004-05 33 376 of 2011 M/s Turbo Impex v. Commissioner of Income Tax-II, Ludhiana 30.6.2011 Chandigarh Bench 190/CHD/2009 2001-02 34 361 of 2011 M/s Turbo Impex v. Commissioner of Income Tax-II, Ludhiana 30.6.2011 Chandigarh Bench 209/CHD/2008 2004-05 35 370 of 2011 M/s Victor Forgings v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 611(ASR)2008 2003-04 36 337 of 2011 M/s Victor Forgings v. Commissioner of Income Tax, Jalandhar 24.12.2010 Amritsar Bench 612(ASR)2008 2004-05 (M.M. KUMAR) (M.M. KUMAR) (M.M. KUMAR) (M.M. KUMAR) JUDGE JUDGE JUDGE JUDGE ( ( ( (ALOK SINGH ALOK SINGH ALOK SINGH ALOK SINGH) ) ) ) M M M March arch arch arch 2 2 2 20 0 0 0, 201 , 201 , 201 , 2012 2 2 2 JUDGE JUDGE JUDGE JUDGE PKapoor "