SAGAR DRUGS & PHARMACEUTICALS LTD vs. ASST.CIT

PDF · subscribers
TAXAP/726/2011HC GujaratGJHC24025420201103 December 2013Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.P.DHOLARIA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the issue was no longer res integra in view of the Supreme Court's decision in 'Topman Exports'. The Supreme Court had held that for the allowance of relief under Section 80HHC(3) of the Act, only the profit, and not the entire sales proceeds, arising out of the DEPB is required to be reduced or considered. Applying this principle, the High Court answered the questions framed in favour of the assessee. The ITAT's order dated November 26, 2010, was quashed and set aside to the extent of the issue decided. The appeal was allowed to this extent. No costs were awarded.

What were the facts?

The assessee, Sagar Drugs & Pharmaceuticals Ltd., filed an appeal before the Gujarat High Court challenging the order of the Income Tax Appellate Tribunal (ITAT) dated November 26, 2010, for Assessment Year 2002-03. The ITAT's order was in ITA No. 4042/AHD/2008. The appeal concerns the eligibility of the assessee for deduction under Section 80HHC of the Income Tax Act, 1961, on the sale of DEPB (Duty Exemption Pass Book) and the method of computing such deduction. The amount in dispute is not explicitly stated.

What were the issues?

1. Whether, in the facts and circumstances of the case, the ITAT was correct in law in holding that the assessee was ineligible for deduction under Section 80HHC on the sale of DEPB? (Question of law) 2. Whether, in the facts and circumstances of the case, the ITAT was correct in law in holding that while computing deduction under Section 80HHC, what is required to be excluded is the gross sale price received on sale of DEPB and not the profit on such sale? (Question of mixed law and fact) Assessee's contention: The learned Senior Counsel for the assessee submitted that the ITAT relied on the decision of the Special Bench of ITAT Bombay in 'Topman Exports vs. ITO' (318 ITR 87), which was confirmed by the Supreme Court in 'Topman Exports vs. Commissioner of Income Tax' (2012) 342 ITR 49 (SC). The assessee argued that the Supreme Court set aside the contrary view of the Bombay High Court and restored the Special Bench's decision, thus the appeal should be allowed. Revenue's contention: The learned advocate for the revenue was not in a position to dispute the assessee's submissions and did not point out any contrary decision to the Supreme Court's ruling in 'Topman Exports'.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
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. 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. special Bench has been confirmed by the Hon’ble Supreme Court in the 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 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

More judgments on Section 80HHC

All 1,083 judgments and leading authorities on Section 80HHC →

Recent GST High Court judgments

Search GST case law →