M/S TRB EXPORTS PVT LTD. vs. COMMISSIONER OF INCOME TAX-II, AYAKAR BHAWAN LDH.

ITA/25/2012HC Punjab & HaryanaPHHC01099327201201 May 2012Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE GURMEET SINGH SANDHAWALIA3 pages
AI SummaryRemanded

What were the facts?

The assessee, M/s TRB Exports Pvt. Limited, filed an appeal before the High Court of Punjab and Haryana at Chandigarh against an order dated 30.9.2011 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT's order was in relation to ITA No.813/Chd/2011 for the assessment year 2001-02. The dispute concerns the computation of profits for deduction under Section 80HHC of the Income Tax Act, 1961, specifically regarding the treatment of Duty Entitlement Passbook (DEPB) credit. The High Court was dealing with two appeals, ITA Nos. 25 and 26 of 2012, as they involved common questions of law and facts. The revenue was represented by the Commissioner of Income Tax-II, Ludhiana.

What did the High Court hold?

The High Court allowed the appeals. It noted that both parties agreed that the present appeals were squarely covered by the High Court's own judgment in M/s Turbo Impex v. Commissioner of Income Tax II, Ludhiana (ITA No.361 of 2011, decided on 20.3.2012). This judgment, in turn, was based on the principles enunciated by the Apex Court in M/s Topman Exports v. Commissioner of Income tax, Mumbai. Consequently, the High Court set aside the impugned order of the ITAT dated 30.9.2011. The matter was 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 light of the Hon'ble Apex Court's judgment in M/s Topman Exports. The High Court did not explicitly address each question individually but disposed of the appeals based on the binding precedent.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the ITAT was justified in dismissing the appellant's appeal and reversing its own earlier order by following the Special Bench of Mumbai ITAT in M/s Topman, holding that DEPB credit, being an export incentive proportional to FOB value, has no face value and the entire amount received on its transfer is to be considered for computing profits under Section 80HHC? 2. Whether the ITAT was justified in dismissing the appeal by following the judgment of the Bombay High Court in CIT v. Kalpataru, when that decision was not from the jurisdictional High Court and therefore not binding on the Chandigarh Bench? 3. Whether the ITAT was justified in dismissing the appeal without considering that DEPB has a cost, as per the ratio in Yasha Overseas v. CST & Others? 4. Alternatively, whether the ITAT was justified in concurring with the Bombay High Court that the entirety of DEPB sale consideration falls under Section 28(iiid), with no face value to be reduced from the total sale consideration for arriving at profits on DEPB transfer? 5. Whether the orders of the Tribunal are legally unsustainable, bad in law, and perverse? Assessee's Contentions: The assessee argued that the ITAT wrongly dismissed its appeal by following non-jurisdictional High Court judgments and the Special Bench of the ITAT. It contended that DEPB credit has a cost and its entire sale consideration should not be considered for Section 80HHC without reducing its cost. The assessee relied on the Apex Court's decision in Yasha Overseas v. CST & Others. Revenue's Contentions: The judgment records that learned counsel for the revenue accepted notice and agreed to the appeals being taken up for disposal. No specific arguments for the revenue are recorded.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC,Section 28(iiid)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 01-05-2012 M/s TRB Exports Pvt. Limited ...Appellant Versus Commissioner of Income Tax-II, Aayakar Bhawan, Ludhiana

...Respondent CORAM: HON'BLE MR.JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present: Mr. Rajiv Sharma, Advocate for the appellant. Ms. Savita Saxena, Advocate for the respondent. Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA Nos.25 and 26 of 2012 as learned counsel for the parties are agreed that common questions of law and facts are involved in both the appeals.

2.

The assessee has preferred ITA No.25 of 2012 under section 260A of the Income Tax Act, 1961 (in short, “the Act) against the order dated 30.9.2011, Annexure A.6 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (for brevity, “the Tribunal”) in ITA No.813/Chd/2011 for the assessment year 2001-02, claiming following substantial 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 Mumb

The order continues below.

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