M/S TURBO IMPEX THR MANOHAR SINGH vs. COMMISISONER OF INCOME TAX-II, LUDHIANA

ITA/361/2011HC Punjab & HaryanaPHHC01095699201120 March 2012Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE ALOK SINGH17 pages
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What were the facts?

The appeals were filed by various assessees, including M/s Turbo Impex, against orders of the Income Tax Appellate Tribunal (ITAT) concerning the computation of deduction under Section 80HHC of the Income Tax Act, 1961, on export incentives like Duty Entitlement Pass Book (DEPB), Duty Draw Back (DBK), and Duty Free Remission Scheme (DFRC). For M/s Turbo Impex, the Assessment Year was 2004-05. The Assessing Officer rejected the assessee's claim for deduction on DEPB, which was upheld by the CIT(A). The ITAT, following a Special Bench decision in M/s Topman Exports, Mumbai, remanded the matter to the Assessing Officer for re-computation. The revenue filed appeals against these ITAT orders. The High Court noted that the Bombay High Court in CIT v. Kalpataru Colours and Chemicals had taken a different view, which was later reversed by the Supreme Court in Topman Exports v. Commissioner of Income Tax, Mumbai.

What did the High Court hold?

The High Court, following the Supreme Court's decision in Topman Exports v. Commissioner of Income Tax, Mumbai, which overruled the Bombay High Court's view in CIT v. Kalpataru Colours and Chemicals, held that the entire sale consideration for the transfer of DEPB would fall within the purview of Section 28(iiid) of the Act. This means that the entire amount received on the sale of DEPB represents profit on transfer of DEPB. The High Court also noted that its earlier judgments in CIT v. M/s F.C. Sondhi & Company (P) Ltd. and other connected matters, which were based on the Bombay High Court's judgment in Kalpataru Colours and Chemicals, no longer hold the field and are deemed to be overruled. The operative direction was that the appeals filed by the revenue were to be decided in light of this pronouncement.

What were the issues?

1. Whether the Tribunal was 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 Tax Act, 1961, and that the face value of the Duty Entitlement Passbook should be deducted from the sale proceeds? (Question of law) 2. Whether the Tribunal was 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, and that the profits on the sale of the Duty Entitlement Passbook, representing the excess of sale proceeds over the face value, is liable to be considered under Section 28(iiid) at the time of sale? (Question of law) Assessee's contentions: The judgment does not explicitly record the assessee's arguments for these specific issues. However, the factual narrative indicates the assessee claimed deduction under Section 80HHC on DEPB. Revenue's contentions: The judgment does not explicitly record the revenue's arguments for these specific issues. However, the factual narrative indicates the revenue rejected the assessee's claim for deduction on DEPB.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 28(iiid),Section 28(iiib)

AI-generated summary — verify with the full judgment below

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

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 involv

The order continues below.

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