COMMISSIONER OF INCOME TAX vs. M/S LIBERTY ENTERPRISES

ITA/864/2010HC Punjab & HaryanaPHHC01093842201014 March 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR JUSTICE JASWANT SINGH2 pages
AI SummaryRemanded

What were the facts?

The Revenue, the Commissioner of Income Tax, appealed under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), New Delhi. The ITAT's order, dated February 16, 2010, was in appeal number I.T.A. No.4760/DEL/2009. The appeal concerns the assessment year(s) not explicitly stated but implied to be related to the deduction under Section 80HHC. The dispute revolves around the ITAT's decision to allow deduction under Section 80HHC on the face value of DEPB (Duty Exemption Pass Book) credits, even where turnover exceeded Rs. 10 crores, and in respect of the entire DEPB amount by incorporating it into business profits under Section 28(iiib). The Revenue challenged the ITAT's reliance on a Special Bench decision of the Mumbai ITAT, which was subsequently reversed by the Bombay High Court.

What did the High Court hold?

The High Court, in its decision dated March 14, 2011, disposed of the appeal in terms of its earlier orders. The Court noted that the matter was covered by its own previous decisions in CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi, both dated August 16, 2010. In those earlier orders, the Court had taken into account the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals and had remanded the matter to the Tribunal for a fresh decision in accordance with the law. Therefore, following this precedent, the present appeal was also disposed of in the same manner. The Court found it unnecessary to issue notice to the respondent (M/s Liberty Enterprises) but granted liberty to the respondent to approach the Court if they had any grievance against this order. The specific findings on the three substantial questions of law were not elaborated upon as the appeal was disposed of on the basis of prior judgments and a remand.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in allowing deduction under Section 80HHC on the face value of DEPB where turnover exceeded Rs. 10 crores, in view of the proviso inserted by the Taxation Law (Amendment) Act, 2005, with retrospective effect from April 1, 1998? 2. Whether the ITAT was justified in allowing deduction under Section 80HHC in respect of the entire DEPB amount by incorporating it into the computation of business profit under Section 28(iiib)? 3. Whether the ITAT was justified in relying on the Mumbai ITAT Special Bench decision in M/s Topman Exports Vs. ITO, despite it being reversed by the Bombay High Court in CIT vs. Kalpataru Colours and Chemicals? Contentions: Revenue: The Revenue argued that the matter was covered in its favour by this Court's orders dated August 16, 2010, in I.T.A. No.301 of 2010 (CIT v. M/s Victor Forgings) and I.T.A. No.299 of 2010 (CIT v. F.C. Sondhi). These orders, after noticing the Bombay High Court's decision in CIT v. Kalpataru Colours & Chemicals, had remanded the matter to the Tribunal for a fresh decision in accordance with law. Assessee: No specific arguments were recorded for the assessee in the provided text.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80HHC,Section 28(iiib)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.864 of 2010 (O&M) Date of decision: 14.3.2011 The Commissioner of Income Tax. -----Appellant. Vs. M/s Liberty Enterprises. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE JASWANT SINGH Present:- Mr. Yogesh Putney, Sr.Standing counsel for the Revenue. --- ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, New Delhi dated 16.2.2010 in I.T.A. No.4760/DEL/2009 proposing following substantial questions of law:- “i) Whether on the facts and in the circumstances of the case, the Ld. ITAT was justified in allowing deduction u/s 80HHC on the face value of DEPB in the case where turnover exceeds Rs.10 crores in view of proviso (ii), (iii) and (iv) inserted by the taxation Law (Amendment) Act, 2005 with retrospective effect from 01.04.1998? ii) Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was justified in allowing deduction u/s 80 HHC in respect of entire DEPB amount by incorporating the same in the computation of bus

The order continues below.

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