CIT-II LUDHIANA vs. M/S PERFECT FORGINGS

ITA/849/2010HC Punjab & HaryanaPHHC01093825201017 February 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
AI SummaryRemanded

What were the facts?

The Revenue has appealed under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2004-05. The appeal concerns the taxability of the sale consideration of Duty Exemption Passbook (DEPB) entitlements, including any premium received. The ITAT's order is under challenge. The procedural history indicates that the Revenue is relying on previous High Court orders in similar cases (CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi) which had remanded matters to the Tribunal for fresh consideration. The High Court has disposed of this appeal in similar terms without issuing notice to the respondent assessee, M/s Perfect Forgings, but granting liberty to the assessee to move the court if aggrieved.

What did the High Court hold?

The High Court disposed of the appeal in terms of its earlier orders in similar cases, specifically citing CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi. These earlier orders had followed the Bombay High Court's judgment in CIT v. Kalpataru Colours & Chemicals and remanded the matter to the Tribunal for a fresh decision in accordance with the law. Consequently, the High Court did not delve into the merits of the substantial questions of law raised by the Revenue in this specific appeal. The operative direction was to dispose of the appeal in the same terms as the cited precedents, which involved a remand. No specific finding was given on any of the six issues raised, as the appeal was decided based on prior judgments leading to a remand. The judgment does not record any specific decision on the merits of the issues by the High Court itself.

What were the issues?

The Tribunal was asked to decide the following substantial questions of law: 1. Whether the total sale consideration of DEPB, including premium, represents profit chargeable under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961. 2. Whether the profit on transfer of DEPB entitlement includes the entire amount of premium received. 3. Whether the word "profit" in Sections 28(iiid) and 28(iiie) means the difference between the sale price and face value, or the entire sale consideration. 4. Whether deducting the face value of DEPB from the sale price for profit calculation under Sections 28(iiid) and 28(iiie) is correct, treating face value as cost. 5. Whether "profit" under Sections 28(iiid) and 28(iiie) requires interpolation of artificial cost by deducting face value from sale proceeds for Section 80HHC computation. 6. Whether the deduction under Section 80HHC was correctly computed in accordance with the amendment by the Taxation Laws (Amendment) Act, 2005. Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the matter is covered by this Court's earlier orders in CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi, which followed the Bombay High Court's decision in CIT v. Kalpataru Colours & Chemicals, and led to remand.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.849 of 2010 (O&M) Date of decision: 17.2.2011 The Commissioner of Income Tax-II. -----Appellant. Vs. M/s Perfect Forgings. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Denesh Goyal, Standing Counsel for the appellant. --- 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, Chandigarh in I.T.A. No.308/CHANDI/2008 for the assessment year 2004-05 proposing to raise following substantial questions of law:- “(i) Whether on the facts and circumstances of the case, the ITAT was right in law in not holding that total sale consideration inclusive of face value of DEPB and premium amount received thereof represents profit chargeable under sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961? (ii) Whether on the facts and circumstances of the case, the ITAT was right in law in not holding that profit on transfer of DEPB entitlement represents the entire amount inclusive of premium of sale of such DEPB? (iii)

The order continues below.

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