COMMISSIONER OF INCOME TAX vs. M/S LIBERTY ENTERPRISES

ITA/804/2010HC Punjab & HaryanaPHHC01093777201013 January 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryRemanded

What were the facts?

The Revenue (Commissioner of Income Tax) filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), New Delhi, dated February 16, 2010. The appeal challenged the ITAT's decision regarding the allowability of deduction under Section 80HHC on the face value of Duty Entitlement Pass Book (DEPB) credit. The assessment years are not explicitly stated. The procedural history involves the ITAT's order which is now under challenge before the High Court.

What did the High Court hold?

The High Court disposed of the appeal in terms of its earlier orders dated August 16, 2010, in ITA No. 301 of 2010 (CIT v. M/s Victor Forgings) and ITA No. 299 of 2010 (CIT v. F.C. Sondhi). In those earlier orders, after noticing the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals, the matters were remanded to the Tribunal for fresh decision in accordance with law. Therefore, this appeal was also disposed of in the same terms, remanding the matter to the ITAT. The Court did not consider it necessary to issue notice to the respondent but granted liberty to the respondent to move the Court if they had any grievance. No specific finding was given on the merits of the substantial questions of law raised, as the matter was remanded.

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 exceeds 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 in the computation of business profit under Section 28(iiib)? 3. Whether the ITAT was justified in relying on the decision of the ITAT Special Bench, Mumbai in M/s Topman Exports Vs. ITO, which was subsequently reversed by the Bombay High Court in CIT vs. Kalpataru Colours and Chemicals? Contentions: Assessee: Not recorded in the judgment. Revenue: Argued that the ITAT was not justified in its findings on the above issues, particularly in light of the Bombay High Court's decision in CIT vs. Kalpataru Colours and Chemicals.

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.804 of 2010 (O&M) Date of decision: 13.1.2011 The Commissioner of Income Tax. -----Appellant. Vs. M/s Liberty Enterprises. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL 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 to raise following substantial questions of law:- “i) Whether on the facts and circumstances of the case, the ITAT was justified in allowing deduction u/s 80HHC on theface 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 circumstances of the case, the Hon’ble ITAT was justified allowing deduction u/s 80 HHC in respect of entire DEPB amount by incorporating the same in the computation of business pro

The order continues below.

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