COMMISSIONER OF INCOME-TAX JALANDHAR-I, JALANDHAR vs. M/S OMSONS INTERNATIONAL MODEL HOUSE ROAD ETC.

ITA/747/2010HC Punjab & HaryanaPHHC01093714201006 January 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 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), Amritsar, for the assessment year 2003-04. The appeal challenges the ITAT's decision regarding the computation of profit on the transfer of Duty Exemption Passbook (DEPB) entitlements and the subsequent deduction under Section 80HHC. The Revenue contended that the entire sale consideration of the DEPB, including any premium, should be treated as profit. The High Court noted that similar matters have been decided by this Court by remanding them to the Tribunal for fresh consideration.

What did the High Court hold?

The High Court, noting that the matter was covered by its earlier orders dated 16.8.2010 in ITA No.301 of 2010 (CIT v. M/s Victor Forgings) and ITA No.299 of 2010 (CIT v. F.C. Sondhi), disposed of the appeal in the same terms. In those earlier orders, the Court had remanded similar matters to the Tribunal for fresh decision in accordance with law, after noticing the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals. Therefore, the High Court did not decide the substantial questions of law on merits but remitted the case back to the ITAT for a fresh adjudication. No specific finding was given on any of the issues raised by the Revenue, and no operative directions other than remand were issued.

What were the issues?

The Tribunal was asked to decide the following substantial questions of law: 1. Whether the total sale consideration of DEPB, inclusive of face value and premium, represents profit chargeable under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961. 2. Whether profit on transfer of DEPB entitlement represents the entire amount inclusive of premium. 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 amount. 4. Whether the face value of DEPB should be deducted from its sale price to calculate profit, as if it were a cost. 5. Whether an artificial cost (face value) needs to be interpolated for determining deduction under Section 80HHC. 6. Whether deduction under Section 80HHC was rightly computed in accordance with the amendment made by the Taxation Laws (Amendment) Act, 2005. Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the entire sale consideration, including premium, represents profit chargeable under Sections 28(iiid) and 28(iiie). They relied on the Bombay High Court judgment in CIT v. Kalpataru Colours & Chemicals.

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.

Date of decision: 6.1.2011 Commissioner of Income Tax. -----Appellant. Vs. M/s Omsons International. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Vivek Sethi, Advocate 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, Amritsar in I.T.A. No.334(ASR)/2009 for the assessment year 2003-04 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?

(i

The order continues below.

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