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

ITA/746/2010HC Punjab & HaryanaPHHC01093713201006 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 2004-05. The appeal challenges the ITAT's decision regarding the computation of profit on the transfer of Duty Exemption Pass Book (DEPB) entitlements. The core of the dispute revolves around whether the entire sale consideration of the DEPB, including any premium, represents profit, or if only the difference between the sale price and the face value (considered as cost) is profit. The procedural history indicates that the Revenue is seeking to overturn the ITAT's ruling.

What did the High Court hold?

The High Court, in its order, did not delve into the merits of the substantial questions of law raised. Instead, it noted that the matter was covered by its earlier orders dated 16.8.2010 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). In those preceding cases, after considering the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals, the High Court had remanded the matter to the Tribunal for a fresh decision in accordance with the law. Consequently, the present appeal was disposed of in the same terms, remanding the case to the ITAT. The Court did not find it necessary to issue notice to the respondent (assessee) but granted liberty to the respondent to approach the Court if they had any grievance.

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 the face value and any 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 received, inclusive of any premium. 3. Whether the word "profit" in Sections 28(iiid) and 28(iiie) means the difference between the sale price and face value, or if the entire amount received is profit. 4. Whether deducting the face value of DEPB from its sale price for profit calculation under Sections 28(iiid) and 28(iiie) is correct, treating the face value as cost. 5. Whether "profit" under Sections 28(iiid) and 28(iiie) requires interpolation of an artificial cost, such as deducting the face value from sale proceeds for Section 80HHC deduction. 6. Whether the deduction under Section 80HHC was correctly computed in accordance with the amendment made by the Taxation Laws (Amendment) Act, 2005, retrospectively from 01.04.1998. Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the entire sale consideration, including premium, represents profit. They relied on the principle that the entire amount received on transfer of DEPB is profit. They also referred to this Court's earlier orders in CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi, which had remanded similar matters to the Tribunal.

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.335(ASR)/2009 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?

(i

The order continues below.

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