CIT KARNAL vs. M/S LIBERTY SHOES LTD.

ITA/711/2010HC Punjab & HaryanaPHHC01093675201017 December 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryRemanded

What were the facts?

The Revenue, Commissioner of Income-Tax, Karnal, appealed against an order dated 9.10.2009 passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench (D), Delhi, in ITA No.139/Del/2009. The appeal pertains to the assessment year 2004-05 and concerns the deduction allowed under Section 80HHC of the Income Tax Act, 1961. The dispute revolves around the inclusion of the face value of DEPB (Duty Exemption Pass Book) and bank/other interest in the computation of business profits for the purpose of this deduction. The ITAT had allowed these deductions, which the Revenue challenged.

What did the High Court hold?

The High Court, in view of the submissions made by the learned counsel for the revenue, noted that the issues raised in questions (a) to (c) were covered in favour of the revenue by its earlier decision in Commissioner of Income-Tax Vs. M/s F.C.Sondhi & Company (P) Ltd. Similarly, for question (d), the Court found the matter covered by its decision in Rani Paliwal Vs. Commissioner of Income-Tax. Consequently, the High Court did not decide the substantial questions of law on merits. Instead, following its earlier pronouncements, the Court remanded the matter back to the Income Tax Appellate Tribunal for a fresh decision in accordance with law. The Court also clarified that if the respondent-assessee (M/s Liberty Shoes Ltd.) was aggrieved by this order, it could approach the High Court. No specific finding was given on any of the issues by the High Court.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in allowing deductions under Section 80HHC on the face value of DEPB, especially considering amendments to Section 28(iiib) effective from 1.4.1998, when the turnover exceeded Rs.10 crores? 2. Whether the ITAT was justified in allowing deductions 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 correct in categorizing DEPB as cash assistance, extending the legal fiction of Section 28(iiib) to other export benefits of a different nature? 4. Whether the ITAT was justified in allowing deductions under Section 80HHC on bank interest and other interest by treating this income as profit and gains of business? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the matter concerning questions (a) to (c) is covered in its favour by this Court's order in Commissioner of Income-Tax Vs. M/s F.C.Sondhi & Company (P) Ltd. (ITA No.299 of 2010, dated 16.8.2010). For question (d), the Revenue contended that the matter is covered by this Court's decision in Rani Paliwal Vs. Commissioner of Income-Tax (2004) 268 ITR 220.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income-tax Appeal No.711

of 2010

-1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.711

of 2010

Date of decision: 17.12.2010 The Commissioner of Income-Tax, Karnal ...Appellant Versus M/s Liberty Shoes Ltd. ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Yogesh Putney, Advocate for the appellant.

**** ADARSH KUMAR GOEL, J (

Oral)

.

1.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 9.10.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench (D), Delhi in ITA No.139/Del/2009, for the assessment year 2004-05, proposing following substantial questions of law:- “a). Whether on the facts and circumstances of the case, the ITAT was justified in allowing deductions u/s 80HHC on the face value of DEPB in the case where turnover exceeds Rs.10 crores in view of (ii), (iii) and (iv) provisions inserted by the Taxation Laws (Amendment) Act, 2005 with retrospective effect from 1.4.1998?

Income-tax Appeal No.711

of 2010

-2- **** b). Whether on the facts and circumstances

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 80HHC

All 989 judgments and leading authorities on Section 80HHC →

Recent GST High Court judgments

Search GST case law →