CIT, JALANDHAR vs. M/S MAYOR & CO.

ITA/660/2010HC Punjab & HaryanaPHHC01093618201013 December 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryRemanded

What were the facts?

The appeal was filed by the Commissioner of Income Tax (Appellant) against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2004-05. The dispute concerns the taxability of amounts received from the transfer of Duty Exemption Pass Book (DEPB) entitlements. The ITAT's order is under challenge. The High Court, without issuing notice to the respondent assessee, M/s Mayor & Company, disposed of the appeal based on its earlier judgments. The appellant stated that the matter was covered by the High Court's decisions in CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi, which had remanded similar matters to the Tribunal.

What did the High Court hold?

The High Court disposed of the appeal in terms of 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 earlier orders, the High Court had noticed the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals (2010) 42 DTR 193 and had remanded the matter to the Tribunal for fresh decision in accordance with law. Therefore, this appeal was also disposed of in the same terms, implying a remand to the ITAT. The High Court did not consider it necessary to issue notice to the respondent assessee but granted liberty to the respondent to move the court if they had any grievance. The specific findings on the six substantial questions of law were not elaborated in this order, as the appeal was disposed of based on precedent, leading to a remand.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the ITAT was correct in not holding that the total sale consideration of DEPB, including face value and premium, represents profit chargeable under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961. 2. Whether the ITAT was correct in not holding that profit on transfer of DEPB entitlement includes the entire amount received, including premium. 3. Whether the ITAT was correct in holding that 'profit' under Sections 28(iiid) and 28(iiie) means the difference between the sale price and face value of DEPB, ignoring that the entire amount is profit. 4. Whether the ITAT was correct in deducting the face value of DEPB from the sale price to calculate profit under Sections 28(iiid) and 28(iiie), treating face value as cost. 5. Whether the ITAT was correct in holding that 'profit' under Sections 28(iiid) and 28(iiie) requires interpolation of artificial cost by deducting face value for calculating deduction under Section 80HHC. 6. Whether the ITAT failed to appreciate that deduction under Section 80HHC was rightly computed as per the amendment by the Taxation Laws (Amendment) Act, 2005. Assessee's contentions: Not recorded. Revenue's contentions: The matter is covered in favour of the revenue by the High Court's 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), which followed the Bombay High Court's judgment in CIT v. Kalpataru Colours & Chemicals and remanded the matter to the Tribunal.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 13.12.2010 Commissioner of Income Tax. -----Appellant. Vs. M/s Mayor & Company. -----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 assessee 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.74(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?

(iii)

The order continues below.

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