COMMISSIONER OF INCOME TAX JALANDHAR-I vs. M/S BROADWAYS OVERSEAS LTD.

PDF · subscribers
ITA/466/2010HC Punjab & HaryanaPHHC01093402201027 September 2010Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted 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). In those 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 ITAT for a fresh decision in accordance with law. Therefore, following its own precedent, the High Court disposed of the present appeal in the same terms. 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 against this order. The specific findings on each of the substantial questions of law were not elaborated upon in this order, as the decision was based on the principle of following prior judgments and remanding the case.

What were the facts?

The Revenue, Commissioner of Income-tax, Jalandhar-I, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 26.11.2009 passed by the Income Tax Appellate Tribunal (ITAT), Amritsar. The appeal pertains to assessment year 2003-04 and concerns M/s Broadways Overseas Ltd. The dispute revolves around the taxability of profits arising from the transfer of Duty Exemption Pass Book (DEPB) entitlements. The High Court consolidated ITA No. 466 of 2010 with ITA No. 467 of 2010, as both involved common questions of law. The High Court decided to dispose of the appeal based on its earlier orders.

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 any 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 the profit on transfer of DEPB entitlement is the entire amount, including the premium of sale. 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 for calculating profit under Sections 28(iiid) and 28(iiie), treating the face value as cost. 5. Whether the ITAT was correct in holding that 'profit' under Sections 28(iiid) and 28(iiie) requires interpolation of an artificial cost to the extent of the face value for determining deduction under Section 80HHC. 6. Whether the ITAT failed to appreciate that deduction under Section 80HHC was correctly computed as per the amendment made by the Taxation Laws (Amendment) Act, 2005. Revenue's Contention: The Revenue argued that the entire sale consideration, including any premium, represents profit chargeable to tax. They relied on the High Court's own prior decisions in CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi, which in turn relied on the Bombay High Court's judgment in CIT v. Kalpataru Colours & Chemicals, and sought a remand for fresh decision. Assessee's Contention: The judgment does not record any specific contentions made by the assessee.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

ITA No. 466 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 466 of 2010 Date of Decision: 27.9.2010 Commissioner of Income-tax, Jalandhar-I ....Appellant. Versus M/s Broadways Overseas Ltd. ...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 order will dispose of ITA Nos. 466 and 467 of 2010 as common questions are involved. 2. ITA No. 466 of 2010 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 26.11.2009 of the Income Tax Appellate Tribunal, Amritsar in I.T.A. No.429(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

ITA No. 466 of 2010 -2- 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. Whether on the facts and circumstances of the case, the ITAT was right in law in holding that the word “profit” referred to in Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 means the difference between the sale price of DEPB and the face value of DEPB ignoring the fact that the entire amount represents the profit in the hands of assessee? IV. Whether on the facts and circumstances of the case, the ITAT was right in law in deducting the face value of DEPB from sale price of DEPB for calculating profit under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 as if the face value is the cost incurred by the assessee to acquire the DEPB? V. Whether on the facts and circumstances of the case, the ITAT was right in law in holding that the word profit referred to in Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 requires any artificial cost to be interpolated to the extent that the face value of DEPB/DFRC should be deducted from the sale proceed for

ITA No. 466 of 2010 -3- the purpose of determination of deduction under Section 80HHC of the Income Tax Act, 1961? VI. Whether on the facts and circumstances of the case, the ITAT has failed to appreciate that deduction u/s 80HHC of the Income Tax Act, 1961 was rightly computed in accordance with amendment made by the Taxation Laws (Amendment) Act, 2005 with retrospective effect from 1.4.1998?” 3. Learned counsel for the appellant states that the matter is covered in favour of the revenue by orders of this Court 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, wherein after noticing the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals 2010 (42) DTR 193, the matter was remanded to the Tribunal for fresh decision in accordance with law. 4. Since we find that the matter is covered by earlier orders of this Court, we dispose of this appeal in same terms. For this purpose, we have not considered it necessary to issue notice to the respondent, but we give liberty to the respondent to move this Court if they have any grievance against this order. (ADARSH KUMAR GOEL) JUDGE September 27, 2010 (AJAY KUMAR MITTAL) gbs JUDGE

ITA No. 466 of 2010 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 467 of 2010 Date of Decision: 27.9.2010 Commissioner of Income-tax, Jalandhar-I ....Appellant. Versus M/s Broadways Overseas Ltd. ...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. For orders, see ITA No. 466 of 2010 (Commissioner of Income-tax, Jalandhar-I v. M/s Broadways Overseas Ltd). (ADARSH KUMAR GOEL) JUDGE September 27, 2010 (AJAY KUMAR MITTAL) gbs JUDGE

More judgments on Section 28(iiid)

All 69 judgments and leading authorities on Section 28(iiid) →

Recent GST High Court judgments

Search GST case law →