COMMI. OF IT, LUDHIANA vs. M/S KANIN (INDIA), B-XXX, LUDHIANA`

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.873 of 2010 (O&M) Date of decision: 15.3.2011 Commissioner of Income Tax. -----Appellant. Vs. M/s Kanin (India). -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE JASWANT SINGH Present:- Mr. Rajesh Katoch, Standing Counsel 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, Chandigarh in I.T.A. No.768/CHANDI/2008 dated 31.8.2009 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 Hon’ble Income Tax Appellate Tribunal is justified in law in not holding that the whole amount of consideration of DEPB that the assessee received is profit, because of the cost of same is Nil to the assessee and when the Hon’ble Mumbai High Court in the case Commissioner of Income Tax 13 Mumbai Vs. M/s Kalpataru Colours & Chemicals,

I.T.A. No.873 of 2010 Mumbai reported in 2010-TIOL-483-HC-MUM-IT has decided contrary to it. (ii) 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 Hon’ble Income Tax Appellate Tribunal is justified in law in not holding that 90% amount of DEPB was rightly excluded while working “Profits of the Business” as per explanation (baa) to section 80 HHC read with clause (iiid) and (iiie) of section28 of the Income Tax Act, 1961 inserted by Taxation Laws (Amendment) Act 2005?” (iii) Whether on the facts and circumstances of the case, the Hon’ble Income Tax Appellate Tribunal is justified in law in not holding that 90% of profit on transfer of export incentives is not to be increased while computing profits u/s 80HHC(3)(a) as the assessee failed to fulfill the conditions as contained in Third or Fourth proviso inserted by the Taxation Laws (Amendment) Act, 2005 as the export turnover of the assessee company is more than Rs.10 Crores? (iv) Whether on the facts and circumstances of the case, the ITAT is 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? (v) Whether on the facts and circumstances of the case, the ITAT is 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? (vi) Whether on the facts and circumstances of the case, the ITAT is right in law in holding that the word “profit” referred 2

I.T.A. No.873 of 2010 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? (vii) Whether on the facts and circumstances of the case, the ITAT is right in law in deducting the face value of DEPB from its sale price 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? (viii) Whether on the facts and circumstances of the case, the ITAT is right 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 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 is right in law in not appreciating 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 01.04.1998?” 2. 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 3

I.T.A. No.873 of 2010 remanded to the Tribunal for fresh decision in accordance with law. 3. 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 March 15, 2011 (JASWANT SINGH ) ashwani JUDGE 4