2011 (1) TMI 765 - HC - Income Tax

Deduction u/s 80 HHC - allowing deduction on the face value of DEPB in the case where turnover exceeds Rs.10 crores - the matter is covered in favour of the revenue by orders of this Court, CIT v. F.C. Sondhi (2010 -TMI - 203399 - PUNJAB AND HARYANA HIGH COURT), wherein after noticing the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals (2010 - TMI - 76895 - BOMBAY HIGH COURT), the matter was remanded to the Tribunal for fresh decision in accordance with law.

Summary

Issues:
1. Interpretation of Section 80 HHC of the Income Tax Act, 1961 regarding deduction on DEPB.
2. Consistency in allowing deductions under Section 80 HHC for turnover exceeding Rs.10 crores.
3. Incorporation of DEPB amount in the computation of business profit under Section 28(iib).

Analysis:

1. The judgment dealt with the interpretation of Section 80 HHC of the Income Tax Act, 1961, specifically regarding the deduction on Duty Entitlement Pass Book (DEPB). The primary issue raised was whether the Income Tax Appellate Tribunal (ITAT) was justified in allowing the deduction under Section 80 HHC on the face value of DEPB when the turnover exceeds Rs.10 crores. The court considered the retrospective effect of provisos (ii), (iii), and (iv) inserted by the Taxation Law (Amendment) Act, 2005 from 01.4.1998. The appellant contended that the matter was covered in favor of the revenue by previous court orders and judgments, leading to the disposal of the appeals in the same terms without issuing a notice to the respondent.

2. Another significant issue addressed in the judgment was the consistency in allowing deductions under Section 80 HHC for cases where the turnover exceeds Rs.10 crores. The court referred to specific orders of the court dated 16.8.2010 in other cases involving similar issues, namely CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi. These cases were remanded to the Tribunal for fresh decisions in line with the law. The court, finding that the matter at hand was covered by the earlier court orders, disposed of the appeals accordingly, providing the respondent with the liberty to approach the court if they had any grievances against the order.

3. Lastly, the judgment addressed the incorporation of the DEPB amount in the computation of business profit under Section 28(iib). The court's decision was guided by the consistency in approach based on previous court orders and judgments, ensuring that the matter was disposed of in alignment with the legal precedents established in similar cases. The appellant's reliance on the decisions in other cases and the subsequent disposal of the appeals without issuing a notice to the respondent highlighted the court's adherence to established legal principles and interpretations of relevant tax laws.