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2012 (9) TMI 90 - AT - Income TaxDis-allowance of deduction u/s 80HHC on export incentives being DEPB and DFRC - Held that - Issue is settled in favor of assessee by the Judgment in the case of M/s Topman Exports V/s CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) wherein it was held that only Profit element embedded in the consideration received on transfer of DEPB would be taxable under Clause (iiid) of Section 28 at the time of calculation of deduction u/s 80HHC. Matter restored to file of AO for re-computation of deduction u/s 80HHC - Decided in favor of assessee
Issues:
1. Disallowance of deduction u/s 80HHC on export incentives (DEPB and DFRC). 2. Recomputation of deduction u/s 80HHC and 80-IB. 3. Applicability of the judgment of the Hon'ble Apex Court in M/s Topman Exports V/s CIT. 4. Consideration of submissions by the CIT(A) and dismissal of the appeal. 5. Request for adding or amending grounds of appeal. Issue 1: Disallowance of deduction u/s 80HHC on export incentives (DEPB and DFRC): The Assessing Officer disallowed the deduction u/s 80HHC, stating that proceeds from the transfer of DEPB and DFRC are revenue receipts chargeable under the head "Income from Business or Profession." The amended provisions required certain conditions to be met for deduction, including turnover exceeding Rs. 10 Crores and evidence to prove compliance with the conditions. The Assessing Officer found the export turnover to be above Rs. 10 Crores but noted the absence of evidence to satisfy the conditions, leading to the disallowance of the deduction. Issue 2: Recomputation of deduction u/s 80HHC and 80-IB: The Assessing Officer recalculated the deduction u/s 80HHC and 80-IB based on the amended provisions, resulting in a reduced deduction amount. The CIT(A) upheld this recalculation, citing the insertion of clauses (iiid) and (iiie) in Section 28, clarifying the treatment of proceeds from DEPB and DFRC schemes as revenue receipts. The deduction u/s 80IB was also reworked based on a High Court decision and upheld by the Hon'ble Apex Court. Issue 3: Applicability of the judgment of the Hon'ble Apex Court in M/s Topman Exports V/s CIT: The appellant argued that the issue raised was settled by the Hon'ble Supreme Court in the case of Topman Exports V/s CIT. The Tribunal acknowledged the merit in this argument and remanded the matter to the Assessing Officer to recompute the deduction u/s 80HHC in accordance with the law and the Supreme Court judgment. The appellant was given the opportunity to produce necessary evidence in support of the claim. Issue 4: Consideration of submissions by the CIT(A) and dismissal of the appeal: The CIT(A) was criticized for not properly considering the submissions of the assessee and dismissing the appeal. The Tribunal set aside the CIT(A)'s order on specific issues and directed the Assessing Officer to recompute the deduction u/s 80HHC in line with the Supreme Court judgment, emphasizing the importance of giving the assessee a fair hearing. Issue 5: Request for adding or amending grounds of appeal: The appellant requested to add or amend the grounds of appeal before the final hearing or disposal of the appeal. Grounds 4 and 5 were deemed general in nature, and no specific comments were provided. The appeal was allowed partly for statistical purposes. This detailed analysis of the judgment from the Appellate Tribunal ITAT, Chandigarh, highlights the key issues involved, the application of relevant legal provisions, and the Tribunal's decision on each issue.
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