2012 (11) TMI 162 - AT - Income Tax

Deduction u/s 80HHC in respects of DEPB entitlement - Held that - As decided in M/s Topman Exports Versus CIT, Mumbai 2012 (2) TMI 100 - SUPREME COURT OF INDIA only the profit on sale of DEPB is to be excluded from business profit for the purpose of computation of deduction allowable to the assessee u/s 80HHC and for the purpose of this computation of profit on sale of DEPB, face value of DEPB should be considered as costs of DEPB Decided in favor of assessee.

Summary

Issues:
1. Rectification of tribunal order based on subsequent judgments of higher courts regarding deduction u/s 80HHC in respect of DEPB entitlement.

Analysis:
The appellant filed a miscellaneous application pointing out an error in the tribunal order dated 30.11.2010 concerning ground No.1 & 2 of the C.O. for the assessment year 2004-05. The tribunal had decided against the assessee based on the judgment of the Hon'ble Bombay High Court in the case of CIT Vs Kalpataru Colour & Chemicals Ltd. However, the appellant argued that this decision was reversed by the Hon'ble Apex Court in the case of Topman Exports. The appellant contended that if a tribunal decision is not in line with subsequent higher court decisions, it constitutes an apparent mistake that should be rectified under section 254(2) of the Income Tax Act, 1961.

Upon reviewing the submissions, the tribunal found that the issue of deduction u/s 80HHC in relation to DEPB entitlement was decided against the assessee based on the Hon'ble Bombay High Court's judgment. Subsequently, the Hon'ble Apex Court's judgment in the case of Topman Exports clarified that only the profit on the sale of DEPB should be excluded from business profit for computing the deduction u/s 80HHC. The tribunal also noted the judgment of the Hon'ble Apex Court in the case of Saurashtra Kutch Stock Exchange, which emphasized correcting apparent mistakes in tribunal orders to align with higher court decisions.

The tribunal referred to a similar case involving Jay Chemicals Industries Ltd., where the Coordinate bench rectified an apparent mistake in the tribunal order by following the judgments of the Hon'ble Gujarat High Court and the Hon'ble Apex Court. The tribunal acknowledged the principle that subsequent benches should not differ from earlier decisions and directed the Assessing Officer to decide the assessee's claim in line with the Hon'ble Apex Court's judgment in the case of Topman Exports.

Based on the above analysis and precedents, the tribunal allowed the appellant's miscellaneous application, indicating that the tribunal order needed rectification to align with the subsequent judgment of the Hon'ble Apex Court in the case of Topman Exports regarding the deduction u/s 80HHC in respect of DEPB entitlement.