2014 (2) TMI 119 - SC - Income Tax

Computation of deduction u/s 80HHC of the Act - Whether entire amount received on sale of the Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB for the purpose of the computation of deduction u/s 80HHC Held that - The decision in Topman Exports v. CIT 2012 (2) TMI 100 - SUPREME COURT OF INDIA followed - DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 Decided in favor of assessee

Summary

Issues: Interpretation of section 80HHC of the Income-tax Act, 1961 in relation to export turnover exceeding Rs. 10 crores.

The Supreme Court, comprising Lodha R. M. and Madan B. Lokur, JJ, heard a civil appeal where the appellant sought a decision similar to the precedent set in Topman Exports case. The appellant's counsel argued that the matter should be remanded to the Assessing Officer based on the principles established in Topman Exports. On the contrary, the Revenue's senior counsel contested this submission. The Court, after examining the contentions, found that the issue at hand was directly covered by the Topman Exports judgment. In Topman Exports, it was concluded that an assessee with an export turnover exceeding Rs. 10 crores would not receive certain benefits under section 80HHC but would be entitled to other deductions. The Court held that the High Court erred in its interpretation and set aside the judgments of both the Bombay and Gujarat High Courts. The Assessing Officer was directed to compute the deduction under section 80HHC in accordance with the principles outlined in the Topman Exports case. Consequently, the civil appeal was allowed, and no costs were awarded.