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2015 (9) TMI 383 - AT - Income TaxNon consideration of sale of DEPB as export incentives for deduction u/s. 80HHC - Held that - In view of the convergence of the stands the rival counsels, and noting that the issue raised are governed by the ratio of the judgment of Hon ble Supreme Court in the case of Topman Exports vs. CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) wherein the decision of CIT vs. Kalpataru Colors & Chemical (2010 (6) TMI 63 - BOMBAY HIGH COURT) has since been reversed to held that 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 - matter is restored back to the file of Assessing Officer for re-adjudication afresh Decided in favor of assessee for statistical purposes. Deduction allowable under section 80HHC where the assessee is also eligible for deduction under section 80IB - Held that - Tribunal following the decision ACIT vs. Hindustan Mint & Agro Products Pvt. Ltd.,(2009 (6) TMI 124 - ITAT DELHI-C ) decided the issue against the assessee in principle which was reversed by Hon ble Bombay High Court in the case of Associated Capsules vs. CIT (2011 (1) TMI 787 - BOMBAY HIGH COURT) and, therefore, it is no longer a good law.This aspect of the matter has not been contested by the Revenue before us - Decided in favour of assessee.
Issues Involved:
1. Non-consideration of sale of DEPB as export incentives for deduction u/s. 80HHC. 2. Restriction of deduction u/s. 80HHC invoking sec. 80IB(13) /S.80IA(9). 3. Not ignoring the loss from trading exports in working out the deduction u/s. 80HHC. 4. Direction to reduce the indirect cost of the business for computation of profit in respect of export of trading goods for deduction u/s. 80HHC. 5. Eligibility of DEPB sold and received, DFRC benefits, and Advance Licence benefits as Export incentives u/s. 28(iii)(a),(b),(c) for working out deduction u/s. 80HHC. Analysis: Issue 1: Non-consideration of sale of DEPB as export incentives for deduction u/s. 80HHC The Tribunal recalled the earlier order for re-adjudication on this issue. The assessee contended that profit on sale of DEPB should be considered as an export incentive for deduction u/s. 80HHC. The Tribunal decided to set aside the order of the CIT(A) and restore the matter to the Assessing Officer for fresh adjudication in light of a subsequent judgment of the Hon'ble Supreme Court. Issue 2: Restriction of deduction u/s. 80HHC invoking sec. 80IB(13) /S.80IA(9) The controversy related to the deduction allowable under section 80HHC where the assessee was also eligible for deduction under section 80IB. The Tribunal noted that the judgment of the Special Bench had been reversed by the Hon'ble Bombay High Court, allowing the issue raised by the assessee regarding the computation of deduction under section 80HHC. Issue 3: Not ignoring the loss from trading exports in working out the deduction u/s. 80HHC The CIT(A) was criticized for considering the loss from trading exports for working out the deduction u/s. 80HHC. The assessee argued that the loss should be considered as Nil for the deduction u/s. 80HHC. The Tribunal decided to apply its decision on similar issues from earlier years to this case as well. Issue 4: Direction to reduce the indirect cost of the business for computation of profit in respect of export of trading goods for deduction u/s. 80HHC The Tribunal found that there was no provision for reducing the indirect cost of the business by 10% of the export incentives for computation of profit. The issue was decided in favor of the assessee, following the decision of the Tribunal in the earlier years. Issue 5: Eligibility of DEPB sold and received, DFRC benefits, and Advance Licence benefits as Export incentives u/s. 28(iii)(a),(b),(c) for working out deduction u/s. 80HHC The Tribunal considered the eligibility of various benefits as export incentives for working out deduction u/s. 80HHC. It was decided that the issues raised in earlier years would apply mutatis mutandis to the current case, and the decision was made accordingly. This comprehensive analysis covers all the issues involved in the judgment, detailing the arguments presented, decisions made, and the legal implications of each issue.
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