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2016 (5) TMI 414 - AT - Income TaxDeduction u/s.80HHC - exclusion of profit on sale of DEPB licence for computing the deduction u/s.80HHC - Held that - en a court interprets a provision, it decides as to what is the meaning and effect of the words used by the Legislature. It is a declaration regarding the statute. In other words, the judgment declares as to what the Legislature had said at the time of the promulgation of the law. The declaration is - This was the law. This is the law. This is how the provision shall be construed. The Hon ble Supreme Court in the case of Topman Exports Vs. CIT 2012 (2) TMI 100 - SUPREME COURT OF INDIA has declared the law on the issue regarding exclusion or inclusion of value of DEPB licence on its sale for computing the deduction under section 80HHC. According to the Hon ble Supreme Court, the entire sale proceeds of DEPB licence is not to be excluded from the profit of the business for computing deduction under section 80HHC, but only profit arising out of the sale of the DEPB licence is to be excluded. Therefore, in view of subsequent decision of the Hon ble Supreme Court, which has explained the position of law, when it was brought on the statute book, resulted an apparent error in the order of the Tribunal, which requires rectification. Therefore, we recall the finding of the Tribunal on ground no.3 also, and restore this ground for adjudication afresh.
Issues Involved:
1. Apparent error in the Tribunal's order regarding the disallowance of deduction under Section 80-IA. 2. Apparent error in the Tribunal's order regarding the exclusion of DEPB license sale proceeds for computing deduction under Section 80HHC. Detailed Analysis: 1. Apparent Error in the Tribunal's Order Regarding the Disallowance of Deduction under Section 80-IA: The assessee pointed out that the Tribunal, in its order dated 24.9.2010, dismissed Ground 2 by relying on a previous decision in the assessee's own case for A.Y. 2003/04. The Tribunal had noted that the issue was covered against the applicant by the decision dated 24/07/2009 of the ITAT Ahmedabad Bench 'D'. However, the Tribunal had recalled its finding on this issue for A.Y. 2001-02 in its order dated 11.5.2012, which was not considered in the current order. The Tribunal had previously held that the new power plant was established by transferring old and previously used machinery, disqualifying it from Section 80-IA deduction. The assessee argued that the value of the old machinery did not exceed 20% of the total value, thus complying with Explanation 2 to Section 80-IA(3). The Tribunal, in its recall order, acknowledged that the previous decision was not in line with the Gujarat High Court's judgment in Gujarat Alkali and Chemicals Ltd. v. CIT, which held that a new undertaking must not be substantially the same as the old business and should involve substantial new capital investment. The Tribunal found that the previous decision contained an apparent error as it did not consider the Gujarat High Court's ruling. Therefore, it recalled the order on this aspect and directed a fresh hearing. 2. Apparent Error in the Tribunal's Order Regarding the Exclusion of DEPB License Sale Proceeds for Computing Deduction under Section 80HHC: The assessee challenged the reduction of business profits by the sale proceeds of DEPB licenses while computing deduction under Section 80HHC. The Tribunal dismissed these grounds based on the Bombay High Court's decision in CIT vs. Kalpataru Colours & Chemicals and the Special Bench decision in Topman Exports, which were subsequently reversed by the Supreme Court. The Supreme Court in Topman Exports v. CIT held that only the profit arising from the sale of DEPB licenses should be excluded for computing the deduction under Section 80HHC, not the entire sale proceeds. The Tribunal acknowledged that non-consideration of a Supreme Court judgment constitutes an apparent error, requiring rectification. The Tribunal recognized that its decision was not in line with the Supreme Court's ruling, resulting in an apparent error. Consequently, it recalled the finding on this ground and restored it for fresh adjudication. Conclusion: The Tribunal allowed the Miscellaneous Application of the assessee, recalling its previous findings on both issues due to apparent errors and directed fresh hearings for re-adjudication. Order Pronounced: Order pronounced in the Court on 30th March, 2016 at Ahmedabad.
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