2012 (5) TMI 464 - HC - Income Tax

Admissibility of deduction u/s 80HHC when deduction u/s 80IA has been made - Held that - If deduction u/s 80IA has been made, deduction u/s 80HHC was not admissible in view of Section 80IB (13) r.w.s. 80IA (9) of the Act. See CIT (Central), Ludhiana vs. M/s. Davinder Exports(2011 (4) TMI 96 (HC)) - Decided in favour of the revenue. Whether Profit or the whole amount of DEPB is to be excluded for computation of the deduction u/s 80HHC - Section 28(iiid) - Held that - Apex court held in case of Topman exports (2012 (2) TMI 100 (SC)) that not the entire amount but the sale value less the face value of the DEPB will represent profit on transfer of DEPB. Difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28. Therefore, matter is remanded back to the AO to pass fresh order in accordance with aforesaid judgement.

Summary

Issues:
Interpretation of provisions of Section 80HHC, 80IA(9), 80IB(13) for deduction claim under Income Tax Act, 1961.
Exclusion of "Profit" or the whole amount of DEPB for computation of deduction under Section 28(iiid) and Section 80HHC.

Analysis:
1. The appeal was filed against the order of the Income Tax Appellate Tribunal for the assessment year 2004-05 under Section 260-A of the Income Tax Act, 1961.
2. Two substantial questions of law were framed for consideration by the Court. The first question dealt with the interpretation of provisions of Section 80HHC, 80IA(9), and 80IB(13) regarding the restriction of deduction claims under the Act.
3. The Court referred to a previous judgment in Commissioner of Income Tax (Central), Ludhiana vs. M/s. Davinder Exports, where it was held that if a deduction under Section 80IA has been made, deduction under Section 80HHC was not admissible, based on Section 80IB(13) read with Section 80IA(9) of the Act. Consequently, the first question was decided against the assessee.
4. The second question involved the exclusion of "Profit" or the entire amount of DEPB for computation of deduction under Section 28(iiid) and Section 80HHC. The Court relied on a judgment in Kohinoor International vs. Commissioner of Income Tax, Jalandhar, following a Supreme Court judgment in Topman Exports vs. Commissioner of Income Tax, Mumbai. The matter was remanded back to the Assessing Officer to compute the deduction under Section 80HHC in accordance with the law and the Supreme Court's judgment in Topman Exports case.
5. Consequently, the second question was answered in the same terms, and the case was remanded back to the Assessing Officer for a fresh order in line with the law and the Supreme Court's judgment.
6. The appeal was disposed of accordingly by the Court.