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2012 (7) TMI 459 - AT - Income TaxDis allowance of Deduction u/s 80HHC - assessee contested for not allowing appropriate amount of deduction by holding that the entire amount received on the sale of DEPB represents profits chargeable to tax under section 28 (iiid)- Held that - DEPB is a kind of assistance given by the Government of India to an exporter to pay customs duty on its imports and it is receivable once exports are made and an application is made by the exporter for DEPB, therefore, no doubt that DEPB is cash assistance receivable by a person against exports under the scheme of the GOI and falls under clause (iiib) of Section 28 and is chargeable to income tax under the head Profits and Gains of Business or Profession even before it is transferred by the assessee - while the face value of the DEPB will fall under clause (iiib) of Section 28 the difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 and it was not right in taking the view that the entire sale proceeds of the DEPB realized on transfer of the DEPB and not just the difference between the sale value and the face value of the DEPB represent profit on transfer of the DEPB - in favour of assessee.
Issues:
- Interpretation of provisions under Section 28(iiib) and Section 28(iiid) of the Income Tax Act. - Deduction under section 80HHV vis-`a-vis receipts on account of sale of DEPB. - Charging of interest under section 234B of the Act. - Proper adjudication of the appeals based on the judgment of the Hon'ble Supreme Court in the case of Topman Exports vs CIT, Mumbai. Interpretation of Provisions under Section 28(iiib) and Section 28(iiid): The case involved a dispute regarding the proper interpretation of provisions under Section 28(iiib) and Section 28(iiid) of the Income Tax Act concerning the treatment of cash assistance and profit on the transfer of the Duty Entitlement Pass Book (DEPB) scheme. The Hon'ble Supreme Court, in the case of Topman Exports vs CIT, Mumbai, clarified that DEPB falls under clause (iiib) as cash assistance receivable by the assessee against exports, while profit on the transfer of DEPB falls under clause (iiid) as a separate item. The Court emphasized that the difference between the sale value and face value of DEPB represents profit on its transfer. Deduction under Section 80HHV vis-`a-vis Receipts on Account of Sale of DEPB: The appeals raised concerns regarding the deduction under section 80HHV and section 80HHC in relation to receipts from the sale of DEPB. The Assessing Officer disallowed the deduction under section 80HHV, asserting that profits from the sale of DEPB should be included in the assessee's income. The CIT(A) upheld this decision, leading to the appeals before the Tribunal. The Tribunal directed the Assessing Officer to reconsider the matter in light of the Supreme Court's judgment in the Topman Exports case. Charging of Interest under Section 234B of the Act: Another issue in the appeals was the charging of interest under section 234B of the Income Tax Act. The CIT(A) had upheld the charging of interest, disregarding a beneficial circular issued by the Central Board of Direct Taxes. The Tribunal noted this discrepancy and decided to set aside the impugned orders, directing the Assessing Officer to reevaluate the matter in accordance with the Supreme Court's judgment. Proper Adjudication Based on Topman Exports Case: The Tribunal, after considering the arguments of both parties and examining the relevant legal provisions and the Supreme Court's judgment in the Topman Exports case, concluded that the Assessing Officer's actions were not aligned with the Court's interpretation. Consequently, the Tribunal allowed the appeals for statistical purposes and remanded the issues back to the Assessing Officer for fresh adjudication in accordance with the directions provided by the Supreme Court. This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal ITAT, Delhi, emphasizing the significance of the Supreme Court's interpretation in resolving the disputes related to the Income Tax Act.
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