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2012 (8) TMI 228 - AT - Income TaxClaim for deduction u/s 80HHC of the Income-tax Act - in relation to the DEPB amount alleged that assessee not fulfilled the conditions stipulated in the said third proviso to sec. 80HHC(3) of the Act Held that - Assessee will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in explanation (baa) to Section 80HHC read with the words used in clauses (iiid) and (iiie) of Section 28 - Assessing Officer is directed to compute the deduction under Section 80HHC in the case of the appellants in accordance with the judgment in the case of Topman Exports (2009 (8) TMI 827 - ITAT MUMBAI ) - assessee are allowed for statistical purposes.
Issues:
Claim for deduction u/s 80HHC of the Income-tax Act,1961 in relation to the DEPB amount. Analysis: The appeals filed by the assessee raised grounds related to the claim for deduction u/s 80HHC of the Income-tax Act,1961 in relation to the DEPB amount for the assessment years 2003-04 and 2004-05. The Assessing Officer did not allow the claim for deduction in both years. The CIT(A) upheld the findings of the AO, stating that the conditions stipulated in the provisos to sec. 80HHC(3) were not fulfilled by the assessee. However, the ITAT directed to allow the deduction u/s 80HHC in respect of the profit on sale of DEPB in accordance with the decision of the Special Bench of the ITAT. The matter was further appealed by the Revenue to the High Court, which remanded the case back to the Tribunal for fresh decision in accordance with law based on previous court orders. The issue was then considered by the Tribunal in light of the decision of the Supreme Court in Topman Exports vs. CIT, where specific interpretations regarding the treatment of DEPB income were provided. The Hon'ble Supreme Court clarified that the face value of the DEPB falls under clause (iiib) of Section 28, while the difference between the sale value and face value falls under clause (iiid) of Section 28. The Court emphasized that the entire sale proceeds of the DEPB represent profit on transfer, not just the difference between the sale value and face value. The Court also discussed the computation of profits derived from exports under Section 80HHC, including the exclusions and additions to be made to the profits. The Court highlighted that the benefit of deduction under Section 80HHC cannot be denied to the assessee if the statutory conditions are met. In light of the Supreme Court's decision, the Tribunal vacated the findings of the CIT(A) and directed the Assessing Officer to re-examine the issue considering the legal position established by the Supreme Court. The Tribunal allowed the appeals of the assessee, providing directions for the AO to readjudicate the matter after giving the assessee sufficient opportunity to demonstrate compliance with the statutory provisions. The appeals were allowed for the assessee, with the case being disposed of accordingly.
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