2012 (11) TMI 417 - AT - Income Tax

Taxability of profits on sale of DEPB license for working out deduction u/s.80HHC - Held that - Co-ordinate Bench had relied on the decision of Bombay High Court while deciding the issue of profit on sale of DEPB. As decided in M/s Topman Exports Versus Commissioner of Income Tax, Mumbai 2012 (2) TMI 100 - SUPREME COURT OF INDIA that profit on transfer of DEPB would be sale value of DEPB less its face value which represents the cost of DEPB and not the entire sum received by assessee on such transfer & ACIT vs. Saurashtra Kutch Stock Exchange Ltd. 2008 (9) TMI 11 - SUPREME COURT that non consideration of a decision of jurisdictional court or of the Hon ble Supreme Court can be said to be mistake apparent from the record - in favour of assessee.

Summary

Issues:
1. Taxability of profits on sale of DEPB license for working out deduction u/s.80HHC.

Analysis:
The appellant filed two Miscellaneous Applications concerning ITA No.634/Ahd/2008 (for A.Y. 1999-2000) and ITA No.635/Ahd/2008 (for A.Y. 2004-05). The issue in question was the taxability of profits on the sale of DEPB license for the purpose of deduction u/s.80HHC. The Hon'ble Tribunal had earlier dismissed the appeal, relying on the decision in the case of CIT vs. Kalpataru Colours & Chemicals, 328 ITR 451, which was against the appellant. However, the appellant argued that a subsequent decision by the Hon'ble Apex Court in the case of Topman Exports vs. CIT, 247 CTR 353, clarified that only 90% of the profit on the sale of DEPB license should be excluded for the deduction u/s.80HHC.

The appellant contended that there was an apparent error in the previous order, citing the Topman Exports case. The respondent, on the other hand, argued that the previous decision was based on the available information at the time and did not warrant a recall. The Co-ordinate Bench had initially relied on the Bombay High Court's decision regarding the profit on the transfer of DEPB. However, the Hon'ble Apex Court in the Topman Exports case clarified that the profit should be calculated differently, considering the sale value of DEPB less its face value.

The Hon'ble Tribunal, in light of the Topman Exports and Saurashtra Kutch Stock Exchange cases, acknowledged that there was a mistake apparent from the record in the previous order. Consequently, the Tribunal decided to recall the order for the limited purpose of reevaluating the issue of calculating profit on the sale of DEPB for the deduction u/s.80HHC. Both Miscellaneous Applications were allowed for this limited purpose, and the appeals were to be heard in due course.