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2013 (10) TMI 473 - HC - Income TaxDeletion of addition made in respect of claim u/s 80HHC pertaining to DEPB Held that - Reliance has been placed upon the judgment of the Hon be Supreme Court of India in the case of Topman Exports 2012 (2) TMI 100 - SUPREME COURT OF INDIA , wherein it was held that entire sale proceeds of Duty Entitlement Pass Book (DEPB) and Duty Free Replenishment Certificate (DFRC) are not to be treated as profit for working out deduction under section 80HHC of the Income Tax Act. It is also held that when DEPB is sold by exporter, his profit on transfer of DEPB would be sale value of DEPB less face value of DEPB (cost of acquisition of DEPB). Further held that face value of DEPB being cash assistance by Government under Section 28(iii-b) of Income Tax Act is not profit, and hence, it cannot be included as profit under section 28(iii-d) of the Income Tax Act Thus, decided against the Revenue.
Issues:
Challenge to impugned judgment regarding deletion of addition under section 80HHC pertaining to DEPB. Analysis: The High Court considered a Tax Appeal challenging the deletion of an addition under section 80HHC related to DEPB. The Appellate Tribunal had allowed the assessee's appeal based on the decision of a Special Bench in a specific case. However, this decision was reversed by the Bombay High Court, which was later overruled by the Hon'ble Supreme Court in the case of Topman Exports. The Supreme Court held that the entire sale proceeds of DEPB should not be treated as profit for deduction under section 80HHC. The profit on the transfer of DEPB was determined as the sale value of DEPB less its face value. The face value of DEPB, being cash assistance by the Government, was not considered as profit under the Income Tax Act. Consequently, the issue in the present appeal was deemed to be conclusively settled by the Supreme Court's decision in the Topman Exports case. The Division Bench initially ruled in favor of the revenue, but the Supreme Court's decision in the Topman Exports case led to the matter being remanded back to the High Court for fresh consideration. Upon reevaluation, the High Court found that the issue was squarely covered by the Supreme Court's decision and, therefore, dismissed the Tax Appeal. The Court emphasized that the decision in Topman Exports clarified the treatment of DEPB proceeds for the purpose of calculating deductions under section 80HHC, establishing a clear precedent that guided the resolution of the present case. Consequently, the appeal was dismissed based on the settled legal position elucidated by the Supreme Court. In conclusion, the High Court, after careful consideration of the arguments presented by both parties and the legal precedents, dismissed the Tax Appeal. The decision was based on the clear and specific ruling of the Supreme Court in the Topman Exports case, which definitively addressed the treatment of DEPB proceeds and their impact on deductions under section 80HHC. The Court's decision was grounded in the established legal principles elucidated by the Supreme Court, leading to the dismissal of the appeal in light of the settled legal position.
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