2014 (5) TMI 597 - SC - Income Tax

Duty Entitlement Pass Book (DEPB) benefits Deduction u/s 80HHC of the Act Held that - Following Topman Exports Vs. Commissioner of Income-Tax 2012 (2) TMI 100 - SUPREME COURT OF INDIA - where the export turnover of an assessee exceeds Rs.10 crores, he does not get the benefit of addition of ninety per cent of export incentive u/s 28(iiid) to his export profits, but he gets a higher figure of profits of the business, which ultimately results in computation of a bigger export profit - a subject 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 r.w. section 28(iiid) and (iiie), the assessee was entitled to a deduction u/s 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee - The AO is directed to compute the deduction u/s 80HHC of the Act in accordance with the observations of Topman Exports Decided in favour of Assessee.

Summary

Issues:
1. Delay condonation in filing special leave petition.
2. Interpretation of Section 80HHC of the Income Tax Act, 1961 regarding export turnover exceeding Rs.10 crores and profits on transfer of DEPB.
3. Applicability of the decision in Topman Exports Vs. Commissioner of Income-Tax (2012) 3 SCC 593 to the present matter.

Analysis:
1. The Supreme Court condoned the delay in filing the special leave petition and granted leave to proceed with the case.
2. The Court discussed the interpretation of Section 80HHC of the Income Tax Act, 1961 in light of the export turnover exceeding Rs.10 crores and profits on transfer of Duty Entitlement Pass Book (DEPB). Referring to the decision in Topman Exports Vs. Commissioner of Income-Tax (2012) 3 SCC 593, the Court emphasized that an assessee with export turnover exceeding Rs.10 crores would not be eligible for certain benefits under Section 80HHC but would receive other deductions based on the statutory provisions. The Court clarified that the benefit of exclusion of a smaller figure from "profits of the business" would still be available to an assessee with export turnover exceeding Rs.10 crores, leading to a computation of a bigger export profit. The Court set aside the impugned judgment and directed the Assessing Officer to compute the deduction under Section 80HHC accordingly.
3. The Court specifically mentioned that the controversy raised in the present matter was squarely covered by the decision in Topman Exports case. By setting aside the impugned order and providing directions for computation of deduction under Section 80HHC in line with the Topman Exports judgment, the Court ensured consistency and application of the legal principles established in the prior case law.

In conclusion, the Supreme Court's judgment addressed the delay condonation, interpreted the provisions of Section 80HHC in relation to export turnover and DEPB profits, and applied the principles established in the Topman Exports case to resolve the controversy in the present matter.