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TMI Blog2006 (5) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent assessment year. The AO is accordingly directed to rework the deduction u/s 80HHC after excluding the sale proceeds of DEPB licences from the turnover as well as from the profits of the business. We direct accordingly. In the result, the appeal of the Revenue are partly allowed. - HON'BLE M.A. BAKSHI, VICE PRESIDENT AND G.S. PANNU, A.M. For the Appellant : Sukhwinder Khanna, Adv. For the Respondent : Sudhir Sehgal and Saurabh Sehgal, Advs. ORDER M.A. BAKSHI, VICE PRESIDENT : 1. We find it convenient to dispose of these two appeals of the Revenue pertaining to different assessees involving some common issues by this consolidated order. We have heard the parties and perused the record. 2. The relevant facts, briefly stated, are that both the respondents are engaged in the business of manufacturing, trading and export of cycle and auto parts. The AO had made assessment under s. 143(3) in both the cases and restricted the claim of the respondents under s. 80HHC. The CIT(A) has allowed relief to the respondents. The Revenue being aggrieved is in appeal before the Tribunal. 3. We will first take up the common grounds of appeal. In Appeal No. 637/Chd/2005, ground Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. 133/132/97-TPL dt. 23rd Feb., 1998 issued by the Ministry of Finance, Department of Revenue, CBDT on the issue whether the premium received for the transfer of export quota would be treated as part of export profit eligible for deduction under s. 80HHC of the IT Act or not. The said OM reads as under: 'The undersigned is directed to refer to PMO's D.O. No. 247/JS(5)/98 dt. 2nd Feb., 1998 on the subject cited above. In the representation enclosed therein a clarification has been sought by AEPC as to whether the premium received for the transfer of the export quotas would be treated as a part of export profit eligible for deduction under s. 80HHC of the IT Act or not. 2. Deduction under s. 80HHC is allowed on export profits with a view of encourage earnings in convertible foreign exchange. Since the premium payment on export quotas under electronic transfer system does not involve any earnings in foreign exchange, this amount does not qualify for deduction under s. 80HHC. 3. Technically export premium can be equated with the items mentioned in s. 28(iiia) (profit on sale of import licences), s. 28(iiib) (cash assistance) and s. 28(iiic) (duty drawback). 4. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deciding the issue afresh, the AO shall keep in mind the decision of the Delhi Bench of the Tribunal in the case of Smt. Sujata Grower vs. Dy. CIT and any other decision that may be relevant to the above issue. The assessee shall be given reasonable opportunity of being heard while deciding the issue afresh in accordance with law. 12. In Appeal No. 637 ground No. 3 reads as under: 3. That the learned CIT(A) has erred in law and facts in directing not to reduce the premium on sale of DEPB which is sold after close of the Finance Act, (sic-financial year) by ignoring that the same cannot be treated to have accrued during the previous year. 13. In Appeal No. 638/Chd/2005 ground No. 3 reads as under: 3. That the learned CIT(A) has erred in law and facts in directing not to reduce the premium on sale of DEPB which is sold after close of the Finance Act (sic-financial year) by ignoring that the same cannot be treated to have accrued during the previous year. 14. The relevant facts relating to this common issue are that the assessee had received DEPB relating to exports of the current year. In the subsequent year, the DEPB licences have been sold by the assessee. However, in the year un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year. The assessee had received the licences in the year under appeal but the same had been sold in the subsequent year and accordingly the income relating to such transaction is assessable in the subsequent assessment year. The AO is accordingly directed to rework the deduction under s. 80HHC after excluding the sale proceeds of DEPB licences from the turnover as well as from the profits of the business. We direct accordingly. 18. In Appeal No. 637/Chd/2005 ground No. 4 reads as under: 4. That the learned CIT(A) has erred in law and facts in directing to exclude the scrap sales from the total turnover of the business for the purpose of calculating the deduction under s. 80HHC by ignoring the facts that scrap sales is a part of total turnover. 19. In Appeal No. 638/Chd/2005, ground No. 4 reads as under: 4. That the learned CIT(A) has erred in law and facts in directing to exclude the scrap sales from the total turnover of the business for the purpose of calculating the deduction under s. 80HHC by ignoring the facts that scrap sales is a part of total turnover. 20. The learned Departmental Representative relied upon the orders of the Tribunal Chandigarh Bench in the case of Asstt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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