9911796707
TMI Blog2012 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ng nature of income from import entitlements. The AO noted that the assessee had shown income of Rs.54.08 lacs from import entitlement and duty drawback of Rs.33.90 lacs. The AO, therefore, asked the assessee to explain as to why the above amount should not be considered as income and claim of deduction under section 80IB in respect of the said issue should not be disallowed. The assessee submitted that the import entitlement of Rs.54.08 lacs referred to entitlement of the company for DEPB licence. The assessee had utilized only a sum of Rs.11,50,012/- in the business which would only go to reduce the cost of the material. No part of the entitlement had been transferred and, therefore, provisions of section 28(iiid) were not applicable. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in case, the assessee re-exports the duty paid imported material it was entitled for refund of duty. The refund of duty was in relation to re-export of duty paid goods such as mother board, monitor etc. There was therefore, no income involved in the transaction. CIT(A) agreed with the submission of the assessee. It was observed by him that DEPB credit had been shown by the assessee only on estimate basis without receiving it and, therefore, it could not be considered as income. Further, there was no transfer of DEPB credit and, therefore provisions of section 28(1)(iiid) were not applicable. Thus DEPB credit could not be assessed as income either under section 28(iiia) or 28(iiid) or 28(iv). He therefore, directed the AO to exclude DEPB c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty drawback and DEPB credit. The taxability of income on account of DEPB credit and duty drawback had been considered in detail by the Special Bench of the Tribunal in the case of Topman Exports (318 ITR(AT) 87). The Tribunal in the said case noted that the objective of DEPB Scheme or duty drawback was to neutralize the incidence of customs duty on the import content of export product. These were post export claims and therefore could be availed only after exports were made and on application made within specified time. It is only when exporter makes application after effecting export that he acquired right to such DEPB credit or duty draw back. Thus income accrues after application is made to the concerned authority. In the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT vs. Dharampal Premchand Ltd. (317 ITR 353) decided by the Hon'ble High Court of Delhi. In that case, the assessee was manufacturing products which were exempt from excise duty however, as per procedure laid, the assessee has to first pay excise duty on removal of goods from the bonded warehouse and make claim of refund of excise duty paid by the seventh day of the following month. The payments had been debited in the P&L account and on refund identical amount had been credited to the P&L Account. Thus there was no effect on the profit/loss. The Hon'ble High Court observed that refund of excise duty was directly linked to manufacturing activity and, therefore, the same could not be excluded for computing deduction under section 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unity of hearing to the assessee. 3. The second dispute is regarding reduction of the profit eligible for deduction under section 80HHC of the Act while computing book profit under section 115JB of the Act. The AO noted that the assessee had reduced an amount of Rs.7,47,47,332/- as profit eligible for deduction under section 80HHC(3) while computing book profit under section 115JB. The AO noted that under clause (iv) of Explanation 1 to section 115JB(2), the amount of profit eligible for deduction under section 80HHC computed under clause (a), (b) or (c) of sub section(3) or under sub section (3A) was required to be reduced from the book profit. The AO further noted that under Section 80HHC(1B), the deduction allowable was phased out durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative on the other hand submitted that since from assessment year 2005-06 no deduction was allowable, no deduction on account of section 80HHC could be allowed while computing book profits. 3.2 We have perused the records and considered the rival contentions carefully. The dispute is regarding reduction of book profit by the amount of profit eligible for deduction under section 80HHC under the provisions of clause (iv) of Explanation-1 of section 115JB. The amount of profit eligible for deduction under section 80HHC computed under clause (a)(b) or (c) of sub section (3) or sub section (3A) of section 80 HHC(3) is required to be reduced from book profit under the provisions of clause (iv) of Explanation-I of section 115JB(2). Earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
