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TMI Blog2014 (7) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... GUJARAT HIGH COURT] - assessee is eligible for deduction u/s 80HHC of the Act irrespective of any restriction of the export turnover – Following the decision in Topman Exports Vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - the face value of DEPB will fall under clause (iiib) of Section 28 of the Act and hence, the same is eligible for deduction u/s 80 HHC of the Act irrespective of any restriction of export turnover - the CIT(A) has rightly allowed the claim of the assessee – Decided against Revenue. - I.T.A. No. 1706 to 1709/Kol/2012, C.O. No.154 to 157/Kol/2012 - - - Dated:- 17-7-2014 - Shri Mahavir Singh, J.M. And Shri Shamim Yahya, A.M.,JJ. For the Petitioner : Shri Vivek Verma, JCIT, Sr. DR For the Respondent : Shri Ishwer Prakash Rathi, C.A. ORDER Per Bench : All these appeals by Revenue and Cross-Objections by Assessee are arising out of separate orders of CIT(A)-XX, Kolkata all dated 08.08.2012 for the assessment years 1999- 2000 to 2002-03 respectively. 2. The first common issue in the Cross-Objections of the assessee is with regard to the order of CIT(A) confirming the reopening of assessment under section 147 of the Act. For this, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Sec.28 of the Income tax Act, 1961 has been amended by the Taxation Laws (Amendment) Act, 2005. The section 80HHC so amended, inter alia, provides that: Profits on sale of duty Entitlement Pass Book Scheme (DEPB) credits or Duty Free Replenishment Certificate (DFRC) will be treated at par with duty drawback for the purposes of proportionate increase of profits derived from exports computed under clause (a) or clause (b) or clause (c) of sub-section (3) of section 80HHC. Same issue has been covered by CBDT Circular No.2 of 2006 dated 17-01-2006. This amendment relating to Duty Entitlement Pass Book Scheme and Duty Free Replenishment Certificate have been brought into the statute with retrosp0ective effect. Since, the assessee is engaged in export activities and had income from DEPB Licence Sale, it appears that assessee's claim of deduction u/s.80HHC was not correct; in fact excess deduction was claimed and was also allowed. The assessee's return for A.Y.1999-2000 was reopened and it was found that its entire export incentive ₹ 1,65,59,062 were nothing but DEPB Licence process. On reassessment a demand of ₹ 46,65,574 was raised in that year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as completed under section 143(3) of the Act, after due application of mind by AO on all the relevant facts relating to assessed income of DEPB under section 28(iiib) and claimed deduction under section 80HHC of the Act. In view of these facts, ld. Counsel for the assessee stated that there is merely a change of opinion in assessment year 2001-02 and in other assessment years also. There is no belief whatever was formed by the AO for reopening of assessment. He has taken us to the order of CIT(A), wherein reopening was confirmed and the relevant observation from assessment year 1999- 2000 reads as under: 2.2 I have carefully considered the aforesaid submissions, the fact remains that the deduction u/s 80HHC was not allowable to the appellant as per the Taxation Law Amendment Act 2005 on profit on transfer of DEPB as per the provisions as applicable as on that date of re-opening of the assessment and as such certain income of the appellant has escaped assessment, since excessive deduction u/s 80HHC was allowed to the appellant which was not in conformity with the Taxation Law Amendment Act 2005 read with section 28(iiid) and 3rd proviso to section 80 HHC(3). Thus, this Ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Based on the return of income for the assessment year 2003- 04, the assessing officer came to the conclusion that the assessee has claimed deduction u/s 80HHC on ₹ 88,96,136 being incentives shares. 10.1 The Hon'ble Supreme Court in the case of ITO vs Lakhmani Mewal Das (supra) relied upon by the learned counsel for the assessee held that reason to believe is not reason to suspect and the powers of the ITO are not plenary, though wide. The reason to believe in this case is merely based on the facts for the assessment year 2003-04 and there is no information or material in possession of the assessing officer to come to even a prima facie conclusion that the assessee has in fact claimed excessive deduction in the year 2000-01. It is well settled that there should be some material in the possession of the assessing officer and that the material should have live link and nexus with the conclusion of fact that the assessing officer would arrive at. In this case when there are no records on hand, for whatever reason the assessing officer chose to pick up the assessment record of another year and based on the figures and claims therein, has come to a conclusion that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 28(iiib) instead of entire sale consideration of DEPB. 10. We have heard rival contentions and gone through facts and circumstances of the case. We find that only the net of sale consideration and face value of DEPB will be taxable under section 28(iiib) of the Act and further in view of the decision of Hon'ble Gujarat High Court in the case of Avani Exports Vs. CIT (2012) 348 ITR 391 (Guj) the assessee is eligible for deduction under section 80HHC of the Act irrespective of any restriction of the export turnover. The CIT(A) allowed the claim of assessee by observing as under:- 3.1 I have carefully considered the aforesaid submissions and the decision of the Honourable Supreme court in the case of Topman Exports reported in 342 ITR 49 and the decision of Gujarat High Court in the case of Avani Export Others dt. 02-07-2012. The Honourable Supreme Court in the case of Topman Exports has held that the face value of the DEPB will fall under clause (iiib) of Section 28 of the Act and hence the same are eligible for deduction u/s 80 HHC irrespective of any restriction of the export turnover. In view of the aforesaid decision the appellant is eligible for deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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