Tribunal rectifies order for assessee, allows application based on higher court judgments. Revisit on section 80HHC deduction.

The tribunal rectified the order in favor of the assessee, allowing the miscellaneous application based on subsequent higher court judgments. The issue regarding the deduction under section 80HHC in respect of DEPB entitlement was revisited, aligning with the judgments of the Hon'ble Apex Court and the Hon'ble jurisdictional High Court. The tribunal directed the matter to be reconsidered by the Assessing Officer in accordance with the judgment of the Hon'ble Apex Court in the case of Topman Exports.

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Issues:
- Rectification of tribunal order based on subsequent judgments of higher courts regarding deduction u/s 80HHC in respect of DEPB entitlement.

Analysis:
The assessee filed a miscellaneous application pointing out a mistake in the tribunal order dated 31.05.2011. The mistake highlighted was related to the decision on ground No.1 of the revenue's appeal for the assessment year 2004-05, which was decided against the assessee by following a judgment of the Hon'ble Bombay High Court. However, it was brought to attention that the decision of the Hon'ble Bombay High Court had been reversed by the Hon'ble Apex Court in the case of Topman Exports. The assessee argued that if a tribunal decision is not in line with subsequent higher court decisions, there is an apparent mistake that should be rectified under section 254(2) of the Income Tax Act, 1961.

Upon considering the submissions and perusing the material on record, the tribunal found that the issue regarding the allowability of deduction u/s 80HHC in respect of DEPB entitlement was decided against the assessee based on the judgment of the Hon'ble Bombay High Court. However, subsequent judgments of the Hon'ble Apex Court and the Hon'ble jurisdictional High Court indicated a different approach. The Hon'ble Apex Court in the case of Topman Exports held that only the profit on sale of DEPB should be excluded from business profit for the computation of deduction u/s 80HHC, considering the face value of DEPB as costs of DEPB. Additionally, the tribunal referred to the judgment of the Hon'ble jurisdictional High Court, which stated that if a point is covered by a decision of the jurisdictional High Court, it can be considered a mistake apparent from the record under section 254(2) and corrected by the tribunal.

In line with the judgments of the Hon'ble Gujarat High Court and the Hon'ble Apex Court, the tribunal held that there was an apparent mistake in the original order as the claim of the assessee regarding deduction u/s 80HHC in respect of DEPB entitlement was not aligned with the subsequent judgments. Therefore, the tribunal rectified the mistake and directed the issue to go back to the Assessing Officer for a fresh decision in accordance with the judgment of the Hon'ble Apex Court in the case of Topman Exports.

In conclusion, the miscellaneous application of the assessee was allowed, and the tribunal rectified the order based on subsequent higher court judgments, emphasizing the correct approach for determining the deduction u/s 80HHC in respect of DEPB entitlement.

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