DEPB deduction under section 80HHC remitted after the precedent relied on by the Tribunal was overruled.

The Tribunal's allowance of deduction under section 80HHC for DEPB profits could not stand because it had rested on a Special Bench view that was later overruled by the Bombay High Court. The High Court held that, once the legal foundation of the Tribunal's reasoning had fallen away, the order required interference and reconsideration under the corrected legal position. The assessee's entitlement on the merits was not finally determined; the matter was remitted to the Tribunal for fresh adjudication on the DEPB-related deduction issue in light of the applicable law and factual record.

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Issues: Whether the Tribunal's order allowing deduction under section 80HHC in relation to DEPB profits could be sustained after the Special Bench view it followed had been overruled.

Analysis: The Tribunal had followed the Special Bench decision treating the face value of DEPB as taxable under section 28(iiib) on accrual and the excess realised on sale as taxable under section 28(iiid). That view stood reversed by the Bombay High Court, and the foundation of the Tribunal's order was therefore no longer tenable. The merits of the assessee's entitlement were not finally examined by the Court and were left for reconsideration by the Tribunal in light of the correct legal position and the factual record.

Conclusion: The Tribunal's order was set aside and the matter was remitted to the Tribunal for on merits.

Final Conclusion: The appeal resulted in interference with the Tribunal's order and a fresh adjudication by the Tribunal on the DEPB-related deduction issue.

Ratio Decidendi: Where the order under challenge rests entirely on a precedent that has been overruled, the matter should be remitted for reconsideration on the correct legal position.

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