2011 (3) TMI 150 - HC - Income Tax

Tax Appeal Upheld on Deduction Dispute

The appeal under Section 260-A of the Income Tax Act challenging the ITAT's order on deduction u/s 80HHC on the face value of DEPB was disposed of in ... Deduction u/s 80HHC - DEPB - the matter is covered in favour of the revenue by orders of this Court in CIT v. F.C. Sondhi 2010 (8) TMI 420 - PUNJAB AND HARYANA HIGH COURT, wherein after noticing the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals[2010 -TMI -76895 - PUNJAB AND HARYANA HIGH COURT ], the matter was remanded to the Tribunal for fresh decision in accordance with law - Decided against the assessee Issues involved:1. Appeal under Section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal.2. Substantial questions of law regarding deduction u/s 80HHC on the face value of DEPB.3. Justification of allowing deduction u/s 80HHC in respect of entire DEPB amount.4. Reliance on the decision of the Income-tax Appellate Tribunal, Special Bench, Mumbai.Analysis:1. The appeal was filed under Section 260-A of the Income Tax Act challenging the order of the Income Tax Appellate Tribunal, New Delhi. The substantial questions of law raised included whether the ITAT was justified in allowing deduction u/s 80HHC on the face value of DEPB when turnover exceeds Rs.10 crores, and whether the deduction should be allowed in the computation of business profit u/s 28(iiib). Additionally, the ITAT's reliance on a previous decision of the Mumbai ITAT Special Bench in the case of M/s Topman Exports was questioned.2. The learned counsel for the appellant argued that the matter was already settled in favor of the revenue by previous orders of the Court in CIT v. M/s Victor Forgings and CIT v. F.C. Sondhi. These orders, dated 16.8.2010, referred to the judgment of the Bombay High Court in CIT v. Kalpataru Colours & Chemicals and remanded the matter to the Tribunal for a fresh decision in accordance with the law.3. The Court found that the matter was indeed covered by the earlier orders, and therefore, disposed of the appeal in the same terms. No notice was issued to the respondent, but they were granted the liberty to approach the Court if they had any grievances against the order. This decision was made based on the precedent set by the previous judgments of the Court.In conclusion, the judgment upheld the decisions of the previous orders of the Court regarding the deduction u/s 80HHC on the face value of DEPB and the reliance on the Mumbai ITAT Special Bench decision. The appeal was disposed of in favor of the revenue, maintaining consistency with the established legal principles.