Tribunal revisits tax treatment of DEPB license sale profits under sec 80HHC

The Hon'ble Tribunal recalled its earlier order concerning the taxability of profits on the sale of a DEPB license for the purpose of deduction under section 80HHC. This decision was made in light of subsequent clarifications provided by the Hon'ble Apex Court in the Topman Exports case, which indicated that only 90% of the profit on the sale of DEPB license should be excluded for the deduction. The Tribunal acknowledged the mistake in the previous order and allowed the appeals to be reevaluated on this specific issue.

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Issues:
1. Taxability of profits on sale of DEPB license for working out deduction u/s.80HHC.

Analysis:
The appellant filed two Miscellaneous Applications concerning ITA No.634/Ahd/2008 (for A.Y. 1999-2000) and ITA No.635/Ahd/2008 (for A.Y. 2004-05). The issue in question was the taxability of profits on the sale of DEPB license for the purpose of deduction u/s.80HHC. The Hon'ble Tribunal had earlier dismissed the appeal, relying on the decision in the case of CIT vs. Kalpataru Colours & Chemicals, 328 ITR 451, which was against the appellant. However, the appellant argued that a subsequent decision by the Hon'ble Apex Court in the case of Topman Exports vs. CIT, 247 CTR 353, clarified that only 90% of the profit on the sale of DEPB license should be excluded for the deduction u/s.80HHC.

The appellant contended that there was an apparent error in the previous order, citing the Topman Exports case. The respondent, on the other hand, argued that the previous decision was based on the available information at the time and did not warrant a recall. The Co-ordinate Bench had initially relied on the Bombay High Court's decision regarding the profit on the transfer of DEPB. However, the Hon'ble Apex Court in the Topman Exports case clarified that the profit should be calculated differently, considering the sale value of DEPB less its face value.

The Hon'ble Tribunal, in light of the Topman Exports and Saurashtra Kutch Stock Exchange cases, acknowledged that there was a mistake apparent from the record in the previous order. Consequently, the Tribunal decided to recall the order for the limited purpose of reevaluating the issue of calculating profit on the sale of DEPB for the deduction u/s.80HHC. Both Miscellaneous Applications were allowed for this limited purpose, and the appeals were to be heard in due course.

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