2014 (1) TMI 241 - AT - Income Tax

Tribunal orders reassessment of tax appeals on DEPB, section 80-HHC, and advance license benefits

Aarti Drugs Limited Versus Addl. CIT, Range 6(1) Mumbai

The Tribunal directed a fresh consideration of the Assessee's appeals regarding the exclusion of profit on the sale of DEPB, deduction under section ... Whether profit on the sale of the DEPB be considered as income u/s 80HHC - Held that:- The decision by the hon'ble jurisdictional High Court in the case of CIT vs. Kalpataru Colours & Chemicals [2010 (6) TMI 63 - BOMBAY HIGH COURT] has been reversed by the hon'ble Supreme Court in the case of Topman Exports vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - The issue was restored for fresh adjudication to be decided in the light of the decision of apex court. Deduction u/s 80HHC - Held that:- The issue was decided with reference to CIT vs. Kalpataru Colours & Chemicals [2010 (6) TMI 63 - BOMBAY HIGH COURT] - The said decision has been reveresed - The issue is restored for fresh adjudication. Issues:1. Appeal by the Assessee regarding exclusion of profit on the sale of DEPB in computing business profits under section 80-HHC.2. Appeal by the Assessee regarding deduction under section 80-HHC in light of section 80-IB(13).3. Appeal by the Assessee regarding treatment of advance license benefit, DEPB, and DFRC benefit for deduction under section 80-HHC.Analysis:1. The Assessee raised objections regarding the exclusion of profit on the sale of DEPB in computing business profits under section 80-HHC. The Tribunal had set aside the impugned order and remitted the matter back to the Assessing Officer (A.O.) based on a decision by the jurisdictional High Court. However, the High Court's decision was later reversed by the Supreme Court. The Tribunal decided not to issue a specific direction at that stage but emphasized deciding the matter in accordance with the law without being bound by the High Court's decision. The Tribunal directed that the matter be decided without considering the earlier High Court decision, which was no longer valid due to the Supreme Court's ruling.2. Another issue involved the deduction under section 80-HHC in relation to section 80-IB(13). The Tribunal had followed a Special Bench decision and a High Court decision, but subsequently, the High Court took a different stance in a separate case. Considering the inconsistency, the Tribunal directed a fresh consideration of the appeals related to this issue, emphasizing adherence to the law as per the High Court's latest decision. The appeals were to be re-examined after hearing the parties involved.3. The Assessee's objection regarding the treatment of advance license benefit, DEPB, and DFRC benefit for deduction under section 80-HHC was also addressed. The Tribunal had directed the matter back to the A.O. based on a specific High Court decision, which was later overturned by the Supreme Court. The Tribunal acknowledged that the issue was not fully considered by the High Court and that the Tribunal's order based on the High Court's decision was no longer valid. Consequently, the Tribunal directed the restoration of the Revenue's appeal for further consideration in line with the law, after hearing all parties involved.In conclusion, the Tribunal's decisions in all three issues were based on ensuring compliance with the latest legal interpretations and judgments, especially those of the Supreme Court overturning earlier High Court decisions. The appeals were to be re-evaluated in light of the current legal framework, emphasizing a fair and lawful resolution of the tax matters at hand.