2011 (12) TMI 705 - HC - Income Tax

Court rules DEPB sale amount eligible for deduction under section 80HHC of Income Tax Act

COMMISSIONER OF INCOME TAX – I Versus M/s AIA ENGINEERING LTD

The Court ruled in favor of the Revenue in a challenge to the Income Tax Appellate Tribunal's order regarding the computation of profit under Explanation ... - Issues involved: Challenge to the order of the Income Tax Appellate Tribunal regarding the computation of profit under Explanation (baa) of section 80HHC of the Income Tax Act, 1961.Summary:Issue 1: Computation of profit under Explanation (baa) of section 80HHC The Revenue challenged the Tribunal's order on whether 90% of profits on transfer of Duty Entitlement Pass Book (DEPB) should be excluded while computing business profit u/s 80HHC. The Court noted that the question was previously adjudicated in Tax Appeal No.507 of 2010. The Court reiterated that the benefit of DEPB upon sale by the assessee is eligible for deduction under section 80HHC subject to certain conditions. The Court found that the Tribunal erred in concluding that only the amount in excess of the face value of DEPB credit would form part of profit, and thus ruled in favor of the Revenue and against the assessee. The Court reversed the decisions of the Tribunal in respective appeals, setting aside the Tribunal's order and allowing the appeals accordingly.Separate Judgement: The Court granted a certificate under Article 133 and 133A of the Constitution for approaching the Apex Court, acknowledging the involvement of a substantial question of law of general importance in the case.This summary provides a detailed overview of the judgment, focusing on the computation of profit under Explanation (baa) of section 80HHC and the subsequent decision of the Court in favor of the Revenue.