TaxTMI 
TaxTMI 
2013 (2) TMI 597
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....4. That the Ld. CIT(A)- II has erred in not granting relief in respect of charging of interest u/s 234D and withdrawing of interest u/s 244A and merely holding that the same is consequential in nature. 3. Firstly, we will take up ground Nos.1 to 3 of the appeal because the same are interlinked. The main grievance of the assessee against the order of CIT(A) -II, Ludhiana is that the CIT(A) was not justified in confirming the order of the Assessing Officer in rejecting the claim of the assessee for allowing deduction u/s 80HHC of the Income Tax Act, 1961 (in short 'the Act') on DEPB. In the first round of appeal, the Assessing Officer and the CIT(A) had rejected the claim of the assessee against which the assessee has came in appeal before the Tribunal and the appeal was disposed of vide consolidated order passed in number of appeals on 31.8.2009 (assessee's appeal bearing No. ITA No. 89/Chd/2008). The Assessing Officer passed order u/s 143(3) read with section 254 of the Act on 20.12.2010 and instead of following the directions of the Tribunal, decided the issue on the basis of Hon'ble Bombay High Court judgment in the case of CIT v Kalapataru Colours & Chemicals (2010) 328 ITR 451....
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....N. Gupta & Co. Ltd., Ludhiana v ACIT, Circle-1, Ludhiana in ITA Nos. 926 to 928/Chd/2011 relating to assessment years 2001-02, 2003- 04 and 2004-05 wherein the Tribunal vide its order dated 21.11.2011 held as under: - "5. We have heard Smt. Jyoti Kumari, Ld. DR at length and have also perused the materials available on record. 6. The issue arising in these appeals relates to computation of deduction u/s 80HHC of the Income Tax Act on account of income by way of Duty Entitlement Pass Book (DEPB). The issue was decided by the Chandigarh Bench of the Tribunal vide order dated 31.8.2009 following the decision of a Special Bench of Mumbai Tribunal in M/s Topman Exports v ITO (2009) 29 DTR 153 (Mumbai) and the matter was remanded back to the file of Assessing Officer to adjudicate afresh in conformity with the aforesaid decision of the Special Bench of the Tribunal. It is pertinent to mention here that recently the Hon'ble Punjab & Haryana High Court in the case of CIT v F.C. Sondhi and Co. P. Ltd (2011) 334 ITR 141 (P&H) vide its judgment dated 16.8.2010, in respect of issue raised with regard to treatment of receipts of DEPB and DFRC entitlement and deduction allowable on such....
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....ent in support of its conclusion that only the premium realized by an exporter on the sale of the DEPB credit would fall within the purview of clause (iiid) of section 28 and not the face value of the DEPB. The entire approach of the Tribunal is with respect misconceived and unsustainable. The Finance Minister sought to introduce clause ( iiid) in section 28 in view of the decision of the Delhi Bench of the Tribunal in the case of P & G Enterprises [2005] 93 ITD 138 (Delhi). The dispute in that case related to taxing the entire amount received on the transfer of the DEPB credit and not the amount that was received in excess of the face value of the DEPB credit. As a matter of fact in that case the assessee had claimed that the entire receipt on the transfer of the DEPB credit including the face value of the credit as profits under section 28(iiia). The Tribunal in that case held that the entirety of the amount would be covered by section 28(iv). However, the view of the Tribunal was that since Explanation (baa) in section 80HHC did not envisage the exclusion of profits covered by section 28(iv), such profits could not be excluded while computing the deduction under section 80HHC. H....
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....the deduction under section 80HHC; (iii) Parliament considered that an exporter who instead of utilizing the DEPB credit for paying customs duty on imported goods, makes a profit by transferring the DEPB, would form a separate class and seeks to tax the receipts on the transfer of the DEPB credit as business profits and not export profits. Exporters who transfer the DEPB credit and make a profit cannot be placed on par with those exporters who utilize the credit for paying the customs duty on the imported goods; (iv) the fact that Parliament did not consider the amount received on the transfer of the DEPB to be export profit cannot be a ground to hold that the receipts on the transfer of DEPB credit are not business profits. Counsel appearing on behalf of the assessee submits that the entire amount received on the transfer of the DEPB credit is business profit, but it was contended that what is included in section 28(iiid) is the amount received on the transfer of the DEPB credit in excess of the face value of the DEPB and the amount received to the extent of the face value of the DEPB would be covered under section 28(iiib). There is no merit in this contention because (a)....