2018 (9) TMI 105

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ib) of the Act and the differential between the sale value and face value of such instruments would fall under Section 28(iiid) thereof or not. Following an earlier decision of the Tribunal in the assessee's own case for the assessment year 2003-04, the Tribunal remanded the matter to the assessing officer for re-computation. In the decision of the Hon'ble Supreme Court of India in the case of TOPMAN EXPORTS Vs. COMMISSIONER OF INCOME TAX reported in 342 ITR 49 it has been held that when DEPB is sold by a person, his profit on transfer thereof less its face value would represent the cost of the said instrument and not the entire sum received by him. It has been held in this decision:- "We may now point out the errors in the impugned judgm....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d therefore the entire sum received on transfer of DEPB would be covered under cl. (iiid) of s. 28. The High Court has failed to appreciate that DEPB represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB is not utilized by the exporter but is transferred to another person, the DEPB continues to remain as a cost to the exporter. When, therefore, DEPB is transferred by a person, the entire sum received by him on such transfer does not become his profits. It is only the amount that he receives in excess of the DEPB which represents his profits on transfer of the DEPB. The High Court has sought to meet the argument of double taxation made on behalf of the assessees by holding tha....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....DEPB takes place in a subsequent previous year, then the DEPB will be chargeable as income of the person for the first assessment year chargeable under cl.( iiib) of s. 28 and the difference between the DEPB credit and the sale value of the DEPB credit would be income in his hands for the subsequent assessment year chargeable under cl. (iiid) of s. 28. The interpretation suggested by us, therefore, does not lead to double taxation of the same income, which the legislature must be presumed to have avoided." The other point urged by Mr. Ghoshal is on the question as to whether expenditure for laying down power evacuation line to connect the assessee's plant to the grid belonging to the State Electricity Board would constitute revenue expend....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ng depreciable/non-depreciable asset in the hands of assessee. 53. The learned DR relied on the order of the AO. The learned counsel for the Assessee relied on the order of the CIT(A). It is seen that the Assessee spent Rs. 92,16,622/- on account of power evacuation line at its 1.5 MW Power unit at Mandya, Karnataka, which is owned by the State Electricity Board. The Assessee did not have any right or ownership whatsoever on the power evacuation. The said expenditure was incurred for transmitting power generated by the Assessee through the power grid owned by the SEB. The expenditure in question was incurred for smooth and efficient running of business. The expenditure incurred did not result in any benefit of enduring nature. It has bee....