TaxTMI 
TaxTMI 
2026 (7) TMI 1726
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....by order dated 13.07.2021 on the following substantial question of law: "Whether the ITAT has committed an error of law apparent on the face of record in directing the Assessing Officer to work out deduction u/s. 80HHC, misinterpreting the decision of Supreme Court in case of CIT v. Ravindranathan Nair, (2007) 295 ITR 228 SC and in following the decision in case of ACG Associated Capsules (P) Ltd. v. CIT Central Circle, (2012) 343 ITR 89 (SC)?" 3. Both the learned advocates submitted that question admitted is no more res integra in view of the decision of this Court in case of Commissioner of Income Tax v. Nirma Ltd., in Tax Appeal No. 358 of 2014, reported in (2015) 55 taxmann.com 125, wherein this Court has held as under: ....
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....3 ITR 89 (SC). The Supreme Court held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Heavy reliance was placed in the case of Topman Exports v. CIT, 342 ITR 49 (SC). Extending such logic, it was further held that even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act. Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. It was observed as under : "If we now apply Explanation (baa) as interpreted by us in thi....
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.... urged that the language used in both the sets of provisions are different. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under section 80HH and 80-I of the Act. He submitted that number of tax appeals have been admitted by this Court on this issue and this appeal may also be likewise admitted. He drew our attention to the order dated 6.5.2013 passed by this Court in the case of Bloom Decor Ltd. In Tax Appeal No.447 of 2013 where at the instance of the assessee, similar question was not considered. On the other hand, learned counsel Shri Soparkar for the assessee, in addition to relying on the decision in the case of ACT Associated Capsules Pvt. Ltd. ....
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....ty which is not eligible for deduction under section 80HH and 80-I are concerned. The logic being when the profit is being excluded from the claim of deduction, not the gross profit but the net thereof, that is the gross profit minus the expenditure incurred for earning such profit should be excluded. That is precisely how this Court in the case of Rajoo Engineers (supra) viewed the situation. That is how the Delhi High Court in the case of Essel Shyam Communication (supra) held referring to the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). It is true that in the case of Bloom Decor Ltd., a question was suggested by the assessee which may have some bearing on the controversy on hand. However, the entire focus o....
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....of the decision of the Hon'ble Apex Court in case of ACG Associated Capsules Pvt. Ltd. v. CIT (supra) allowed the appeal of the assessee with the direction to the Assessing Officer to work out deduction from job work charges and interest in light of the Paragraphs 15 and 16 of the said decision. Paragraph Nos. 15 and 16 of the decision of the Hon'ble Supreme Court in case of ACG Associated Capsules Pvt. Ltd. v. CIT (supra), read as under: "15. The Bombay High Court has also relied on the Memorandum explaining the clauses of the Finance Bill, 1991 in contained 19.12.1991 of the Central Board of Direct Taxes to come to the conclusion that the Parliament intended to exclude items which were unrelated to the export turnover from the co....