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2007 (12) TMI 236 - AT - Income TaxComputing deduction under s. 80HHC - DEPB income as eligible for deduction under s. 80HHC? - HELD THAT:- We find that as per cl. (iiid) only the profits on sale/transfer of DEPB can be taken into consideration. The language of ss. 28(iv) and 28(iiid) is very clear. Therefore, the value of license falls within sec. 28(iv) and only the profit on transfer of license falls within 28(iiid). In view of the judgment of the Special Bench in the case of Surendra Engineering [2002 (12) TMI 199 - ITAT BOMBAY-H] and in view of the recent judgment of the Supreme Court in Hero Export v. CIT [2007 (11) TMI 13 - SUPREME COURT], we hold that part of the direct cost is attributable to the value of DEPB license. To find out the direct cost relatable to trading export, one has to reduce that part of the direct cost attributable to earning of DEPB from the value of total direct cost. However, this aspect has not been examined by the AO or by the CIT(A). Therefore, we restore this issue to the file of the AO to ascertain the value of DEPB license on the date of receipt and reduce the same from total direct cost. We clarify that any difference in realization of DEPB license will be treated under s. 28(iiid) of the Act. Thereafter the AO is directed to recompute the deduction under s. 80HHC. We order accordingly. In the result, the appeal filed by the assessee is partly allowed for statistical purpose.
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