TMI Blog2013 (2) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... e value and the amount received on its transfer is to be considered while computing the profits allowable for deduction under section 80HHC of the Act - Therefore no merit was found in the stand of the assessee that DEPB credit has a face value and while determining the profits eligible for deduction under section 80HHC of the Act, only the profits arising on the transfer of DEPB credit are to be excluded – However, the amount received by the assessee on the transfer of DEPB credit is includible as business profit in the hands of the assessee under section 28(iiid) of the Act – Appeal dismissed. Charging of interest u/s 234D – Assessee submitted that interest is not chargeable in re-assessment proceedings as held in the case of Dredging Corporation of India Ltd[2011 (7) TMI 584 - ITAT VISAKHAPATNAM] – Also submitted that interest u/s 234D is also not chargeable in order u/s 143(3) read with sect ion 254 of the Act, which is an order only to give effect to the Tribunal’s directions. - ITA No. 1142/Chd/2011 - - - Dated:- 10-1-2012 - SHRI H.L.KARWA AND SHRI D.K.SRIVASTAVA, JJ. Respondent By : Shri N.K. Saini ORDER PER H.L. KARWA, VP This appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Special Bench of ITAT in the case of M/s Topman Exports had been referred. However, the fact of the matter is that the above decision of the Special Bench has since been reversed by the Hon'ble Bombay High Court in the case of CIT v Kalapatru Colours and Chemicals 42 DTR 193 and thereafter even the Hon'ble Punjab Haryana High Court in a number of cases which have been mentioned by the Assessing Officer in its assessment order have held that the said decision of the Hon'ble Bombay High Court should be considered by the Hon'ble Chandigarh ITAT and its earlier decision has been set aside. Thus, under the circumstances, the action of the Assessing Officer is justified. Though, I am in agreement with the Ld. counsel for the appellant that the Hon'ble Chandigarh Bench has been directed to decide the issue afresh on merits, but nevertheless, the decision of the Kalapataru Colours (supra) wherein it has been clearly decided that the complete sale proceeds of the DEPB/DFRC Licenses is to be considered as profits for the purpose of computing deduction u/s 80HHC. This being the legal position, I have no hesitation in upholding the action of the Assessing Officer. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 ITR 451 (Bom) . The Hon'ble Punjab Haryana High Court held as under: - 6 . After hearing learned counsel for the parties, we are in agreement with the view taken by the Bombay High Court and are of the view that the income from DBK, DEPB and DFRC has to be treated as business income and has to be taken into account for deduction under Section 80HHC. The questions proposed are answered accordingly and matter is remanded to the ITAT for fresh decision in accordance with law. 7. We find that the issue is squarely covered in favour of the assessee and against the Revenue by the decision of the ITAT Chandigarh Bench of the Tribunal in the case of M/s Fitex Industries v ACIT-V, Ludhiana Others in ITA No. 956/Chad/2006 relating to assessment years 2003-04 and others. The Tribunal vide its order dated 30.6.2011 after keeping in view of the observations and the directions of the Hon'ble High Court in the case of CIT Vs F.C. Sondhi and Co P.Ltd (2011) (2011) 334 ITR 141 (P H) and following the ratio laid down by the Hon'ble Bombay High Court in the case of CIT v Kalapatru Colours and Chemical (2010) 328 ITR 451 (Bom), whereby the Hon'ble Bombay High Court reversed the orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit which was sought to be included in section 28(iv) was brought in by Parliamentary amendment in the form of an insertion of clause (iiid) in section 28 with retrospective effect. There was no controversy regarding the taxability of the quantum of receipts on the transfer of the DEPB credit. Hence, for these reasons we are of the view that it cannot be inferred from the speech of the Finance Minister that the insertion of clause (iiid) in section 28 was made with a view to tax only the amount which has been received in excess of the face value of the DEPB credit. 46. The Hon' ble Court further held as under : 33. The submission that prior to the insertion of clause (iiid) in section 28, the face value of the DEPB credit realized on the transfer of such credit constituted export profits, but not the amount realized in excess of the face value of the DEPB is similarly without any basis. This is because (i) the object of the DEPB was to furnish an incentive to exporters so as to adjust the credit against the customs duty payable on any goods imported into India. However, where an exporter instead of utilizing the credit transfers the credit at a premium, it cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government. The amount received on the transfer of the DEPB credit is not received by the assessee from the Government pursuant to a scheme of the Government within the meaning of clause (iiic); and (c) when section 28(iiid) specifically deals with profits realized on the transfer of the DEPB credit, it would be impermissible as a matter of first principle to bifurcate the face value of the DEPB and the amount received in excess of the face value of the DEPB. 47. Respectfully following the above said ratio laid down by the Hon'ble Bombay High Court in Kalaptaru Colours Chemicals (supra) we find no merit in the stand of the assessee that DEPB credit has a face value and while determining the profits eligible for deduction under section 80HHC of the Act, only the profits arising on the transfer of DEPB credit are to be excluded. As observed by us in para 42 above the DEPB credit being an export incentive received by the assessee in proportion to the FOB value of its export has no face value and the amount received on its transfer is to be considered while computing the profits allowable for deduction under section 80HHC of the Act. Admittedly, in the case of the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X
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