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2015 (7) TMI 335 - ITAT AHMEDABAD

2015 (7) TMI 335 - ITAT AHMEDABAD - TMI - Disallowing deduction u/s 80HHC on sale of DEPB - Held that:- This issue is covered in favour of assessee by the decision of Hon’ble Supreme Court Court in the case of Topman Exports vs. CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) wherein reversing the decision in the case of CIT vs. Kalpataru Colours & Chemicals (2010 (6) TMI 63 - BOMBAY HIGH COURT ) has been decided in favour of assessee by observing as the DEPB credit has direct nexus with the cos .....

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e person acquires it by paying customs duty on the import content of the export product and the DEPB credit which accrues to a person against exports has a cost element in it. The DEPB credit represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB credit is not utilized by the exporter but is transferred to another person, the credit continues to remain as a cost to the exporter. When, therefore, the DEPB credit is transferred by a per .....

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held Sec. 145A was inducted to clarify that while computing the value of the inventory as per the method of accounting regularly employed by the assessee, the same shall include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force, notwithstanding anything to the contrary contained in Section1 45. The explanation to section 145A provides that for the purposes of this section, any tax, duty, cess or fees (by whatever name called) under any law .....

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. The same practice was followed for all preceding assessment years. As in the closing stock of current year excise duty of ₹ 5,23,379/- was not included also excise duty of ₹ 5,22,238 was not included in opening stock of current Assessment Year. The Assessing Officer has not considered the same consistent policy, being followed for all preceding Assessment Years. So, he has not followed the same principles while considering the value of opening stock. In this background, addition ma .....

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arate orders dated 17.02.2011 for the Asst. Years 2003-04 & 2007-08. Since these appeals pertain to the same assessee, these were heard together and are being disposed of by this common order for the sake of convenience. 2. In ITA No.1455/Ahd/2011 the assessee has filed the appeal on following grounds:- 1. The ld. Asstt. CIT erred in disallowing deduction u/s 80HHC on sale of DEPB without considering the facts. Considering it deduction u/s 80HHC is to be allowed on sale of DEPB. 2. The appel .....

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ed. The CIT(A) dismissed the appeal of assessee and the assessee came in appeal before the Tribunal. The Tribunal restored the matter to the file of Assessing Officer on the belief that the Assessing Officer had no occasion to go through the amendment made out in the provisions of section 80HHC by Finance Act, 2005. In the re-assessment proceedings the Assessing Officer restored the findings in the original assessment after considering the submissions made before him. On appeal before CIT(A) the .....

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ITR 49 (SC) wherein reversing the decision in the case of CIT vs. Kalpataru Colours & Chemicals (supra) has been decided in favour of assessee by observing as under :- As the DEPB credit has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessee over and above the DEPB credit on transfer of the DEPB credit would represent profit on the transfer of the DEPB credit. Thus, while the face value of the DEPB credit will fall under clause (iii .....

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nd hence even where the DEPB credit is not utilized by the exporter but is transferred to another person, the credit continues to remain as a cost to the exporter. When, therefore, the DEPB credit is transferred by a person, the entire sum received by him on such transfer does not become his profit. It is only the amount that he receives in excess of the DEPB credit which represents his profits on transfer of the DEPB credit. 5. Facts being similar and even nothing contrary was brought to our no .....

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onsidered same principles should apply while valuing opening stock also. The addition made on this ground is required to be deleted. 2. The ld. Addl. CIT has failed to understand that the valuation of closing stock is done on same principle since last 10 years. He added excise duty u/s 145 (a) while valuing the closing stock. He has not applied same principles for the valuation of opening stock. There can not be two set of principle to value the opening stock as well as closing stock. If additio .....

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CIT(A) held :- The issue relating to whether the value of closing stock of the inputs, work-in-progress and finished goods must necessary include the element for which MODVAT credit is available was a hotly debated topic. Sec.145A was inducted to clarify that while computing the value of the inventory as per the method of accounting regularly employed by the assessee, the same shall include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force, .....

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7.1 The facts and issue involved in the Asst. Year 2005-06 were similar, therefore, the CIT(A) by following his earlier order dismissed .this ground. The assessee being aggrieved and is in appeal before us. 7.2 Before us the ld. AR submitted that the issue of Asst. Year 2005-06 travelled upto the Tribunal and the Tribunal vide its order in ITA No.2316/Ahd/2010 dated 28/11/2013 decided the issue in favour of assessee by observing as under :- 4. We have heard the rival submissions, perused the ma .....

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A was inducted to clarify that while computing the value of the inventory as per the method of accounting regularly employed by the assessee, the same shall include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force, notwithstanding anything to the contrary contained in Section1 45. The explanation to section 145A provides that for the purposes of this section, any tax, duty, cess or fees (by whatever name called) under any law for the time b .....

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