TMI Blog2015 (10) TMI 2038X X X X Extracts X X X X X X X X Extracts X X X X ..... I 75 - SUPREME Court). In the case of Pruthvi Brokers and Share Holders (P) Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT ), the Hon'ble Bombay High Court has clearly held that the appellate authorities can admit new claim made by an assessee even if same was not made before the AO, that in case of the AO the claim could be made by filing a revised return only.As the FAA did not have the benefit of the judgment of the Pruthvi Brokers(supra),so,in the interest of justice we are restoring back the matter to the file of the FAA to decide the issue afresh in light of the decision of Surendra Engg. Corpn. (2002 (12) TMI 199 - ITAT BOMBAY-H). He is directed to afford a reasonable opportunity of hearing to the assessee. Ground No.3 of the appeal is allowed in part. - Decided partly in favour of assessee. - ITA No.1118/Mum/2008 - - - Dated:- 9-9-2015 - Sh. Rajendra,Accountant Member Parthasarathy Choudhury,Judicial Member For The Assessee : Shri Bhavin Parekh For The Revenue : Shri S.P. Walimbe Challenging the order dt.27.11.2007 of CIT(A)-IV, Mumbai,the Assessing Officer(AO)has raised following Grounds of Appeal: 1.The ld. CIT(A)IV has wrongly confirmed that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X export turnover total turnover = 90% of 27273438 X 257514526 2727438 = ₹ 24,54,694/- Total amount qualified for deduction = ₹ 4,54,15,122/- 2.1. Aggrieved by the order of the AO the assessee preferred an appeal before the First Appellate Authority (FAA). Before him, it was stated that there was no transfer of DEPB amount to ₹ 1.16 crores. During the year that no profit could have been earned by the assessee. Referring to the provisions of section 28(iiid) of the Act it was argued that profit on transfer of DEPB should be considered at ₹ 70,70,739/- only for the current year, that DEPB license of ₹ 1.16 crores was not sold in the A.Y. 2005-06, that same were sold in the A.Y. 2006-07 and the profit arising out of the transaction was duly accounted for in that AY.After considering the submission of the assessee and the assessment order the FAA held that provisions of section 28(iiid) were very clear to indicate that only profit was to be considered.But,he directed the AO to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit has direct nexus with the cost of imports for manufacturing an export product, any amount realised 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 (iiib) of section 28 of the Act, the difference between the sale value and the face value of the DEPB credit will fall under clause (iiid) of section 28 of the Act. The cost of acquiring the DEPB credit is not nil because the 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 utilised 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 profits. It is only the amount that he receives in excess of the DEPB credit which represents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on transfer of the DEPB credit covered under clause (iiid) and not ninety per cent of the entire sale value including the face value of the DEPB credit will get excluded from the profits of the business . Thus, where the ninety per cent. of the face value of the DEPB credit does not get excluded from profits of the business under Explanation (baa) and only ninety per cent. of the difference between the face value of the DEPB credit and the sale value of the DEPB credit gets excluded from profits of the business , the assessee gets a bigger figure of profits of the business and this is possible when the DEPB credit accrues to the assessee in one previous year and transfer of the DEPB credit takes place in the subsequent previous year. The result in such case is that a higher figure of profits of the business becomes the multiplier in the formula under sub-section (3)(a) of section 80HHC for arriving at the figure of profits derived from exports. ITA/1118/M/08-Mangal Creation 4 To the figure of profits derived from exports worked out according to the formula under subsection (3)(a) of section 80HHC , the additions as mentioned in the first, second, third and fourth provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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