TMI Blog2011 (11) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal are as under:- 1. That the Ld. CIT(A)-I has erred in not following the direction of the Hon'ble Tribunal and thus exceeded his jurisdiction in rejecting the claim of the appellant in respect of deduction under section 80HHC on the value of DEPB. 2. That the Ld. CIT(A)-I has erred in following the judgment of the Hon'ble Mumbai High Court in the case of Kalpataru Colours and Chemicals ignoring the specific directions of the Hon'ble Tribunal for deciding the issue on the basis of Special Bench Judgment in the case of M/s Topman Exports v ITO. 3. Briefly stated, the facts of the case are that the assessee is engaged in the business of manufacturing of steel forgings rigs and accessories. While framing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts judgment dated 16.8.2010, in respect of issue raised with regard to treatment of receipts of DEPB and DFRC entitlement and deduction allowable on such receipts u/s 80HHC observed after hearing the rival contentions of the parties that the view taken by Mumbai Bench in the case of M/s Topman Exports v ITO (supra) and M/s Kalpataru Chemicals v ACIT (ITA No. 5769/Mum/2006 and 5851/Mum/2006 order dated 11.8.2009, has been reversed by the Hon'ble Bombay High Court in CIT v Kalapataru Colour Chemical (2010) 328 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the introduction of clause (iiid) in section 28 of the Act in view of the decision of Delhi Bench of the Tribunal in the case of P G Enterprises (93 ITD 138) (Del) and had observed as under : 32. The Tribunal has relied to a considerable extent on a speech made by the then Finance Minister on the floor of Parliament in support of its conclusion that only the premium realized by an exporter on the sale of the DEPB credit would fall within the purview of clause (iiid) of section 28 and not the face value of the DEPB. The entire approach of the Tribunal is with respect misconceived and unsustainable. The Finance Minister sought to introduce clause (iiid) in section 28 in view of the decision of the Delhi Bench of the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount received on the transfer of the DEPB to be export profit cannot be a ground to hold that the receipts on the transfer of DEPB credit are not business profits. Counsel appearing on behalf of the assessee submits that the entire amount received on the transfer of the DEPB credit is business profit, but it was contended that what is included in section 28(iiid) is the amount received on the transfer of the DEPB credit in excess of the face value of the DEPB and the amount received to the extent of the face value of the DEPB would be covered under section 28(iiib). There is no merit in this contention because (a) the DEPB credit was not in existence when section 28(iiib) was inserted by the Finance Act of 1990. DEPB credit was introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Third proviso to sub-section (3) of section 80HHC of the Act are applicable and the assessee having not fulfilled the conditions laid down under the said proviso, the total amount received on transfer of DEPB credit is to be excluded from the profits eligible for deduction under section 80HHC of the Act. 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. 8. Respectfully following the order of the Tribunal (supra), we do not find any merit in the appeals. 9. Vide Ground No.1 of the appeal, the assessee has challenged the action of the CIT(A) as well as that of Assessing Officer in not following the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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