TMI Blog2016 (11) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... tted before the lower authorities claiming at ₹ 19,17,630/-. These figures need verification at the level of the AO. However, the claim of assessee is allowable, as the assessee has incurred a loss on sale of export incentive and hence no amount is to be excluded while calculating deduction in term of section 80HHC third proviso. Hence direct the Assessing Officer, as in the present case there is a loss, where there is a loss (and not profit) on sale of export incentives, no loss can be reduced while computing deduction under section 80HHC of the Act. - Decided in favour of assessee. - ITA No. 247/MUM/2015 - - - Dated:- 19-9-2016 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER For The Appellant : Shri Rajan Vora, AR For The Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f deduction under section 80HHC of the Act in regard to DEPB/DFRC and the controversy went before the Special Bench of this Tribunal in the case of Topman Exports vs. CIT, 124 ITD 1(SB)(Mum) and the same was reversed by Hon'ble Bombay High Court in ITA No. (L) 3019 of 2009, decided on 29.6.2010. Finally Hon'ble Supreme Court has reversed the Hon'ble Bombay High Court decision and affirmed the decision of the Special Bench of the Tribunal. The AO, while giving effect to the order of Hon'ble Supreme Court has computed the deduction under section 80HHC of the Act by taking the loss from export of trading goods and adjusting the same against proportionate incentive profits, i.e. profits on DEPB/DFRC. The assessee carried the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax. He explained that as per clause (iiid) of section 28 of the Act any profit on transfer of DEPB is chargeable to tax under the head profits and gains of business or profession as an item separate from cash assistance under clause (iiib) of section 28 of the Act. Ld. Counsel narrated that Hon'ble Supreme Court has interpreted the word profit which means the gross proceeds of the business transaction, less the cost of the transaction. According to him, since DEPB has direct nexus with the cost of imports and manufacturing an export product, any amount realized by the assessee over and above DEPB on its transfer would represents profit on the transfer of DEPB. He explained that while face value of the DEPB falls under claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export; Then he drew our attention to second proviso and third proviso to section 80 HHC (3) of the Act, which reads as under:- Provided further that in the case of an assessee having export turnover not exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, the same proportion as the export turnover bears to the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third proviso to section 80HHC subject to the condition mentioned in the section, as the profit on sale of DEPB/DFRC would get covered under section 28 (iiid) of the Act. 7. I have gone through the facts of the case and heard both the sides. I find from the facts of the case that the AO while giving effect to the decision of Hon ble Supreme Court in the case of Topman Exports(Supra), he has not followed the directions. In this case I find from the facts of the case that there is loss on sale of export incentives as is clear from the comparative chart reproduced above. According to mu understanding of the decision of Hon ble Supreme Court where there is a loss, and not profit, on sale of export incentive, there was no requirement of reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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