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2016 (11) TMI 1050

ntly and has already offered the income for tax in the year of receipt from the sale of DEPB license. Considering the facts of the present case and the fact that system of accounting of DEPB entitlements on cash/ realization basis has been consistently followed year after year by the assessee in past also and more so since the DEPB entitlements receipt during financial year 2009-10 relevant to A.Y. 2010-11 are already accounted and offered for taxation in the next financial year 2010-11 relevant year 2011-12 on realization basis, therefore after taking into consideration the decision of Hon’ble Supreme Court in the case of CIT Vs. M/s. Excel Industries Ltd., (2013 (10) TMI 324 - SUPREME COURT ), we hold that the assessee is entitled for DEP .....

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t craves leaves to add, amend, alter or delete or any other grounds of Appeal. 2. The brief facts of the case are that the assessee is a company engaged in the business of trading in pharmaceuticals, Bulk Drugs and Chemicals. A return was e-filed on 15.10.2010 declaring an income of ₹ 1,75,90,170/-. The return was processed u/s.143(1) of the Income Tax Act. Thereafter, the case was selected for scrutiny and notice was served upon the assessee, seeking reply of the assessee. Assessment order was passed by ACIT whereby a sum of ₹ 11,09,321/- being the amount of DEPB credit was added back to the total income of the assessee. 3. Aggrieved by the order of the AO, assessee preferred an appeal before CIT(A) and the CIT(A) after conside .....

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asis. 8. On the other hand, learned DR relied upon the order passed by the Revenue Authorities. 9. We have heard the counsel for both the parties and also perused the material on record as well as the orders passed by the Revenue Authorities. Learned CIT(A) has decided the issue of DEPB entitlements in paragraph 2.3 of its order, the same is reproduced below. 2.3 I have considered the facts of the case, order passed by the AO and the submission made by the appellant. It is seen that the appellant follows the mercantile system of accounting. Therefore, the income out of transfer DEPB by way of sale or otherwise has to be offered as income for the year under the mercantile system of accounting followed by the appellant, which the appellant ha .....

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pute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. 11. From the facts of the case, we found that the assessee accounted the income from sale of DEPB license on cash basis and the same is followed consistently by the assessee on year to year basis. We have also observed that the same procedure is being followed by the assessee in the following years and the assessee has offered the said amount for tax in the year of receipt from sale of DEPB license. Since the facts of the present case are .....

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been consistently followed year after year by the assessee in past also and more so since the DEPB entitlements receipt during financial year 2009-10 relevant to A.Y. 2010-11 are already accounted and offered for taxation in the next financial year 2010-11 relevant year 2011-12 on realization basis, therefore after taking into consideration the decision of Hon ble Supreme Court in the case of CIT Vs. M/s. Excel Industries Ltd., (supra), we hold that the assessee is entitled for DEPB credit in the year under consideration and therefore the additions made by the AO are hereby deleted. The AO is directed to re-compute the income in the terms of aforementioned decision. Therefore, these grounds raised by the Assessee are allowed. 12. Ground No. .....

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