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TMI Blog2022 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing substantial question of law: "Whether on the facts and circumstances of the case, the Tribunal was right in remanding the issue of computation of deduction under section 80HHC with respect to sale of DEPB license in accordance with the decision of the special bench in the case of Topman exports reported in 318 ITR AT 87 (Mumbai)." 3. The assessee is engaged in the business of export of sea foods. They filed their return of income for the relevant assessment years viz., 1999-2000, 2000-01, 2001-02 and 2002-03, admitting NIL income which were originally, accepted under section 143(1). Subsequently, the assessing officer issued notices under section 148 for reopening the assessment under section 147 relating to the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents placed before this court. 6. The only issue that arises for consideration herein is with respect to the claim of deduction under section 80HHC with respect to sale of DEPB licence by the assessee. 7. It could be seen that the assessing officer, while computing the deduction under section 80HHC, reduced 90% of the sale proceeds of DEPB. According to the assessee, as per section 28(iiid), which refers to any profit on the transfer of duty entitlement and not to the sale proceeds, only 90% of the profits earned on the sale of DEPB has to be reduced and not the entire sale value of DEPB. Accepting the contention of the assessee, the CIT(A) allowed the appeals by directing the assessing officer to reduce 90% of the profit on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable for the different assessment years from the assessment years 2001-2002 to 2004-2005. Sub-section (3) (a) of Section 80HHC provides that where the export out of India is of goods or merchandise manufactured or processed by the assessee, the profits derived from such exports shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee. In CIT vs. K.Ravindranath Nair (2007) 295 ITR 228/165 Taxmann 282 (SC) the formula in sub-section (3) (a) of Section 80HHC was stated by this Court to be as follows:- Profits derived = Profits of the business x Export Turnover from exports = Total Turnover. 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to have happened in the present batch of cases, only ninety per cent of the profits on transfer of DEPB covered under clause (iiid) and not ninety per cent of the entire sale value including the face value of the DEPB does not get excluded from "profits of the business". Thus, where the ninety per cent of the face value of the DEPB 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 and the sale value of the DEPB 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 accrues to the assessee in one previous year and transfer of the DEPB takes place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ninety per cent of any sum referred to in clauses (iiid) and (iiie) of Section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. The third proviso to sub-section (3) states that in case of an assessee having export turnover exceeding Rs.10 crores, similar addition of ninety per cent of the sums referred to in clause (iiid) of section 28 only if the assessee has the necessary and sufficient evidence to prove that (a) he had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme. Therefore, if the assessee having export turnover of more than Rs.10 crores does not satisfy these two conditions, he will not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a view to get over this difficulty the assessee was contending that the profits on transfer of DEPB under Section 28(iiid) would not include the face value of the DEPB. It is a well-settled principle of statutory interpretation of a taxing statute that a subject will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in explanation (baa) to Section 80HHC read with the words used in clauses (iiid) and (iiie) of Section 28, the assessee was entitled to a deduction under Section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee. 23. The impugned judgment and orders of the Bombay High Court are accordingly s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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