ANIRUDDHA BOSE,J. - (1.) Out of the four points suggested for admission of this appeal, Mr. Ghoshal, learned senior counsel has pressed only two. First one is whether in computing deduction under section 80HHC of the Income Tax Act, 1961, face value of Duty Entitlement Pass Book Scheme (DEPB) would fall under Section 28 (iiib) of the Act and the differential between the sale value and face value of such instruments would fall under Section 28(iiid) thereof or not. Following an earlier decision of the Tribunal in the assessee's own case for the assessment year 2003-04, the Tribunal remanded the matter to the assessing officer for re-computation. In the decision of the Hon'ble Supreme Court of India in the case of Topman Exports v. Commissioner Of Income Tax reported in 342 ITR 49 it has been held that when DEPB is sold by a person, his profit on transfer thereof less its face value would represent the cost of the said instrument and not the entire sum received by him. It has been held in this decision:- "We may now point out the errors in the impugned judgment of the High Court. The first reason given by the High Court is that clause (iiia) of section 28 treats profits on the sale of an import license as income chargeable to tax and when the license is sold, the entire amount is treated as profits of business under clause (iiia) of section 28 and thus there is no justification to treat the amount which is received by an exporter on the transfer of the DEPB and differently than the profits which are made on the sale of an import license under clause (iiia) of section 28 of the Act. In taking the view that when the import license is sold the entire amount is treated as profits of business, the High court has visualised a situation where the cost of acquiring the import license is nil. The cost of acquiring DEPB, on the other hand, is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB which accrues to a person against exports has a cost element in it. Accordingly, when DEPB is sold by a person, his profit on transfer of DEPB would be the sale value of the DEPB less the face value of DEPB which represents the cost of the DEPB. The second reason given by the High Court in the impugned judgment is that under the DEPB Scheme, DEPB is given at a percentage of the FOB value of the exports so as to neutralise the incidence of customs duty on the import content of the export products, but the exporter may not himself utilise the DEPB for paying customs duty but may transfer it to someone else and therefore the entire sum received on transfer of DEPB would be covered under clause (iiid) of section 28. The High Court has failed to appreciate that DEPB represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB is not utilised by the exporter but is transferred to another person, the DEPB continues to remain as a cost to the exporter. When, therefore, DEPB 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 which represents his profits on transfer of the DEPB. The High Court has sought to meet the argument of double taxation made on behalf of the assessees by holding that where the face value of the DEPB was offered to tax in the year in which the credit accrued to the asessee as business profits, then any further profit arising on transfer of DEPB would be taxed as profits of business under section 28(iiid) in the year in which the transfer of DEPB took place. This view of the High Court, in our considered opinion, is contrary to the language of section 28 of the Act under which "cash assistance" received or receivable by any person against exports such as the DEPB and "profit on transfer of the DEPB" are treated as two separate items of income under cls. (iiib) and (iiid) of section 28. If accrual of DEPB and profit on transfer of DEPB are treated as two separate items of income chargeable to tax under cls.(iiib) and (iiid) of section 28 of the Act, then DEPB will be chargeable as income under clause (iiib) of section 28 in the year in which the person applies for DEPB credit against the exports and the profit on transfer of the DEPB by that person will be chargeable as income under clause (iiid) of section 28 in his hands in the year in which he makes the transfer. Accordingly, if in the same previous year the DEPB accrues to a person and he also earns profit on transfer of the DEPB, the DEPB will be business profits under clause (iiib) and the difference between the sale value and the DEPB (face value) would be the profits on the transfer of DEPB under clause (iiid) for the same assessment year. Where, however, the DEPB accrues to a person in one previous year and the transfer of DEPB takes place in a subsequent previous year, then the DEPB will be chargeable as income of the person for the first assessment year chargeable under clause ( iiib) of section 28 and the difference between the DEPB credit and the sale value of the DEPB credit would be income in his hands for the subsequent assessment year chargeable under clause (iiid) of section 28. The interpretation suggested by us, therefore, does not lead to double taxation of the same income, which the legislature must be presumed to have avoided."
(2.) The other point urged by Mr. Ghoshal is on the question as to whether expenditure for laying down power evacuation line to connect the assessee's plant to the grid belonging to the State Electricity Board would constitute revenue expenditure or capital expenditure. Mr. Ghoshal's submission is that the same would constitute capital expenditure whereas the assessee claimed full deduction for such expenditure treating the same as revenue expenditure. The Tribunal held on this issue:- "51.Gr.No.5 raised by the revenue reads as follows: 5. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in allowing the expenditure on construction of evacuation line of the SEB for transmission of power produced by the assessee company to the SEB grid as a revenue expenditure without appreciating the fact that such expenditure was a one time expenditure for bringing into existence an advantage for the enduring benefit of the power unit and hence required to be capitalized and treated as a capital expenditure." 52. During the year under consideration, expenditure of Rs. 92,16,622/- was incurred by the Assessee on account of power evacuation line at its 1.5 MW Power unit at Mandya, Karnataka, to facilitate smooth conduct of business. The said transmission line is owned by the State Electricity Board. In the order passed under section 143(3) of the Act, the AO disallowed entire expenses on installation of power transmission line contending that it was capital expenditure allowable under section 37(1) of the Act. On appeal by the Assessee, the CIT(A) held that the expenditure be treated as revenue expenditure since the power lines was property of Electricity Board and it did result in creating depreciable/non-depreciable asset in the hands of assessee. 53. The learned DR relied on the order of the AO. The learned counsel for the Assessee relied on the order of the CIT(A). It is seen that the Assessee spent Rs. 92,16,622/- on account of power evacuation line at its 1.5 MW Power unit at Mandya, Karnataka, which is owned by the State Electricity Board. The Assessee did have any right or ownership whatsoever on the power evacuation. The said expenditure was incurred for transmitting power generated by the Assessee through the power grid owned by the SEB. The expenditure in question was incurred for smooth and efficient running of business. The expenditure incurred did result in any benefit of enduring nature. It has been held by the Hon'ble Apex Court in Empire Jute Co. Ltd. v. Commissioner of Income Tax ITA (1980) 124 ITR 1 (SC) , that if the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for any indefinite future. The test of enduring benefit is, therefore, certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. In Commissioner of Income Tax v. Birla Jute Manufacturing Co.Ltd. (1990) 182 ITR 497 (Cal) , it was held that payment made to Electricity Board for laying service lines, ownership of which vested on the Electricity Board was revenue expenditure. In Commissioner of Income Tax v. Gujarat Mineral Development Corporation (2001) 249 ITR 787 (SC) it was held that amount paid to Electricity Board for laying electric cables and electric supply transmission lines etc. for assessee's benefication plant for separating waste material from useful material was held to be of revenue expenditure. In Commissioner of Income Tax v. Associated Cement Companies Ltd. (1988) 172 ITR 257 (SC) it was held that expenditure incurred towards installing water pipelines and accessories outside the factory premises which were to belong to and be maintained by municipality was revenue in nature and the said expenditure did result in bringing any capital asset into existence. In National Organic Chemical Industries Ltd. v. Commissioner of Income Tax (1993) 203 ITR 410 (Bom) , it was held that expenditure on construction of jetty for facilitating trading operation of the assessee is a revenue expenditure in spite of the fact that the property of the jetty is to remain with the government but the assessee was responsible to keep the jetty in good order. Similar view has been expressed in the following decisions:- Commissioner of Income Tax v. Hindustan Zinc Ltd. (2010)322 ITR 478 (Raj.) Commissioner of Income Tax v. Coats Viyella India Ltd. (2002)253 ITR 667 (Mad.) Commissioner of Income Tax v. Excel Industries Ltd. (1980) 122 ITR 995 (Born.) 54. In view of the aforesaid decisions rendered on the issue by the various Courts, we are of the view that there is no merit in Gr.No.5 raised by the revenue and the same is dismissed."
(3.) The decision of the Tribunal thus reflects the view expressed by the coordinate Bench of this Court in the case of Birla Jute Manufacturing Co. Ltd.(supra) relied upon in the Tribunal's decision. We do not find any reason to take a contrary view in this appeal.;