M.M.KUMAR,J. - (1.) THIS order shall dispose of a bunch of appeals* filed under Section 260A of the Income Tax Act, 1961 (for brevity, 'the Act') against the order(s)** passed by the Amritsar and Chandigarh Benches of the Income Tax Appellate Tribunal because common question of law and facts are involved. The primary issue in these appeals relates to computation of deduction under Section 80HHC of the Act on export incentive Duty Entitlement Pass Book (DEPB); Duty Draw Back (DBK); and Duty Free Remission Scheme (DFRC). The Tribunal following the view of the Bombay High Court in the case of Commissioner of Income Tax v. Kalpataru Colours and Chemicals, (2010) 328 ITR 451 (Bom), held that the entire amount received by an assessee on sale of DEPB represents profit on transfer of DEPB, under Section 28(iiid) of the Act. In Topman Exports v. Commissioner of Income Tax, Mumbai, (2012) 3 SCC 593, Hon'ble the Supreme Court has, however, held that the entire amount received by the assessee less the face value of the DEPB would represent profit on transfer of DEPB by the assessee. The view taken by Bombay High Court stands overruled and the judgment of Bombay High Court in CIT v. Topman Exports [ITA No. (L) 3019 of 2009, decided on 29.6.2010], has been reversed. It also follows that the view of this Court in Commissioner of Income-tax v. M/s F.C. Sondhi & Company (P) Ltd. (ITA No. 299 of 2010, decided on 16.8.2010) and in any other connected matter would no longer holds the field and are deemed to be overruled since the view of this Court is based on the judgment of Bombay High Court in the case of Kalpataru Colours and Chemicals (supra).
(2.) THE facts are being referred from ITA No. 361 of 2011 wherein the common order, dated 30.6.2011, passed by the Chandigarh Bench of the Tribunal is subject matter of challenge. On 27.10.2004, the appellant-M/s Turbo Impex filed its return for the Assessment Year 2004-05, declaring the income at Rs 1,72,90,748.00. It was processed under Section 143(1) and selected for scrutiny. Keeping in view retrospective amendment of Section 80HHC of the Act w.e.f. 1.4.1998, the Assessing Officer asked the assessee-appellant to justify its claim under that Section. The submission made by the assessee-appellant with regard to deduction under Section 80HHC of the Act on export incentive Duty Entitlement Pass Book (DEPB) was rejected and the assessment order dated 26.12.2006 was passed (A-I). The appeal filed by the assessee-appellant was also rejected by the CIT(A), vide order dated 11.1.2008 (A-II). The assessee-appellant then filed an appeal before the Chandigarh Bench of the Tribunal. On 31.8.2009, the aforementioned appeal along with a bunch of others appeals were disposed of in terms of the decision of a Special Bench of the Mumbai Tribunal, dated 11.8.2009, rendered in the case of M/s Topman Exports, Mumbai v. Income Tax Officer (OSD), 14(2), Mumbai [29 DTR (MUM-SB) 153]. Accordingly, the Chandigarh Bench of the Tribunal set aside the orders of the CIT (Appeals) and remanded the matter to the Assessing Officer for fresh adjudication for the purpose of re-computing the deduction under Section 80HHC (A-III).
(3.) FEELING aggrieved, the revenue filed various appeals before this Court. The Division Bench of this Court rendered its judgment in the case of M/s F.C. Sondhi & Company (P) Ltd. (supra). On the issue of treatment of receipts of DEPB/DFRC entitlements and deduction allowable on such receipts under Section 80HHC of the Act, the Division Bench has found that the view taken by the Special Bench of the Mumbai Tribunal was reversed by the Bombay High Court in the case of Kalpataru Colours and Chemicals (supra). Bombay High Court formulated the following two substantial questions of law: "(a) Whether the Tribunal is justified in holding that the entire amount received on the sale of the Duty Entitlement Passbook does not represent profits chargeable under Section 28(iiid) of the Income Tax Act, 1961 and that the face value of the Duty Entitlement Passbook shall be deducted from the sale proceeds? (b) Whether the Tribunal is justified in holding that the face value of the Duty Entitlement Passbook is chargeable to tax under Section 28(iiib) at the time of accrual of income i.e. when the application for Duty Entitlement Passbook is filed with the competent authority pursuant to the exports made and that the profits on the sale of Duty Entitlement Passbook representing the excess of the sale proceeds over the face value is liable to be considered under Section 28(iiid) at the time of sale? ;