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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 1915 OF 2012
(Arising out of SLP (C) NO. 16403 of 2011)
Vikas Kalra … Appellant
Versus
The Commissioner of Income Tax-VIII,
New Delhi … Respondent
WITH
CIVIL APPEAL No. 1916 OF 2012
(Arising out of SLP (C) NO. 20270 of 2011)
J U D G M E N T
A. K. PATNAIK, J.
Leave granted.
2. These are the appeals against the order dated
18.02.2011 as modified by the order dated 22.03.2011 of
the Delhi High Court in ITA No.185 of 2011 and the order
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dated 21.02.2011 as modified by the order dated
22.03.2011 of the Delhi High Court in ITA No.308 of
2011.
3. The facts very briefly are that the appellant is
engaged in manufacturing and exporting leather
garments. For the assessment years 2001-2002 and
2004-2005, the appellant filed returns of income claiming
deductions in respect of profits retained for export
business under Section 80HHC of the Income Tax Act,
1961 (for short `the Act’). The Assessing Officer held in
the assessment orders that the entire sale value of Duty
Entitlement Pass Book (for short `DEPB’) represents profit
on transfer of DEPB under Section 28(iiid) of the Act and
did not allow the amount of deduction claimed by the
appellant under Section 80HHC. The appellant filed
appeals before the Commissioner of Income Tax (Appeals)
but the Commissioner of Income Tax (Appeals) sustained
the orders of the Assessing Officer. The appellant filed
appeals before the Income Tax Appellate Tribunal (for
short `the Tribunal’) and the Tribunal following the order
dated 11.08.2009 of the Special Bench of the Tribunal at
3
Mumbai in the case of M/s Topman Exports allowed the
appeals and held that the face value of the DEPB will be
`cash assistance’ against export and will fall under
Section 28(iiib) of the Act and the sale value less the face
value of the DEPB will be profit on transfer of DPB and
will fall under Section 28(iiid) of the Act.
4. Aggrieved, the Revenue preferred the appeals ITA
No.185 of 2011 in respect of assessment year 2001-2002
and ITA No.308 of 2011 in respect of assessment year
2004-2005 before the Delhi High Court against the orders
of the Tribunal. In both the appeals, the High Court held
in the impugned orders that the Tribunal simply followed
the decision of the Special Bench of the Tribunal at
Mumbai in M/s Topman Exports and the decision of the
Special Bench in M/s Topman Exports has been reversed
by the Bombay High Court in Commissioner of the Income
Tax v. Kalpataru Colours and Chemicals (ITA(L) 2887 of
2009). The High Court accordingly set aside the orders of
the Tribunal and remitted the case to the Tribunal to
decide the appeals of the appellant on merits after taking
into account the facts of the cases. In ITA No.308 of
4
2011, an additional issue raised before the High Court
was whether the Tribunal was correct in law in ignoring
Explanation (baa) under Section 80HHC of the Act which
specially excludes profits of DEPB from total turnover
and the High Court held that this issue was covered by
its judgment in the case of Commissioner of Income-Tax v.
Shri Ram Honda Power Equip [(2007) 289 ITR 475
(Delhi)].
5. We have today delivered judgment in Civil Appeal
arising out SLP (C) No.26558 of 2010 (M/s Topman
Exports v. Commissioner of Income Tax, Mumbai) and
other connected appeals setting aside the judgment of the
Bombay High Court in Commissioner of the Income Tax v.
Kalpataru Colours and Chemicals. We have also delivered
a separate judgment in Civil Appeal arising out of S.L.P.
(C) No.32450 of 2010 (M/s ACG Associated Capsules
Private Limited v. Commissioner of Income Tax, Central-IV,
Mumbai) and other connected appeal affirming the
judgment of the Delhi High Court in Commissioner of
Income Tax v. Shri Ram Honda Power Equip (supra).
These two appeals are disposed of in terms of our
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aforesaid two judgments. There shall be no order as to
costs.
……………………..CJI.
………………………..J.
(A. K.
Patnaik)
………………………..J.
(Swatanter
Kumar)
New Delhi,
February 08, 2012.
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