At, High Court of Judicature at Madras
By, THE HONOURABLE MRS. JUSTICE R. BANUMATHI & THE HONOURABLE MR. K. RAVICHANDRA BAABU
For the Appellant: J. Narayanasamy, Standing Counsel for Income-tax. For the Respondent: S. Sridhar, Advocate.
(Prayer: Tax Case Appeal is filed under Section 260A of the Income Tax Act, 1961 against the Order dated 26.4.2010 made in I.T.A.No.771/Mds/2008.)
R. Banumathi, J.
1. The adjudication regarding the exclusion of sale proceeds of DEPB licence in the computation of 80HHC deduction is the issue falling for consideration in this appeal filed by the revenue. The revenue's appeal was admitted on the following substantial questions of law:
"1. Whether on the facts and circumstances of the case, the Tribunal was right in remanding the issue back to Assessing Officer based on the case of Mumbai, Special Bench, which was reversed by Mumbai High Court?
2. Whether in the facts and circumstances of the case, the claim of deduction u/s.80HHC in respect of the profits on sale of DEPB is alowable?
2. Brief facts of the case are that the assessee is a firm engaged in the business of manufacture and export of finished leather shoe uppers and other leather products. For the assessment year 2004-2005, the assessee firm filed return of income on 30.10.2004 admitting the taxable income of Rs.1,36,02,280/- after claiming deduction under Section 80HHC to the tune of Rs.56,14,857/- on 90% of the export incentives being Rs.2,90,21,720/-. The Assessing Officer held that the assessee firm was not eligible to claim deduction under Section 80HHC in respect of the export profits. The Assessing Officer further held that the assessee firm was not entitled for any relief in respect of income by way of sale of DEPB licence and thus the Assessing Officer denied the claim of assessee for deduction under Section 80HHC.
3. Aggrieved, the assessee filed appeal before Commissioner of Income-tax (Appeals). The commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer and held that the Assessing Officer had brought out clearly the fact that the assessee firm had not compiled with the conditions prescribed under the third proviso to Section 80HHC. Aggrieved by the Order of Commissioner of Income-tax (Appeals), the assessee filed appeal before the Tribunal. Referring to the decision of Special Bench of the Income-tax Appellate Tribunal, Mumbai in the case of Topman Exports v. Income Tax Officer, (2009) 318 ITR (AT) 87 (Mumbai)(SB) and after extracting paragraph No.89 of the said judgment of the Special Bench of ITAT, Mumbai, the Tribunal allowed the assessee's appeal and remitted the matter back to the Assessing Officer with a direction to follow the decision of the Special Bench and decide the issue accordingly after giving adequate opportunity of hearing to the assessee. The Tribunal also directed the assessee to cooperate with the assessing officer by providing necessary details that would be required by the Assessing Officer for deciding the issue.
4. Being aggrieved by the Order of the Tribunal revenue has preferred this appeal. Heard Mr.J.Narayanasamy, learned counsel appearing for the revenue and Mr.Sridhar, learned counsel appearing for the assessee.
5. The learned counsel for the revenue as well as the assessee submitted that the decision of the Special Bench of the Income-tax Appellate Tribunal, Mumbai in the case of Topman Exports v. Income Tax Officer, (2009) 318 ITR (AT) 87 (Mumbai)(SB) was challenged before the Mumbai High Court and the said decision of the Special Bench has been reversed by the Bombay High Court. The decision of the Bombay High Court was challenged by the assessee before the Supreme Court in Topman Exports Vs. CIT, (2012) 342 ITR 49 (SC). The Hon'ble Supreme Court allowed the appeal to the extent indicated in the judgment and directed the Assessing Officer to compute the deduction of Section 80HHC in the case of assessee in accordance with the judgment of the H
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onourable Supreme Court. 6. Therefore, following the judgment of the Supreme Court in Topman Exports Vs. CIT, (2012) 342 ITR 49 (SC), the Tax Case appeal is disposed of by directing the Assessing Officer to compute the deduction under Section 80HHC in the light of the decision of the Supreme Court in Topman Exports Vs. CIT, (2012) 342 ITR 49 (SC) and pass fresh orders after affording opportunity to the assessee.