Deduction under section 80HHC before amendment of Taxation Law is eligible

IN THE INCOME TAX APPELLATE TRIBUNAL

(DELHI BENCH “F” New Delhi)

BEFORE SHRI R. P. TOLANI: JUDICIAL MEMBER

And

SHRI T.S. KAPOOR: ACCOUNTANT MEMBER

ITA No. 3302 /Del/ 2011

(Assessment Year: 2003-04)

M/s Riviera Textile

Behind Khadi Ashram,

Shiv Nagar, Panipat.

PAN: AABFDR 5534 R

(Appellant)

Vs.

Income-tax Officer,

Ward-2, Panipat.

 (Respondent)

Appellant By: Dr. Rakesh Gupta Adv. & Shri Sunil Aggarwal CA

Respondent By: Shri Bhim Singh Sr. DR

ORDER

PER R. P. TOLANI, J.M:

This is assessee’s appeal against CIT(A)’s order dated 16-3-2011 relating to assessment year 2003-04. Following grounds are raised:

“1. That the order of Learned CIT(A), Karnal is against law and facts.

2. That on the facts & circumstances of the case of the appellant the order of the Learned CIT(A) in disallowing deduction of Section 80HHC on total sale proceeds of DEPB instead of Profit as mentioned in Section 28(iii) of the Income Tax Act, 1961 is highly undesirable and uncalled for.

3. That the appellant craves for permission to add, delete or amend the grounds of appeal and for granting of any consequential relief and on legal claim arising in the interest of substantial justice to avoid protracted litigation before or at the time of hearing of appeal.”

2. Learned counsel for the assessee at the outset contends that the issue in question about calculation DEPB profits while working out deduction u/s 80-HHC decided by the Hon’ble Supreme Court in the case of Topman Exports vs. CIT 342 ITR 49 (SC), holding that the face value of DEPB is part of normal business profit available for deduction u/s 80HHC and only profit on transfer of DEPB is to be dealt in accordance with Taxation Law Amendment Act, 2005.

2.1. However, in assessee’s own case the Hon’ble Punjab & Haryana High Court in Civil Writ Petition no. 16906 of 2007 dated 3-10-2012 has held by following Hon’ble Gujarat High Court in Guru Nanak Exports Vs. ACIT in CWP no. 11328 of 2009 wherein the Hon’ble Gujarat High Court has followed its own decision of Avani Exports & others vs. CIT & ors. (2012) 252 CTR (Guj) 473, has held that Taxation Law Amendment Act, 2005 is prospective being thereby that entire amount of DEPB becomes eligible for deduction u/s 80HHC since the assessment year involved is AY 2003-04 which is prior to Taxation Law Amendment Act, 2005 and therefore, the same is not applicable.

2.2. Ld. Counsel thus pleads that the issue may be set aside, restored back to the file of assessing officer to decide the same afresh in accordance with law, after giving the assessee an opportunity of being heard in this behalf. 3. Ld. DR is heard.

4. We have heard rival contentions and perused the material available on record. We find merit in the proposition of ld. Counsel for the assessee and set aside the issue back to the fie of assessing officer to decide the same afresh in accordance with law, keeping in view the relevant case laws and decide the issue after giving the assessee an opportunity of being heard.

5. In the result assessee’s appeal is allowed for statistical purposes.

Order pronounced in open court on 24-05-2013.

Sd/- Sd/-

(T.S. KAPOOR ) (R.P. TOLANI)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated the 24th day of May, 2013

*MP*

Copy forwarded to

1. APPELLANT

2. RESPONDENT

3. CIT

4. CIT (A)

5. CIT (ITAT), New Delhi.

AR,ITAT

NEW DELHI.