I.  Recent Updates:

1.   M/S TOPMAN EXPORTS Vs. COMMISSIONER OF INCOME TAX, SLP (C) NO. 26558 OF 2010, DATE OF JUDGMENT: 08/02/2012, SUPREME COURT OF INDIA

ISSUE:

Whether the entire amount received by an assessee on sale of the Duty Entitlement Pass Book (for short ‘the DEPB’) represents profit on transfer of DEPB under Section 28(iiid) of the Income Tax Act, 1961 (for short ‘the Act’) for the purpose of the computation of deduction in respect of profits retained for export business under Section 80HHC of the Act.

Held:

22. Where an assessee has an export turnover exceeding Rs.10 crores and has made profits on transfer of DEPB under clause (iiid) of Section 28, he would not get the benefit of addition to export profits under third or fourth proviso to sub-section (3) of Section 80HHC, but he would get the benefit of exclusion of a smaller figure from “profits of the business” under explanation (baa) to Section 80HHC of the Act and there is nothing in explanation (baa) to Section 80HHC to show that this benefit of exclusion of a smaller figure from “profits of the business” will not be available to an assessee having an export turnover exceeding Rs.10 crores. In other words, where the export turnover of an assessee exceeds Rs.10 crores, he does not get the benefit of addition of ninety per cent of export incentive under clause (iiid) of Section 28 to his export profits, but he gets a higher figure of profits of the business, which ultimately results in computation of a bigger export profit.

The High Court, therefore, was not right in coming to the conclusion that as the assessee did not have the export turnover exceeding Rs.10 crores and as the assessee did not fulfill the conditions set out in the third proviso to Section 80HHC (iii), the assessee was not entitled to a deduction under Section 80HHC on the amount received on transfer of DEPB and with a view to get over this difficulty the assessee was contending that the profits on transfer of DEPB under Section 28 (iiid) would not include the face value of the DEPB. It is a well-settled principle of statutory interpretation of a taxing statute that a subject will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in explanation (baa) to Section 80HHC read with the words used in clauses (iiid) and (iiie) of Section 28, the assessee was entitled to a deduction under Section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee.

(Please click here for judgment)

 

2.  AL-KABEER EXPORTS LIMITED Vs. COMMISSIONER OF INCOME TAX, S.L.P. (C) Nos. 33932-33933/2010, Date: 03/02/2012, SUPREME COURT OF INDIA

For s. 115JA/JB s. 80HHC deduction to be computed as per P&L Profits & not normal provisions

In computing “book profits” u/s 115JA & 115JB, the assessee claimed that the deduction admissible there under u/s 80HHC had to be computed on the basis of the “book profits” and not on the basis of the income computed under the normal provisions of the Act. This claim was upheld by the Tribunal   On appeal by the Revenue, the High Court   reversed the Tribunal. On appeal by the assessee, HELD reversing the High Court:

In view of this Court's Order in the case of Commissioner of Income-Tax vs. Bhari Information Technology Systems (P) Ltd. [S.L.P. (C) No.33750 of 2009], upholding the judgment of the Special Bench of Income Tax Appellate Tribunal in the case of Deputy Commissioner of Income Tax vs. Syncome Formulations (I) Ltd., reported in (2007) 106 ITD 193, the impugned judgment of the High Court is set aside and the judgments of the ITAT in these cases stand affirmed. The civil appeals filed by the assessee are, accordingly, allowed with no order as to costs.

(Please click here for judgment)

 

II.  Today's News : 

1. National Competition Policy to be launched on March 31: Moily  (Click for detail)

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3. SC pulls up Sebi for leaking Sahara Group’s proposal to media  (Click for detail)

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1. Government of Himachal Pradesh
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