Sri Polisetty Somasundaram., Guntur v. The ACIT, Circle-2(1)., Guntur

ITA 203/VIZ/2008 | 2004-2005
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 20325314 RSA 2008
Bench Visakhapatnam
Appeal Number ITA 203/VIZ/2008
Duration Of Justice 1 year(s) 9 month(s) 22 day(s)
Appellant Sri Polisetty Somasundaram., Guntur
Respondent The ACIT, Circle-2(1)., Guntur
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 22-01-2010
Assessment Year 2004-2005
Appeal Filed On 31-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.203/VIZAG/2008 ASSESSMENT YEAR : 2004 - 05 M/S. POLISETTY SOMASUNDARAM GUNTUR VS. ACIT CIRCLE-2(1) GUNTUR (APPELLANT) (RESPONDENT) PAN NO.AACFP 7251J APPELLANT BY: SHRI U.L.N. SUDHAKAR ADVOCATE RESPONDENT BY: SHRI SUBRATA SARKAR DR ORDER PER SHRI B.R. BASKARAN ACCOUNTANT MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A) PERTAINING TO THE ASSESSMENT YEAR 2004-05. THIS APPEAL IS WITH REGARD TO THE PROFIT ON TRANSFER OF DEBP LICENSES I N ORDER TO COMPUTE DEDUCTION U/S 80HHC OF THE ACT. NOW THE CONTROVER SY WITH REGARD TO THE PROFIT ON TRANSFER OF DEPB LICENSES HAS BEEN SET AT REST BY THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL DATED 11.8.2009 IN TH E CASE OF M/S. TOPMAN EXPORTS & OTHERS (ITA NO.5769/MUM/2006) (318 ITR (A T) 87) IN WHICH THE MATTER HAS BEEN RESTORED TO THE A.O. TO RE-ADJUDICA TE THE ISSUE IN TERMS INDICATED IN THE ORDER. THE FINDING OF THE SPECIAL BENCH IN THAT ORDER ARE REPRODUCED HEREUNDER FOR THE SAKE OF REFERENCE: THE QUESTION RAISED BEFORE THE SPECIAL BENCH HAS T WO PARTS. IN SO FAR AS THE FIRST PART: WHETHER THE ENTIRE AMOUNT R ECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PROFIT CHARGEABLE UNDE R SECTION 28(IIID) OF THE INCOME TAX ACT IS CONCERNED WE A NSWER IT IN NEGATIVE AND THE SECOND PART OF THE QUESTION: OR TH E PROFIT REFERRED TO THEREIN REQUIRES ANY ARTIFICIAL COST TO BE INTER POLATED? IS REPLIED IN AFFIRMATIVE TO THE EXTENT THAT THE FACE VALUE OF DEPB SHALL BE DEDUCTED FROM THE SALE PROCEEDS. AS REGARDS THE GR OUNDS RAISED IN THESE APPEALS AGAINST THE DENIAL OF DEDUCTION U/S 8 0HHC IN FULL OR PART WE FIND THAT THE COMPUTATION OF PROFITS DERIV ED FROM EXPORTS AND THE RESULTANT AMOUNT OF DEDUCTION UNDER THIS SE CTION CAN BE MADE ONLY WHEN THE DECISION IS TAKEN ON THE AMOUNT AND THE TIMING OF TAXABILITY OF THE FACE VALUE OF DEPB AND THE PROFIT ON ITS SALE. ON THIS ISSUE WE HOLD THAT THE FACE VALUE OF DEPB IS 2 CHARGEABLE TO TAX U/S 28(IIIB) AT THE TIME OF ACCRU AL OF INCOME THAT IS WHEN THE APPLICATION FOR DEPB IS FILED WITH THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFIT ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OV ER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28(IIID) AT TH E TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB SHALL ALSO HOLD GOOD F OR DFRC ON BOTH ITS COMPONENTS VIZ THE FACE VALUE OF DRC AND PROFIT ON ITS TRANSFER EXCEPT FOR THE FACT THAT THE PROFIT ON SA LE OF DFRC SHALL BE CHARGED TO TAX U/S 28(IIIE). THERE IS NO DISPUTE A BOUT THE DUTY DRAWBACK WHICH SHALL BE CHARGEABLE TO TAX AT THE T IME OF ACCRUAL OF INCOME U/S 28(IIIC) WHEN APPLICATION IS FILED WITH THE COMPETENT AUTHORITY AFTER MAKING EXPORTS. SINCE THE NECESSAR Y FACTS FOR THE DETERMINATION OF THE QUANTUM OF DEDUCTION U/S 80HHC AS DISCUSSED ABOVE ARE NOT AVAILABLE ON RECORD WE T HEREFORE SET ASIDE THE IMPUGNED ORDERS AND DIRECT THE AO TO COMP UTE THE AMOUNT OF RELIEF IN ACCORDANCE WITH THE VIEW EXPRES SED BY US HERE IN ABOVE. 3. WE THEREFORE FOLLOWING THE ORDER OF THE SPECIAL BENCH SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE F ILE OF THE A.O. TO RE- ADJUDICATE THE IMPUGNED ISSUE IN THE LIGHT OF THE R ATIO LAID DOWN BY THE TRIBUNAL. 4. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 22-01-2010. SD/- SD/- (SUNIL KUMAR YADAV) (BR BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM 22 ND JANUARY 2010 COPY TO 1 M/S. POLISETTY SOMASUNDARAM D.NO.8-24-31 MANGAL AGIRI ROAD GUNTUR- 522 001. 2 THE ACIT CIRCLE-2(1) LAKSHMIPURAM GUNTUR-522 0 06. 3 THE CIT GUNTUR 4 THE CIT(A) GUNTUR 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM