VIKAS KALRAversusTHE COMMISSIONER OF INCOME TAX-VIII, NEW DELHI

                    [2012] 3 S.C.R. 273


                       VIKAS KALRA                             A
                             v.
THE COMMISSIONER OF INCOME TAX-VIII, NEW DELHI
         (Civil Appeal No. 1915 of 2012)
                   FEBRUARY 08, 2012
                                                               B
        [S.H. KAPADIA, CJI, A.K. PATNAIK AND
               SWATANTER KUMAR, JJ.]

      Income Tax Act, 1961 - ss. 80 HHC and 28(iiid) -
 Deductions in respect of profits retained for export business C
- Claim for, by exporter-Assessing Officer held that the entire
 sale value of Duty Entitlement Pass Book (DEPB) represents
profit on transfer of DEPB u!s 28(iiid) and did not allow
exemption/deduction u/s 80 HHC - Order upheld by
 Commissioner of Income Tax (Appeals) - Appellate Tribunal D
relying on a decision of Special Bench of the Tribunal in Ml
s Topman Exports holding that the face value of DEPB would
be cash assistance against export and would fall u/s 28 (iiid)
 and sale value less the face value of DEPB would be profit
on transfer of DEPB - High Court remitted the case to the E
Appellate Tribunal since the decision of the Special Bench
was reversed by the High Court in CIT v Kalpataru Colours
and Chemicals :- As regards the additional issue whether the
 Tribunal was correct in law in ignoring explanation (baa) u/s
 80 HHC which specifically excludes profits of DEPB from total F
turnover, the High Court held that the issue was covered by
CIT v Shri Ram Honda Power Equip - On appeal held:
Appeals disposed of in terms of the judgment passed by this
Court in Mis Topman Exports v. Commissioner of Income
 Tax, Mumbai and other connected appeals setting aside the G
judgment of the High Court in CIT v Kalpataru Colours and
Chemicals; and Mis ACG Associated Capsules Private
Limited v. Commissioner of Income Tax, Central-IV, Mumbai
 and other connected appeals affirming the judgment of the
 High Court in CIT v Shri Ram Honda Power Equip.                H
                              273
    274       SUPREME COURT REPORTS             [2012] 3 S.C.R.


A        Appellant-exporter filed returns of income claiming
    deductions in respect of profits retained for export
    business under Section 80HHC of the Income Tax Act,
    1961. The Assessing Officer held that the entire sale value
    of Duty Entitlement Pass Book (DEPB) represented the
B   prnfit on transfer of DEPB under Section 28(iiid) of the Act
    and did not allow the amount of deduction under Section
    80HHC. The Commissioner of Income Tax (Appeals)
    upheld the order. On appeal, the Tribunal following the
    order of the ~pecial Bench of the Tribunal in the M/s
c   Topman Exports's case allowed the deductions holding
    that the face value of the DEPB would be 'cash
    assistance' against export and would fall under Section
    28(iiib) of the Act and the sale value less the face value
    of the DEPB would be profit on transfer of DEPB.
    Aggrieved the Revenue filed appeals. The High Court
0
    he~d that the tribunal had simply followed the decision of
    the Special Bench of the Tribunal which was reversed by
    the High Court in Commissioner of the Income Tax v.
    Kalpataru Colours and Chemicals ITA(L) 2887 of 2009 and
E   remitted the case to the tribunal to decide the appeals on
    merits. As regards the issue 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, the High Court held that the
    issue was covered by its judgment in the Commissioner
F   of Income- Tax v. Shri Ram Honda Power Equip (2007) 289
    ITR: 475 (Delhi). Therefore, the appellant filed the instant
    appeals.
          Disposing of the appeals, the Court
G      HELD: The instant appeals are disposed of in terms
  of the 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 High Court in Commissioner of
H the Income Tax v. Kalpataru Colours and Chemical; and in
VIKAS KALRA v. COMMISSIONER OF INCOME TAX- 275
                VIII, NEW DELHI

terms of the judgment in Civil Appeal arising out of 5.L.P.        A
(C) No.32450 of 2010 (Mis ACG Associated Capsules
Private Limited v. Commissioner of Income Tax, Central-IV,
Mumbai) and other connected appeal affirming the
judgment of the High Court in Commissioner of Income
Tax v. Shri Ram Honda Power Equip's case. [Para 5] [277-           B
D-F]
    Commissioner of the Income Tax v. Kalpataru Colours
and Chemicals ITA (L) 2887 of 2009; Commissioner of
Income-Tax v. Shri Ram Honda Power Equip (2007) 289 ITR
475 (Delhi); Mis. Topman Exports v. Commissioner of Income C
Tax, Mumbai [2012] 4 SCR 684; Mis ACG Associated
Capsules Private Limited v. Commissioner of Income Tax,
Central-IV, Mumbai 2012 (2) SCR 401, referred to.
                      Case Law Reference:
                                                                   D
   ITA (L) 2887 of 2009           Referred to        Para 4
   (2007) 289 ITR 475(Delhi) Referred to             Para 4
   2012 (2) SCR 401               Referred to        Para 5
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.                E
1915 of 2012.

     From the Judgment & Order dated 21.02.2011122.03.2011
of the High Court of Delhi at New Delhi in ITA No. 308 of 2011.

                                With
                                                                   F
C.A. No. 1916 of 2012.

       D.R. Thadani, Ashwani Kumar for the Appellant.

    RP. Bhatt, V. Shekhar, Arijit Prasad, D.D. Kamat, Aman         G
Ahluwalia, Kunal Bahri, Fuzail A. Ayyubi, Abhigya, Jatin Rajput,
Deepakshi Jain, Vishal Saxena, B.V. Bairam Das for the
Respondent.
       The Judgment of the Court was delivered by
                                                                   H
     276       SUPREME COURT REPORTS              [2012] 3 S.C.R.


A          A.K. PATNAIK, J. 1. 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 dated
     21.02.2011 as modified by the order dated 22.03.2011 of the
!3   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
C 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
o 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
E 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 Mumbai in the case of Mis Topman Exports
  allowed the appeals and held that the face value of the DEPB
  will be 'cash assistance' against export and will fall under
F 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
G 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
H
VIKAS KALRA v. COMMISSIONER OF INCOME TAX- 277
       VIII, NEW DELHI [A.K. PATNAIK, J.]
Bench of the Tribunal at Mumbai in M/s Topman Exports and          A
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    B
the appeals of the appellant on merits after taking into account
the facts of the cases. In ITA No.308 of 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          c
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           D
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          E
judgment in Civil Appeal arising out of S.L.P. (C) No.32450 of
2010 (Mis 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              F
Power Equip (supra). These two appeals are disposed of in
terms of our aforesaid two judgments. There shall be no order
as to costs.

N.J.                                    Appeals disposed of.