Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.  1915  OF 2012  (Arising out of SLP (C) NO. 16403 of 2011)

  Vikas Kalra                                                    … Appellant

Versus

The Commissioner of Income Tax-VIII,  New Delhi                                                   … Respondent

WITH

CIVIL APPEAL No. 1916  OF 2012  (Arising out of SLP (C) NO. 20270 of 2011)

J U D G M E N T

A. K. PATNAIK, J.

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  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 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 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 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  

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Mumbai in the case of M/s Topman Exports allowed the  

appeals and held that the face value of the DEPB will be  

‘cash  assistance’  against  export  and  will  fall  under  

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  

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  Bench  of  the  Tribunal  at  

Mumbai in M/s Topman Exports and 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 the appeals of the appellant on merits after taking  

into  account  the  facts  of  the  cases.   In ITA No.308 of  

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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  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  

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 judgment in Civil Appeal arising out of S.L.P.  

(C)  No.32450  of  2010  (M/s  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  Power  Equip (supra).  

These  two  appeals  are  disposed  of  in  terms  of  our  

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aforesaid two judgments.  There shall be no order as to  

costs.

.…………………….CJI. (S. H. Kapadia)

.……………………….J.                                                                      (A. K.  Patnaik)

………………………..J.                                                                    (Swatanter  Kumar)

New Delhi, February 08, 2012.    

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