AGK 1 itxal1276-10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.1276 OF 2010 The Commissioner of Income Tax, Central - IV, Mumbai ..Appellant. Versus M/s.Associated Capsules Private Limited ..Respondent. Ms.Padma Divakar for the appellant. Mr.Atul K. Jasani for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 6 August 2010. P.C. : 1. This appeal by the Revenue arises out of an order of the Income Tax Appellate Tribunal dated 15 December 2009 for assessment year 2003-2004. Four questions of law have been formulated by the Revenue, which are as follows : “1. Whether, on the facts and in the circumstances of the case, the Tribunal, in law, was justified in holding that the entire amount received on the sale of DEPB entitlements does not represent profit chargeable u/s. 28(iiid) of the Income Tax Act, 1961 and it requires an artificial cost to be interpolated ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal, in law, was justified in holding that the face value of DEPB as covered under Section 28(iiib) and the profit on transfer of DEPB i.e. excess of sale price over the face value of AGK 2 itxal1276-10 DEPB as falling u/s. 28(iiid) is to be considered in computation of deduction u/s.80HHC as held in the case of M/s.Topman Exports in ITA No.5769/M/06 by the ITAT Special Bench vide its order dated 11-8-2009 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal, in law, was justified in ignoring the decision of the Hon’ble Bombay High Court in CIT, City III V/s. Asian Star Company Limited in ITA No.200 of 2009 dated 18/19-3-2010 and directing the department to apply the decision of the ITAT (SB), Mumbai in the case of Lalsons Enterprise Vs. DCIT (89 ITD 25) and the decision of the Delhi High Court in the case of CIT Vs. Shree Ram Honda Power Equipments (289 ITR 475) (Del.) ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal, in law, was justified in directing to reduce the rent paid from the rent received while considering the rental income for the purpose of exclusion of business income for computing deduction u/s. 80HHC of the Act by ignoring the decision of the Hon’ble Bombay High Court in CIT, City III Vs. M/s.Asian Star Company Limited in ITA No.200 of 2009 dated 18/19-3-2010 ? 2. The learned Counsel appearing on behalf of the Revenue and Counsel for the assessee are agreed in stating before the Court that since the Tribunal has remanded the proceedings back to the Assessing Officer, this Court may not be inclined to interfere with the order of remand, save and except to clarify that upon remand the Assessing Officer shall have due regard to the judgment of this Court delivered on 29 June 2010 in Commissioner of Income Tax V/s. Kalpataru Colours and Chemicals (Income Tax Appeal (L) No.2887 of 2009). Accordingly, the Assessing Officer shall on remand decide the issue before him after having due regard to the judgment of this Court in the case of Kalpataru Colours and Chemicals (supra). AGK 3 itxal1276-10 3. As regards the third and fourth question, the Tribunal has remanded the proceedings back to the Assessing Officer. In view thereof, it is not necessary for this Court to entertain the appeal, save and except to clarify that upon remand the Assessing Officer shall dispose of the issue in accordance with law, having due regard to the judgment of this Court in Commissioner of Income Tax V/s. M/s.Asian Star Company Limited (Income Tax Appeal No.200 of 2009) decided on 18/19 March 2010. 4. Both the learned Counsel are agreed to the aforesaid direction. The appeal is accordingly disposed of. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)