IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.M. Nos.20932-33-CII of 2010 & C.M. No.29459-CII of 2009 in/and I.T.A. No.681 of 2009 (O&M) Date of decision: 27.8.2010 Abhishek Industries Ltd. -----Appellant. Vs. Assistant Commissioner of Income Tax. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Sandeep Goyal, Advocate for the appellant. Mr. Rajesh Katoch, Standing Counsel for Mr. Dinesh Goyal, Standing Counsel for the respondent. --- ADARSH KUMAR GOEL, J. 1. Notice of motion. Mr. Rajesh Katoch, Advocate, present in Court, accepts notice on behalf of Mr. Dinesh Goyal, Standing Counsel for the revenue. 2. Delay condoned. Heard on merits. 3. This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 31.3.2009 in I.T.A. No.582/CHANDI /2007 passed by the Income Tax Appellate Tribunal, Chandigarh, proposing to raise following substantial question of law:- I.T.A. No.681 of 2009 “(i) Whether the appellant-assessee is entitled to the benefit of Section 80-HHC(3) on the sale of DEPB? (ii) Whether ion the facts and circumstances of the case, the Ld. Tribunal is justified in holding that the assessee has failed to fulfill the conditions laid down in third proviso to Section 80-HHC(3)? (iii) Whether on the facts and circumstances of the case, the finding of Ld. Tribunal is perverse to the extent that assessee has not produced any material on record to show that conditions laid down in third proviso to Section 80-HHC(3) have been fulfilled? (iv) Whether the Ld. Commissioner was justified in invoking powers of Section 263 for revision of the Assessment order on a debatable question?” 4. The Assessing Officer allowed benefit of Section 80HHC of the Act in respect of export income but the Commissioner exercising power under Section 263 of the Act held the assessment order to be erroneous and prejudicial to the interests of the revenue, to the extent of giving benefit of income derived from sale of DEPB for purposes of Section 80HHC of the Act. 5. It was held that conditions prescribed under Clause (a) and (b) of the third Proviso to Section 80HHC of the Act having not been met, the benefit thereof could not be given. The Tribunal affirmed the said view observing:- 2 I.T.A. No.681 of 2009 “13. In this case we find that the Commissioner is justified in observing that the Assessing Officer has not recorded as to in what manner the conditions in clauses (a) and (b) of the 3rd proviso to section 80- HHC(3) are satisfied by the assessee. Therefore, the action of the Assessing Officer in allowing the benefit under Section 80-HHC in terms of the afore-stated proviso cannot be said to be appropriate. The Commissioner in para 11.2 of his order has concluded that there is no material or evidence led by the assessee to demonstrate as to how the conditions prescribed in clause (a) and (b) of the proviso are satisfied. Before us also, on this issue, no material has been led which would enable us to infer differently than the Commissioner. Hence, we sustain the order of the Commissioner withdrawing the deduction under Section 80-HHC allowed in respect of 90% of DEPB income. Hence, the assessee fails on this aspect.” 6. We have heard learned counsel for the parties. 7. The proviso in question is as under:- “Provided also that in the case of an assessee having export turnover exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub- section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiid) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if 3 I.T.A. No.681 of 2009 the assessee has necessary and sufficient evidence to prove that,— (a) he had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme.” 8. There is nothing to show that case of the assessee was covered by Clause (a) or Clause (b) which is a condition precedent for the benefit from DEPB to be taken into account under third proviso to Section 80 HHC of the Act. In absence thereof, the Commissioner was justified in interfering under Section 263 of the Act, which view has been rightly upheld by the Tribunal. 9. No substantial question of law arises. 10. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 27, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 4