HIGH COURT OF DELHI
Date of Decision: 26th March, 2012.
+ ITA 1191/2011
PAL ENTERPRISES Vs. CIT
ORDER
SANJIV KHANNA,J: (ORAL)
Having heard counsel for the parties, we frame the following substantial question of law:
“Whether the Income Tax Appellate Tribunal has erred in holding that duty entitlement pass book credit was cash assistance within the meaning of clause (iiib) to Section 28 of the Income Tax Act, 1961 and the entire amount including the premium received on transfer of DEPB was “profit” under clause (iiid) of Section 28 of the aforesaid Act and accordingly exemption under Explanation (baa) to Section 80HHC should be calculated?”
2. The appellant-assessee is a partnership firm engaged in the business of manufacture and export of leather garments. During the assessment year in question i.e. 2002-03, it had earned incentive i.e. duty drawback of Rs.9,77,618/- and credit under Duty Entitlement Pass Book Scheme (DEPB) of Rs.5,72,00,818/- totaling Rs.5,81,77,436/- on the exports made by them.
3. The DEPB was transferred by the assessee to others and profit of Rs.20,75,382/- was earned by way of premium.
4. The assessee had claimed deduction of Rs.2,77,48,947/- under Section 80HHC of the Income Tax Act, 1961 („Act‟, for short) after accounting for these export incentives and other income.
