Income Tax Appellate Tribunal - DelhiPurolator India Ltd.,, vs Assessee on 18 February, 2011IN THE INCOME TAX APPELLATE TRIBUNAL
                               [ DELHI BENCH "G" DELHI ]


     BEFORE SHRI I. P. BANSAL, JM & SHRI K. D. RANJAN, AM

                             I. T. Appeal No. 5685 (Del) of 2004.
                                 Assessment year : 2001-02.


M/s. Purolater India Ltd. [now known as                    Dy. Commissioner of Income-tax,
Mahle Filter System India Limited]               Vs.       C i r c l e : 14 (1),
1 - Sri Aurobindo Marg,                                    N E W D E L H I.
N E W D E L H I - 110 016.

P A N / G I R No. AAA CP 5890 Q.
      ( Appellant )                                                  ( Respondent )


                       Assessee by : Shri Neeraj Jain, C. A.; &
                                            Shri Rohit Garg, C. A.;

                       Department by : Shri A. K. Monga, Sr. D. R.;


                                          O R D E R.
PER K. D. RANJAN, AM :This appeal by the assessee for assessment year 2001-02 arises out of order of the ld. CIT
(Appeals)-XVII, New Delhi.2.     In this case ITAT, Delhi Bench "G" vide order consolidated dated 18th February, 2011 in
ITA. No. 5685 (Del) of 2004 and 1927 (Del) of 2006 for assessment years 2001-02 and 2002-03
decided the appeals. One of the issues related to treatment of DEPB receipts for the purpose of
assessment. ITAT following the decision of Special Bench of the Tribunal in the case of
Topman Exports Vs. ITO 33 SOT 337 (Mum.) [SB] held that the amount of DEPB credit2I. T. Appeal No. 5685 (Del) of 2004.received / receivable will be chargeable to tax under section 28(iiid) of the Act. The assessing
officer was directed to exclude only the profit on transfer of DEPB from the profits of business
for the purpose of computing deduction under section 80-HHC of the Act.3.     The assessee appealed against the order of the ITAT before Hon'ble Delhi High Court.
Hon'ble Delhi High Court vide their order dated 22/03/2011 had set aside the matter to the file of
the ITAT by holding that the decision of Special Bench in the case of Topman Exports (supra)
stands over-ruled by the decision of Hon'ble Bombay High Court in the case ofCIT Vs.
Kalpataru Colours & Chemicals[2010] 328 ITR 451 (Bom.) with the directions to decide the
appeal on merits after taking into account actual position of the case.4.     During the course of hearing the ld. AR of the assessee conceded that the issue is
squarely covered by the decision of Hon'ble Bombay High Court in the case ofCIT Vs.
Kalpataru Colours & Chemicals(supra). On the other hand, the ld. Sr. DR supported the order
of the ld. CIT (Appeals). It was also submitted that the entire amount of DEPB receipts will be
taxable as business income and, therefore, no deduction under clause (baa) to section 80-HHC of
the Act will be available.He also placed reliance on the decision of Hon'ble Bombay High
Court in the case ofCIT Vs. Kalpataru Colours & Chemicals(supra).5.     We find that this issue is covered by the decision of Hon'ble Bombay High Court in the
case ofCIT Vs Kalpataru Colours & Chemicals(supra). Hon'ble Bombay High Court has held
that the amount received on transfer of DEPB credit including the face value of the DEPB credit
would constitute profits of business under section 28(iiid) of the Act and, therefore, the entire
amount of DEPB received has to be excluded under clause (baa) of Explanation to section 80-
HHC of the Act. Hon'ble High Court while arriving at this decision observed that when section
28(iiid) specifically   deals with profits realized on transfer of DEPB credit, it would be
impermissible as a matter of first principle to bifurcate the face value of the DEPB and the
amount received in excess of face value of DEPB.Since the issue is now covered by the
decision of Bombay High Court in the case ofCIT Vs Kalpataru Colours & Chemicals(supra)3I. T. Appeal No. 5685 (Del) of 2004.we set aside this matter to the file of the assessing officer with the direction to decide the issue
relating to exclusion of DEPB credits including profits thereon as per the decision of Hon'ble
Bombay High CourtCIT Vs Kalpataru Colours & Chemicals(supra) after affording the assessee
a reasonable opportunity of being heard.6.     In the result, the appeal filed by the assessee is allowed, for statistical purposes.The order pronounced in the open court on : 26th August, 2011.Sd/-                                                                  Sd/-
[ I. P. BANSAL ]                                                      [ K. D. RANJAN ]
JUDICIAL MEMBER                                                     ACCOUNTANT MEMBER



Dated : 26th August, 2011.
*MEHTA*

" Copy of the order forwarded to : -
1.     Appellant.
2.     Respondent.
3.     CIT,
4.     CIT (Appeals),
5.     Sr. DR, ITAT, New Delhi.
          True Copy.           By Order.


                       Assistant Registrar, ITAT. "