The order of the Bench was delivered by
Chandramohan Garg (Judicial Member).-This miscellaneous application has been filed against the order of this Tribunal vide order, dated December 16, 2011, passed in I. T. A. No. 5563/Del/2010, for the assessment year 2002-03.
2. The main contentions and submissions of the applicant-assessee are that the appeal was dismissed on the ground thus :
"The issue involved in the present case is now covered by the decision of the hon'ble Bombay High Court in the case of CIT v. Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom) referred to above and in the light of that decision, we do not find any reason to interfere with the order of the learned Commissioner of Income- tax (Appeals), which is accordingly upheld."
3. The assessee's representative further submitted that consequent to the decision of the hon'ble Supreme Court in the case of Topman Exports v. CIT [2012] 342 ITR 49 (SC) which has reversed the decision of the hon'ble Bombay High Court in the case of Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom) and held that the face value of the DEPB will fall under clause (iiib) of section 28 of the Income-tax Act, 1961 (for short "the Act") and the difference between sale value and face value of DEPB will fall under clause (iiid) of section 28 of the Act. The authorised representative further submitted that as per the above decision of the hon'ble apex court in the case of Topman Exports v. CIT [2012] 342 ITR 49 (SC), the face value of DEPB will fall under clause (iiib) of section 28 of the Act and the same is binding on the Tribunal as well. The authorised representative finally submitted that the ratio laid down by the hon'ble Supreme Court may kindly be applied for rectifying the order under section 254(2) of the Act.
4. Replying to the above contentions and submissions of the authorised representative, the learned Departmental representative submitted that the Tribunal passed order in issue as per the provisions of the Act and by following the decision of the hon'ble Bombay High Court in the case of Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom) which was relevant and prevailing at that time when impugned order was passed. The Departmental representative further submitted that if it is found just and proper, then the Revenue has no serious objection if the order is recalled or rectified as per subsequent decision of the hon'ble Supreme Court in the case of Topman Exports v. CIT [2012] 342 ITR 49 (SC).
5. On a careful consideration of above facts and contentions of both parties and on thoughtful perusal of material placed on record, we observe that the appeal of the assessee was dismissed by our predecessors, the then presiding officers of the Tribunal by passing order dated, December 16, 2011, with following observations and findings :
"We have heard both parties and have carefully perused the material on record. It is now an admitted position that the decision of the Spe cial Bench of the Income-tax Appellate Tribunal, Mumbai in the case of Topman Exports v. ITO [2009] 318 ITR (AT) 87 (Mum) [SB] on which reliance was placed by the assessee before the Assessing Officer, has been overruled by the decision of the hon'ble Bombay High Court in the case of CIT v. Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom), where it has been held that the entirety of the sale consideration of DEPB would fall within the purview of section 28(iiid) of the Act. Thus, the sale proceeds of DEPB including face value shall be treated as profit assessable under section 28(iiid) of the Act. The case of the assessee before the Assessing Officer that only the profit element in DEPB receipts is to be reduced from the profit for the purpose of computing deduction under section 80HHC on the basis of decision of the Special Bench of the Income-tax Appellate Tribunal in the case of Topman Exports [2009] 318 ITR (AT) 87 (Mum) [SB] is thus not maintainable. Further, it is admitted by the assessee that the twin conditions referred to in the third proviso to section 80HHC(3), i.e., (1) the assessee had an option to choose either the duty drawback or duty entitlement pass book scheme, being the duty remission scheme, and (2) 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, are not satisfied in the assessee's case. The learned Commissioner of Income-tax (Appeals) has recorded a finding that the assessee has an export turnover exceeding Rs. 10 crores and has not fulfilled the conditions set out in the third proviso to section 80HHC and therefore, the assessee is not entitled to a deduction under section 80HHC on the amount received on transfer of DEPB in the proportion as the export turnover bears to the total turnover of the business carried out by the assessee. The issue involved in the present case is now covered by the decision of the hon'ble Bombay High Court in the case of Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom) referred to above and in the light of that decision, we do not find any reason to interfere with the order of the learned Commissioner of Income-tax (Appeals), which is accordingly upheld."
6. From a bare reading of the above order of the Tribunal we clearly observe that the Tribunal has followed decision of the hon'ble Bombay High Court in the case of Kalpataru Colours and Chemicals while dismissing the appeal of the assessee/applicant/appellant. From a careful perusal of the decision of the hon'ble apex court, dated February 8, 2012, in the case of Topman Exports v. CIT [2012] 342 ITR 49 (SC), we also observe that the decision of the hon'ble Bombay High Court in the case of Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom) has been reversed with the following observations of the hon'ble Supreme Court thus (page 67 of 342 ITR) :
"The aforesaid discussion would show that where an assessee has an export turnover exceeding Rs. 10 crores and has made profits on transfer of DEPB under clause (d) of section 28, he would not get the benefit of addition to export profits under third or fourth proviso to sub-section (3) of section 80HHC, but he would get the benefit of exclusion of a smaller figure from 'profits of the business' under Explanation (baa) to section 80HHC of the Act and there is nothing in Explanation (baa) to section 80HHC to show that this benefit of exclusion of a smaller figure from 'profits of the business' will not be available to an assessee having an export turnover exceeding Rs. 10 crores. In other words, where the export turnover of an assessee exceeds Rs. 10 crores, he does not get the benefit of addition of ninety per cent. of export incentive under clause (iiid) of section 28 to his export profits, but he gets a higher figure of profits of the business, which ultimately results in computation of a bigger export profit. The High Court, therefore, was not right in coming to the conclusion that as the assessee did not have the export turnover exceeding Rs. 10 crores and as the assessee did not fulfil the conditions set out in the third proviso to section 80HHC(iii), the assessee was not entitled to a deduction under section 80HHC on the amount received on transfer of the DEPB and with a view to get over this difficulty the assessee was contending that the profits on transfer of the DEPB under section 28(iiid) would not include the face value of the DEPB. It is a well- settled principle of statutory interpretation of a taxing statute that a subject will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in Explanation (baa) to section 80HHC read with the words used in clauses (iiid) and (iiie) of section 28, the assessee was entitled to a deduction under section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee.
The impugned judgment and orders of the Bombay High Court are accordingly set aside. The appeals are allowed to the extent indicated in this judgment. The Assessing Officer is directed to compute the deduction under section 80HHC in the case of the appellants in accordance with this judgment."
7. The learned authorised representative has also placed reliance on the decision of the hon'ble jurisdictional High Court of Delhi in the case of Lakshmi Sugar Mills Co. Ltd. v. CIT [2013] 212 Taxman 118 (Delhi) (Mag) wherein is has been held that :
"It is apparent from section 254 that a time limit of four years from the date of the order has been prescribed in respect of the exercise of the power of rectification of a mistake apparent from the record.
There is absolutely no doubt that had an appeal or other proceeding been pending in respect of the order of the Tribunal in the instant case, when the decision in CIT v. Gold Coin Health Food P. Ltd. [2008] 304 ITR 308 (SC) was rendered, that decision would have to be followed. But, as it happens, no appeal or other proceeding was pending. However, the period of four years stipulated in section 254(2) had not elapsed. Thus, once the fact has been recognised that the Supreme Court decision in Gold Coin Health Food P. Ltd. [2008] 304 ITR 308 (SC) operates retrospectively and, therefore, it has to be regarded as the law as it existed when the order was passed by the Tribunal, there is a clear mistake apparent from the record. That mistake cannot be allowed to remain. The only limitation for correcting the mistake is that imposed by the provisions of section 254(2) itself and that is only with respect to time. The application for rectification having been made in time, the order of the Tribunal recalling its earlier order cannot be faulted."
8. The learned authorised representative has also placed reliance on the decision of the Income-tax Appellate Tribunal Bench "A" Chandigarh, dated June 22, 2012 in the case of R. N. Gupta and Co. Ltd. v. Asst. CIT in M. A. Nos. 48 to 50/Chd/2012 (in I. T. A. Nos. 926 to 928/Chd/2011 for the assessment years 2001-02, 2002-03 and 2003-04) where in the same factual matrix the Tribunal held as under thus :
"4. The Tribunal vide its order dated November 21, 2011, decided the above grounds against the assessee following the judgment of the hon'ble Bombay High Court in the case of CIT v. Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom). It is observed that the hon'ble Supreme Court in the case of Topman Exports v. CIT reported in [2012] 342 ITR 49 (SC) has set aside the judgment and the orders of the hon'ble Bombay High Court in the case of CIT v. Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom), Topman Exports and other connected appeals and the matter has been remanded to the Assessing Officer with certain directions and guidelines. Shri Subhash Aggarwal, learned counsel for the assessee submitted that the issue in respect to the claim of deduction under section 80HHC of the receipt of DEPB entitlement stands finally settled by the hon'ble Supreme Court in the case of Topman Exports (supra), therefore, the order passed by the Tribunal deserves to be rectified as the mistake is apparent from record. Taking into consid eration the entire facts and circumstances of the present case as well as the settled legal position, we are of the view that the order of the Tribunal deserves to be rectified as the mistake is apparent from record. Accordingly, we rectify our order, dated November 21, 2011, with respect to common grounds Nos. 1 and 2 passed in I. T. A. Nos. 926 to 928/Chd/2011 relating to the assessment years 2001-02, 2003-04 and 2004-05 holding that the issue raised by the assessee is squarely covered by the ratio laid down by the hon'ble Supreme Court in the case of Topman Exports v. CIT reported in [2012] 342 ITR 49 (SC), and hence we remand the issue to the Assessing Officer with a direction to recompute the deduction under section 80HHC of the Income-tax Act, 1961 (in short 'the Act'), in accordance with law and in the light of the judgment of the hon'ble Supreme Court in the case of Topman Exports v. CIT (supra). The Assessing Officer is also directed to give an opportunity of being heard to the assessee in the matter. For statistical purposes, the common grounds Nos. 1 and 2 of the appeals bearing I. T. A. Nos. 926 to 928/Chd/2011 are allowed. The order of the Tribunal, dated November 21, 2011, is rectified to the above extent."
9. In view of the above foregoing discussion, we are of the opinion that the Tribunal passed the impugned order on December 16, 2011 and the decision of the hon'ble Supreme Court in the case of Topman Exports v. CIT (supra) was delivered on February 8, 2012, subsequently. The learned authorised representative submitted that the issue in respect of the claim of deduction under section 80HHC of the receipt of DEPB entitlement stands finally settled by the hon'ble apex court in the case of Topman Exports v. CIT (supra) and therefore, the order of the Tribunal deserves to be rectified as mistake has crept on the face of record by the above subsequent decision of the hon'ble Supreme Court. The learned authorised representative submitted that above issue of the claim of deduction under section 80HHC of the Act has been settled by the hon'ble Supreme Court in favour of the assessee.
10. On a careful consideration of the above submissions, we are of the considered view that subsequent decision of the hon'ble Supreme Court operates retrospectively and, therefore, it had to be regarded as it existed when the impugned order was passed by the Tribunal and, thus, a mistake has crept on the face of the record which could not be allowed to remain. We further note that the limitation for correcting mistake, that is imposed by the provisions of section 254(2), is only with respect to time and since the miscellaneous application in hand for rectification had been made within the prescribed time limitation, the order dated December 16, 2011, in I. T. A. No. 5563/Del/2010 deserves to be rectified and we proceed to rectify the same by respectfully following decision of the hon'ble apex court in the case of Topman Exports v. CIT and decision of the hon'ble jurisdictional High Court of Delhi in the case of Lakshmi Sugar Mills Co. Ltd. v. Asst. CIT (supra) as follows. Accordingly, we rectify our order dated December 16, 2011, with respect to the sole ground of the assessee in I. T. A. No. 5563/ Del/2010 for the assessment year 2012-13 by holding that the issue is squarely covered by the ratio laid down by the hon'ble Supreme Court in the case of Topman Exports. Hence, we remand the issue to the file of the Assessing Officer with a direction to recompute the deduction under section 80HHC of the Act in accordance with the relevant provisions of the Act and in the light of the decision of the hon'ble Supreme Court in the case of Topman Exports. The Assessing Officer is also directed to provide due opportunity of hearing for the assessee during the remanded proceedings.
11. The sole ground of the assessee in I. T. A. No. 5563/Del/2010 is deemed to be allowed for statistical purposes in the manner as indicated above. The order of the Tribunal dated December 16, 2011, is rectified to the extent as mentioned hereinabove.
12. In the result, this miscellaneous application filed by the assessee stands allowed.
The order pronounced in the open court on July 1, 2014.