| Case ID |
2b880daf-d258-41e8-b0be-112f0b8d4fb4 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 2012 |
| Hearing Date |
Jan 01, 2012 |
| Decision |
The Supreme Court ruled that the Duty Entitlement Pass Book (DEPB) is considered cash assistance under section 28(iiib) of the Income-tax Act, 1961, and is taxable as income at the time of accrual, even before its transfer. The Court clarified that while the face value of DEPB is taxable under section 28(iiib), the profits realized on its transfer are taxable under section 28(iiid) and should be calculated as the difference between the sale value and the face value of the DEPB. The High Court's ruling that the entire sale proceeds represented profits was incorrect, as it failed to recognize the distinct treatments for cash assistance and profits on transfer. |
| Summary |
The case of Topman Exports vs. Commissioner of Income Tax deals with the taxation of income from the Duty Entitlement Pass Book (DEPB) under the Income-tax Act of 1961. The Supreme Court examined the provisions of sections 28(iiib) and 28(iiid) concerning cash assistance and profits on transfer. The judgment emphasized that DEPB constitutes cash assistance received against exports, which is taxable at the time of accrual. The Court also addressed how profits from the sale of DEPB are to be calculated, clarifying that only the surplus over the face value should be considered as profit on transfer. This ruling has significant implications for exporters and their tax liabilities, providing clarity on how export incentives are treated under the law. The decision reinforces the necessity for accurate accounting of profits derived from export activities and the importance of understanding the nuances of tax law regarding incentives like DEPB. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
S.H. KAPADIA, C.J.,
A.K. PATNAIK,
SWATANTER, JJ.
|
| Lawyers |
Not available
|
| Petitioners |
Topman Exports
|
| Respondents |
Commissioner of Income Tax, Mumbai
|
| Citations |
2012 SLD 3073 = (2012) 342 ITR 49
|
| Other Citations |
E.D. Sassoon and Co. Ltd. v. CIT [1954] 26 ITR 27 (SC),
CIT v. Kalpataru Colours and Chemicals [2010] 328 ITR 451 (Bom.),
IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521 / 135 Taxman 594 (SC),
CIT v. K. Ravindranathan Nair [2007] 295 ITR 228 / 165 Taxman 282 (SC)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(iiib),
28(iiid),
80HHC
|