LexM/S TOPMAN EXPORTS versus COMMISSIONER OF INCOME TAX, MUMBAI
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A
B
[2012] 4 S.C.R. 684
MIS TOPMAN EXPORTS
v.
COMMISSIONER OF INCOME TAX, MUMBAI
(Civil Appeal No. 1699 of 2012)
FEBRUARY 08, 2012
[S.H. KAPADIA, CJI, A.K. PATNAIK AND
SWATANTER KUMAR, JJ.]
Income Tax Act, 1961 - ss. 28(iiib) & (iiid) and s.80HHC
C - Assessment Year 2002-2003 - Whether the entire amount
received by an assessee on sale of Duty Entitlement Pass
Book ('DEPB') represents profit on transfer of DEPB u/
s.28(iiid) for purpose of computation of deduction in respect
of profits retained for export business u/s. 80HHC - Held:
o DEPB_ is "cash assistance" receivable by a person against
exports under the scheme of the Government of India and
falls under clause (iiib) of s.28 and is chargeable to income
tax under the head "Profits and Gains of Business or
Profession" even before it is transferred by the assessee -
E Under clause(iiid) of s.28, any profit on transfer of DEPB is
chargeable to income tax under the head "Profits and Gains
of Business or Profession" as an item separate from cash
assistance under clause (iiib) - As DEPB has direct nexus
with the cost of imports for manufacturing an export product,
F any amount realized by the assessees over and above the
DEPB on transfer of the DEPB would represent profit on the
transfer of DEPB - While the face value of the DEPB will fall
under clause (iiib) of s.28, the difference between the sale
value and the face value of the DEPB will fall under clause
G (iiid) of s. 28 - High Court not right in taking the view that the
entire sale proceeds of the DEPB realized on transfer of the
DEPB and not just the difference between the sale value and
the face value of the DEPB represent profit on transfer of the
DEPB - High Court also not right in coming to the conclusion
H
684
MIS TOPMAN EXPORTS v. COMMISSIONER OF
685
INCOME TAX, MUMBAI
that as the assessee did have the export turnover exceeding A
Rs. 1 O crores and as the assessee did not fulfill the conditions
set out in the third proviso to s. 80HHC(iii), it was not entitled
to a deduction u/s. 80HHC on the amount received on transfer
of DEPB and with a view to get over this difficulty the assessee
was contending that the profits on transfer of DEPB u!s.28(iiid) B
would not include the face value of the DEPB - Where an
assessee has an export turnover exceeding Rs. 10 crores and
has made profits on transfer of DEPB under clause (d) of s. 28,
he would not get the benefit of addition to export profits under
third or fourth proviso to sub-section (3) of s. 80HHC, but he c
would get the benefit of exclusion of a smaller figure from
''profits of the business" under explanation (baa) to s. BOHHC
and there is nothing in explanation (baa) to s. BOHHC to show
that this benefit of exclusion of a smaller figure from ''profits
of the business" will not be available to an assessee having 0
an export turnover exceeding Rs. 10 crores - 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 s. BOHHC
read with the words used in clauses (iiid) and (iiie) of s.28, the E
assessee was entitled to a deduction uls. BOHHC on export
profits, the benefit of such deduction cannot be denied to the
assessee - Interpretation of Statutes - Exemption provision.
Customs - DEPB scheme - Nature and objective of -
F
Held: The objective of DEPB scheme is to neutralize the
incidence of customs duty on the import content of the export
products - Hence, it has direct nexus with the cost of the
imports made by an exporter for manufacturing the export
products - The neutralization of the cost of customs duty under G
the DEPB scheme, however, is by granting a duty credit
against the export product and this credit can be utilized for
paying customs duty on any item which is freely importable -
DEPB is issued against the exports to the exporter and is
transferable by the exporter - Hand Book on DEPB issued by H
686
SUPREME COURT REPORTS
[2012] 4 S.C.R.
A the Government of India - Paragraphs 4.37 and 4.42 - Export
and Import Policy, 1997-2002 as notified by the Central
Government in the Notification No. 1(RE-99)/1997-2202 dated
31st March, 2000 - Paragraphs 7.14, 7.15, 7.16 and 7.38.
8
Words and Phrases - "Profit" - Meaning of - Held: The
word "profit" means the gross proceeds of a busExcerpt shown. Read the full judgment & AI analysis in Lexace.