Reckitt Benckiser (India) Limited, Kolkata V. ACIT, Circle - 12, Kolkata, Kolkata

ITA 1043/KOL/2008

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70462 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 05-07-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 04-06-2008
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: R N BAJORIA
• Keywords: Principle of natural justice; Reassessment proceedings
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SRI SHAMIM YAHYA, AM & HONBLE SR I GEORGE MATHAN, JM] ITA NO.1043/KOL/2008 ASSESSMENT YEAR : 1997-98 ( APPELLANT ) (RESPONDENT) RECKITT BENCKISER (INDIA)LIMITED -VS- . A.C.I.T., CIRCLE-12, KOLKATA KOLKATA (PAN:AABCR 2655 Q) FOR THE APPELLANT: SHRI R.N.BAJORIA, SR.ADVOCATE FOR THE RESPONDENT: SHRI VARINDER MEHTA, CIT(DR) DATE OF HEARING : 16.12.2013 DATE OF PRONOUNCEMENT : 16. 12.2013. ORDER PER SHRI GEORGE MATHAN, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. C.I.T.(A)- XII, KOLKATA IN APPEAL NO.20/XII/AC-12/05-06 DATED 14.02 .2008 FOR ASSESSMENT YEAR 1997-98. 2. SHRI R.N.BAJORIA, SR.ADVOCATE REPRESENTED ON BE HALF OF THE ASSESSEE AND SHRI VARINDER MEHTA, CIT(DR) REPRESENTED ON BEHALF OF T HE REVENUE. 3. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS :- 1(A). THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [LD.CIT(A)] ERRED IN NOT APP RECIATING THE FACT THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER (AO) IS TIME BARRED SINCE THE SAME WAS INITIATED AFTER 4 YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR 1997- 98. 1.(B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN HOLDING THAT THE ACTION OF THE AO WAS WITHIN THE PARAMETERS SPECIFIED BY THE STATUTE EITHER BY WAY OF TIME LIMITS OR THE MONETARY LIMITS, WITHOUT GIVING ANY JUSTIFICATION OF SUCH A CONCLUSION. 2.(A). THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) GROSSLY ERRED IN ENHANCING THE ASSESSMENT MADE UNDER SECITONN147/143 (3) OF THE INCOME TAX ACT, 1961 (THE ACT) WHEREIN THE AO HAS COMPUTED RS.3,668,91 5 AS INDIRECT EXPENSES PERTAINING TO EXPORT TURNOVER OF TRADING GOODS WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC OF ITA NO.1043/KOL/2008 RECKITT BENCKISER (INDIA) LIMITED A.YR.1997-98 2 THE ACT, WITHOUT PROVIDING ANY BASIS FOR THE SAME A ND IN GROSS VIOLATION OF NATURAL JUSTICE. 2(B). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)ERRED IN UPHOLDING THE ACTION OF THE AO IN REVISING THE COMPUTATION OF INDIRECT EXPENSES PERTAINING TO EXPORT TURNOVER OF TRADING GOODS, IN THE REMAND REP ORT WHEREBY THE AO HAS RECOMPUTED THE INDIRECT EXPENSES PERTAINING TO EXPORT TURNOVER OF TRADING GOODS FOR THE PURPOSES OF DEDUCTION UNDER SECTION 80HHC OF THE ACT AT RS.8,68 3,246 INSTEAD OF PROVIDING THE BASIS FOR COMPUTING THE SAME AT RS.3,668,915. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANTS CLAIM FO R DEDUCTION UNDER SECTION 80HHC OF THE ACT IS BASED ON THE CERTIFICATE ISSUED BY A REN OWNED FIRM OF CHARTERED ACCOUNTANTS VIZ. PRICE WATERHOUSE, CHARTERED ACCOUNTANTS. 4(A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)ERRED IN UPHOLDING THE ACTION OF THE AO WHEREBY THE AO HAS CONSIDERED THE TOTAL EMPLOYMENT COST, TRAVELING EXPENSES, RENT AND MISCELLANEOUS EXPENSES AS PER THE AUDITED ACCOUNTS AS INDIRECT COST AND WORKED OUT THE PRORATED INDIRECT COST OF TRADING GOODS AT RS.8,683,246 ON THE BASIS OF TURNOVER, WITHOUT PROVIDING ANY BAS IS THEREOF. 4(B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE PLEA OF THE APPELLANT THAT THE AMOU NT OF RENT OF RS.10,758,441 AND MISCELLANEOUS EXPENSES OF RS.96,534,109 CONSIDERED BY THE AO IN COMPUTING THE INDIRECT COST ARE NOT MATCHING WITH THE AUDITED ACC OUNTS AND NO BASIS IN RESPECT THEREOF HAS BEEN PROVIDED BY THE AO. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)ERRED IN NOT CONSIDERING THE SUBMISSION OF THE APPELLANT THAT NO ADVERTISEMENT EXPENSES HAS BEEN INCURRED DURING THE SUBJECT YEAR FOR EXPORT OF GOOD S OUTSIDE INDIA. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)ERRED IN DIRECTING THE AO TO ADOPT THE REVISED FIGURE OF RS.8,683,246 IN R ESPECT OF INDIRECT EXPENSES PERTAINING TO EXPORT TURNOVER OF TRADING GOODS AND RECOMPUTED THE DEDUCTION UNDER SECTION 80HHC OF THE ACT ACCORDINGLY. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND, AMPLIFY OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF H EARING OF THE APPEAL. 4. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE LD. COUNSEL THAT THE CRUX OF THE WHOLE APPEAL IN THE GROUND CONTAIN TWO ISSUES. THE FIRST ONE BEING THE INITIATION OF REOPENING BEYOND THE PERIOD OF FOUR YEARS WITHOUT S PECIFYING THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE SECOND ISSUE IS IF THE ISSUE OF REOPENING IS HELD AGAINST THE ASSESSEE, THEN THE RE STORING THE ISSUE OF THE COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT TO THE FILE OF TH E AO FOR RE-ADJUDICATION. THE LD. COUNSEL DREW OUR ATTENTION TO PAGE 96 OF THE PAPER BOOK WHICH WAS THE COPY OF THE REASONS RECORDED. IT WAS THE SUBMISSION THAT THE AO HAS REFERRED TO A FIGURE OF RS.36,68,915/- IN THE REASONS WHICH THE AO HAS BEEN UNABLE TO RECONCILE. IT WAS THE SUBMISSION THAT EVEN THOUGH THE APPEAL HAS BEEN HEA RD FOR A NUMBER OF TIMES THE REVENUE HAS BEEN UNABLE TO EXPLAIN THIS FIGURE OF R S.36,68,915/-. IT WAS THE FURTHER ITA NO.1043/KOL/2008 RECKITT BENCKISER (INDIA) LIMITED A.YR.1997-98 3 SUBMISSION THAT EVEN THOUGH THE ISSUE OF REOPENING WAS RAISED BEFORE THE LD. CIT(A) THE LD. CIT(A) IN HIS ORDER AT PAGE-3 HAS WITHOUT G IVING ANY REASONS ADJUDICATED THE ISSUE IN A VERY CRYPTIC MANNER AND HAD UPHELD THE R EOPENING. AT THIS POINT THE BENCH REQUESTED THE LD. DR TO EXPLAIN THE ISSUE OF THE FI GURE OF RS.36,68,915/- WHICH WAS RECORDED BY THE AO IN HIS REASONS FOR THE PURPOSE O F REOPENING. THE LD. DR WAS ALSO REQUESTED TO EXPLAIN THE REASONS FOR THE CRYPTIC OR DER OF LD. CIT(A) AT PAGE 3 OF HIS ORDER. THE LD. CIT(DR) SUBMITTED THAT THE LD. CIT( A) HAD EXTRACTED ALL THE FACTS AND ALSO CALLED FOR REMAND REPORT WHEREIN THE LD. AO HA S REVISED THE FIGURE OF RS.36,68,915/- TO RS.86,83,246/-. IT WAS THE FURTHE R SUBMISSION THAT THE LD. CIT(A) HAD ADJUDICATED THE ISSUE OF REOPENING AND HAD UPHELD T HE REOPENING OF THE ASSESSMENT THOUGH ADMITTEDLY THE ORDER COULD HAVE BEEN MORE IN DETAIL. AT THIS POINT THE BENCH SUGGESTED THAT THE ISSUE OF REOPENING AS ALSO THE I SSUES IN THE APPEAL CAN BE RESTORED TO THE FILE OF THE LD. CIT(A) FOR PASSING A SPEAKING O RDER ON THE ISSUE OF REOPENING AS ALSO IN REGARD TO GRANTING OF THE ASSESSEE OPPORTUNITY T O RECOMPUTE THE DEDUCTION U/S 80HHC OF THE ACT, IF THE REOPENING WAS HELD AGAINST THE ASSESSEE. TO THIS PROPOSITION BOTH THE LD. AR AND THE DR HAD NO OBJECTION. IN THE CIRCUMSTANCES THE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE LD. CIT(A) F OR RE-ADJUDICATION. THE LD. CIT(A) SHALL PASS A SPEAKING ORDER IN RESPECT OF THE ISSUE S IN THE APPEAL AS ALSO IN RESPECT OF THE ISSUE OF REOPENING AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS CASE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES.. . ORDER PRONOUNCED IN THE OPEN COURT ON 16.12.2013. SD/- SD/- [SHAMIM YAHYA] [ GEORGE MATHAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 16.12.2013. R.G.(.P.S.) ITA NO.1043/KOL/2008 RECKITT BENCKISER (INDIA) LIMITED A.YR.1997-98 4 COPY OF THE ORDER FORWARDED TO: 1. RECKITT BENCKISER (INDIA)LIMITED, 206, A.J.C.BOSE R OAD, BUSINESS TOWERS, UNIT 7C, 7 TH FLOOR, KOLKATA-700017. 2 A.C.I.T., CIRCLE-12, KOLKATA 3 . CIT(A)-XII, KOLKATA 4. CIT - KOLKATA. 5. CIT(A)DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES