MOHINI TEXTILES (HUF), MUMBAI V. ITO 14(2)2, MUMBAI

ITA 1046/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2735 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 16-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M KESHKAMAT S S RANA
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, MUMBAI. BEFORE S/SHRI R.S.SYAL, AM & SMT, ASHA VIJAYARAGHAV AN,JM I.T.A. NO. 1046/MUM/2009 ASSESSMENT YEAR: 2003-04 MOHINI TEXTILES (HUF), V. THE I.T.O. 14(2)(2), 384, F, DHABOLKAR WADI, KALBADEVI ROAD, EARNEST HO USE, 3 RD FLOOR, MUMBAI-02. NARIMAN POINT, MUMBAI-21. PA NO.AAAHM 5522 N (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI S.M.KESHKAMAT/S.S.RANA O R D E R PER R.S.SYAL, AM THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A)-XIV ON 6 TH JANUARY, 2009 IN RELATION TO ASSESSMENT YEAR 2003- 04. 2. THE FIRST GROUND IS AGAINST DENIAL OF DEDUCTION U/S.80HHC IN RESPECT OF INTEREST RECEIVED BY THE ASSESSEE ON SURPLUS FUNDS. 3. HAVING HEARD THE LD D.R. AND PERUSED THE RELEVAN T MATERIAL ON RECORD, WE FIND THAT THE ISSUE IN THIS GROUND IS ABOUT THE HEAD UNDER WH ICH THE INTEREST ON SURPLUS FUNDS SHALL FALL AND CONSEQUENTLY ELIGIBILITY OF OTHERWISE OF S UCH AMOUNT FOR DEDUCTION U/S. 80HHC. THIS ISSUE HAS BEEN DEALT WITH BY THE ITAT SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS V ITO (1009) 318 ITR (AT) 87(MUMBAI)(SB). IN THIS CASE, IT HAS BEEN HELD THAT THE INTEREST ON SURPLUS FUNDS WILL FALL UNDER THE HEAD INCOME FROM OTHER SOURCES AND HENCE, NO DEDUCTION WILL BE AVAILABLE. RESPECTFULLY FOLLO WING THE SAID DECISION, WE UPHOLD THAT THE IMPUGNED ORDER ON THIS GROUND. 4. GROUND NO.2 IS AGAINST DENIAL OF DEDUCTION U/S.8 0HHC IN RESPECT OF DEPB LICENCES. 5. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE RE LEVANT MATERIAL. IT IS FOUND THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTA TIS MUTANDIS SIMILAR TO THOSE DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S. TOPMAN EXPORTS V. ITO,(2009) 2 318 ITR(AT )87 (MUMBAI)(SB). THE SPECIAL BENCH VID E ITS ORDER DATED 11.8.2009 HAS RESOTRED THE MATTER TO THE FILE OF THE AO FOR CONSI DERING THE FACE VALUE OF DEPB AS COVERED UNDER SECTION 28(IIIB) AND THE PROFIT ON TR ANSFER OF DEPB I.E. EXCESS OF SALE PRICE OVER THE FACE VALUE OF DEPB AS FALLING UNDER SECTIO N 28(IIID). IT HAS FURTHER BEEN HELD THAT THERE IS NO SCOPE FOR ALLOWING SEPARATE DEDUCT ION FOR INDIVIDUAL EXPENSES CONNECTED WITH THE SALE OF DEPB DUE TO THE SCHEME OF SECTION 80 HHC. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND DIRECT THE AO TO R ECOMPUTE THE DEDUCTION U/S.80HHC IN ACCORDANCE WITH THE VIEW TAKEN BY THE SPECIAL BENCH IN THE AFORENOTED CASE. NEEDLESS TO SAY THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPOR TUNITY OF BEING HEARD BY THE AO. 6. GROUND NO.3 IS AGAINST DENIAL OF DEDUCTION OF 1 0% OF EXPORT INCENTIVES FROM THE INDIRECT COST FOR THE PURPOSES OF DEDUCTION U/S 80H HC. 7. AFTER HEARING THE LD D.R. AND GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE HONBLE SUPREME COURT IN ASSESSEES FAVOUR VIDE ITS JUDGEMENT IN HERO EXPORTS (2007) 295 ITR 454 (SC) H OLDING THAT 10% OF INCENTIVES SHALL BE REDUCED FROM THE `INDIRECT COSTS FOR THE PURPOS ES OF DEDUCTION U/S 80HHC. SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT MUMBAI (SB) IN FAVO UR OF THE ASSESSEE BY THE DECISION IN THE CASE OF SURENDRA ENGG. WORKS, 86 ITD 121 (MU M)(SB). RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HERO EXPORT (SUPRA), WE ALLOW THIS GROUND OF APPEAL. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED ON 9 TH DECEMBER, 2009 SD/- SD/- (ASHA VIJAYARAGHAVAN) ( R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 9 TH DECEMBER , 2009. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T.A.T., MUMBAI. PARIDA BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. 3 DATE INITIALS SR.P.S 1. DRAFT DICTATED ON 8.12. 2009 2. DRAFT PLACED BEFORE AUTHOR 8..12.2009 3. DRAFT PROPOSED & PLACED BEFORE THE JM/AM SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY JM/AM SECOND MEMBER 5. APPROVED DRAFT COMES TO THE SR.PS SR .PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR. P S 8. DATE ON WHICH FILE GOES TO THE H.C. 9. DATE OF DISPATCH OF ORDER