ACIT, Pondicherry V. Hidesign, Pondicherry

ITA 1052/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6229 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 25-04-2014
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Keywords: Retrospective amendment
• Section: 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 1045, 1046, 1047 & 1048/MDS/2014 ASSESSMENT YEARS : 1998-99, 1999-2000, 2000-01 & 2 001-02 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-I, D.P.THOTTAM, MUTHIALPET, PUDUCHERRY605 003 VS M/S.HIDES, NO.244/1, ODIAMPET VILLAGE, VILLIANUR, PUDUCHERRY [PAN: AABFM 9226 M] I.T.A. NOS. 1049, 1050, 1051 & 1052/MDS/2014 ASSESSMENT YEARS : 1998-99, 1999-2000, 2000-01 & 20 01-02 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-I, D.P.THOTTAM, MUTHIALPET, PUDUCHERRY605 003 VS M/S.HIDESIGN, NO.244/1, ODIAMPET VILLAGE, VILLIANUR, PUDUCHERRY [PAN: AABFH 9225 K] ( !% /APPELLANT) ( &'!% /RESPONDENT) REVENUE BY : SHRI N. MADHAVAN, JCIT ASSESSEE BY : NONE / DATE OF HEARING : 09-07-2014 / DATE OF PRONOUNCEMENT : 21-07-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEALS HAVE BEEN FILED BY THE REVENUE IN THE CASE OF TWO ASSESSEES FOR THE FOUR ASSESSMENT YEARS (AYS) 1 998-99 TO I.T.A. NOS. 1045 - 1048/MDS/14 & 1049 - 1052/MDS/14 2 2001-02. IN ALL THE EIGHT APPEALS, THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX(APPEALS) IN GRANTING BENEFIT OF SECTION 80HHC OF THE INCOME TAX ACT, 196 1 (HEREIN AFTER REFERRED TO AS THE ACT) TO THE ASSESSEES WITHOUT CONSIDERING THE AMENDMENTS BROUGHT IN BY THE TAXATION LAWS (SECOND AMENDMENT) ACT, 2005 BY INSERTING SECOND, THIRD AND FOURTH PROVISO TO SUB-SECTION(3) WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 1998 AND ADDING FIFTH PROVISO TO SECTION 80HHC(3) W ITH RETROSPECTIVE EFFECT FROM 01-04-1992. 2. THE APPEALS HAVE BEEN WITH THE DELAY OF FIFTY TH REE DAYS. THE LD.DR REPRESENTING THE REVENUE HAS PRAYED FOR C ONDONATION OF DELAY IN FILING OF THE APPEALS. THE DELAY IN FI LING OF THE APPEALS IS CONDONED. THE APPEALS ARE ADMITTED TO BE HEARD ON MERITS. 3. THE ASSESSEES HAD FILED THEIR RETURNS OF INCOME FOR THE RESPECTIVE AYS CLAIMING DEDUCTION U/S.80HHC ON REAL IZATION OF EXPORT INCENTIVES. IN CASE OF BOTH THE ASSESSEES, FOR THE AYS UNDER CONSIDERATION, THE ASSESSMENTS WERE COMPLETED ACCEPTING THE CLAIM OF DEDUCTION U/S.80HHC. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S.154 OF THE ACT AND REVISE D ASSESSMENT ORDER BY DISALLOWING DEDUCTION U/S.80HHC CLAIMED BY THE I.T.A. NOS. 1045 - 1048/MDS/14 & 1049 - 1052/MDS/14 3 ASSESSEES. THE ASSESSING OFFICER HELD THAT SINCE T HE EXPORT TURNOVER OF THE ASSESSEES IS MORE THAN ` 10.00 CRORES, THE DEDUCTION CLAIMED U/S.80HHC HAS TO BE WITHDRAWN IN VIEW OF THE AMENDED PROVISIONS OF THE SECTION. AGGRIEVED BY THE ORDER PASSED U/S.154 FOR THE RESPE CTIVE AYS, THE ASSESSEES PREFERRED APPEALS BEFORE THE CIT (APPEALS). THE CIT(APPEALS), FOLLOWING THE DECISION OF THE HON 'BLE GUJARAT HIGH COURT IN THE CASE OF M/S.AVANI EXPORTS & OTHERS VS. CIT REPORTED AS 348 ITR 391 (GUJ) ALLOWED THE APPEALS OF THE ASSESSEES. NOW, THE REVENUE HAS COME IN APPEAL BEFORE THE TRIB UNAL ASSAILING THE ORDER OF CIT(APPEALS). 4. SHRI N.MADHAVAN, APPEARING ON BEHALF OF THE DEPA RTMENT SUBMITTED THAT THE ASSESSEE IS NOT ELIGIBLE FOR CLA IMING DEDUCTION U/S.80HHC IN VIEW OF THE AMENDMENT BROUGHT IN BY TH E TAXATION LAWS (SECOND AMENDMENT) ACT, 2005. THE SAID AMENDM ENT IS OPERATIVE WITH RETROSPECTIVE EFFECT FROM 01-04-1992 / 01-04-1998. IN ORDER TO SUPPORT HIS CONTENTIONS, THE LD.DR RELI ED ON THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF I.T.A. NOS. 1045 - 1048/MDS/14 & 1049 - 1052/MDS/14 4 MENTHA AND ALLIED PRODUCTS LTD., VS. UNION OF INDIA REPORTED AS 363 ITR 504 (ALL). 5. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESP ITE SERVICE OF NOTICE. WE HAVE HEARD THE SUBMISSIONS M ADE BY THE LD.DR AND HAVE ALSO PERUSED THE ORDERS OF THE AUTHO RITIES BELOW AS WELL AS THE JUDGMENT RELIED UPON BY THE LD.DR. IN THE CASE OF M/S.AVANI EXPORTS & OTHERS VS. CIT (SUPRA), THE HON'BLE GUJARAT HIGH COURT HELD AS UNDER: 26. ON CONSIDERATION OF THE ENTIRE MATERIALS ON RE CORD, WE, THEREFORE, FIND SUBSTANCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE PETITIONERS THAT THE IMPUGNED AMEND MENT IS VIOLATIVE FOR ITS RETROSPECTIVE OPERATION IN ORDER TO OVERCOME THE DECISION OF THE TRIBUNAL, AND AT THE SAME TIME, FOR DEPRIVING THE BENEFIT EARLIER GRANTED TO A CLASS OF THE ASSESSEES WHOSE ASSESSMENTS WERE STILL PENDING ALTH OUGH SUCH BENEFIT WILL BE AVAILABLE TO THE ASSESSEES WHO SE ASSESSMENTS HAVE ALREADY BEEN CONCLUDED. IN OTHER WORDS, IN THIS TYPE OF SUBSTANTIVE AMENDMENT, RETROSPECTIVE O PERATION CAN BE GIVEN ONLY IF IT IS FOR THE BENEFIT OF THE A SSESSEES BUT NOT IN A CASE WHERE IN AFFECTS EVEN A FEWER SECTION OF THE ASSESSEES. 27. WE, ACCORDINGLY, QUASH THE IMPUGNED AMENDMENT O NLY TO THIS EXTENT THAT THE OPERATION OF THE SAID SECTION COULD BE GIVEN EFFECT FROM THE DATE OF AMENDMENT AND NOT IN RESPEC T OF THE I.T.A. NOS. 1045 - 1048/MDS/14 & 1049 - 1052/MDS/14 5 EARLIER ASSESSMENT YEARS OF THE ASSESSEES WHOSE EXP ORT TURNOVER IS ABOVE RS.10 CRORES. IN OTHER WORDS, THE RETROSPECTIVE AMENDMENT SHOULD NOT BE DETRIMENTAL T O ANY OF THE ASSESSEES. ON THE OTHER HAND, IN THE CASE OF MENTHA AND ALLIED PRODUCTS LTD., VS. UNION OF INDIA (SUPRA), THE HONBLE ALLAHABAD HIGH COURT HAS UPHELD THE RETROSPECTIVE APPLICABILITY OF THE AMEND MENT BROUGHT IN BY THE TAXATION LAWS (SECOND AMENDMENT) ACT, 2005. 6. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., REPORTED AS 88 ITR 192 (SC) HAS HELD THAT WHERE TWO VIEWS ARE AVAILABLE, THE VIEW IN FAV OUR OF THE ASSESSEE HAS TO BE TAKEN. WE ACCORDINGLY, FOLLOWIN G THE VIEW TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF M/S.AVANI EXPORTS & OTHERS VS. CIT (SUPRA). 7. AS REGARDS COMPUTATION OF THE QUANTUM OF DEDUCTI ON AVAILABLE TO THE ASSESSEE U/S.80HHC, WE DEEM IT NEC ESSARY TO REMIT THE FILES BACK TO ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RE-COMPUTE DEDUCTION IN THE LIGHT OF DECISION RENDERED IN THE CASE OF M/S.AVANI EXPORTS & OTHERS VS. CIT (SUPRA). I.T.A. NOS. 1045 - 1048/MDS/14 & 1049 - 1052/MDS/14 6 IN THE RESULT, THE APPEALS OF THE REVENUE ARE PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 21 ST JULY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT / JUDICIAL MEMBER /CHENNAI, /DATED: 21 ST JULY, 2014 TNMM !'#$ %&$ /COPY TO: 1. %'#() /APPELLANT 2. !*() /RESPONDENT 3. + (%'#) /CIT(A) 4. + /CIT 5. $./' !01 /DR 6. /23 4# /GF