ITO, WD-51(4), KOLKATA, Kolkata V. Shri Rabindra Nath Sikdar, Kolkata

ITA 1097/KOL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6552 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: MANISH TIWARI
• Keywords: Business income; Capital receipt
• Section: 143(3); 142(1); 80HHC; 28; 144

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1097 / KOL / 20 15 ASSESSMENT YEAR :2006-07 INCOME TAX OFFICER, WARD-51(4), UTTARAPAN COMPLEX, ULTADANGA, MANIKTALA CIVIC CENTRE, SCH.VII/M, KOLKATA-54 V/S . SHRI RABINDRA NATH SIKDAR, AJ-253, SECTOR-II, SALT LAKE CITY, KOLKATA- 700 091 [ PAN NO.AOTPS 2045 G ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S. DASGUPTA, ADDL. CIT-DR /BY RESPONDENT SHRI MANISH TIWARI, FCA /DATE OF HEARING 22-02-2018 /DATE OF PRONOUNCEMENT 20-04-2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLKATA DA TED 03.06.2015. ASSESSMENT WAS FRAMED BY ITO WARD-51(4), KOLKATA U/ S 143(3)/144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 31.12.2008 FOR ASSESSMENT YEAR 2006-07. SHRI S. DASGUPTA, LD. DEPARTMENTAL REPRESENTATIVE A PPEARED ON BEHALF OF REVENUE AND SHRI MANISH TIWARI, LD. AUTHORIZED REPR ESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. GROUNDS RAISED BY REVENUE WHICH READS AS UNDER:- ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 2 I) WHETHER ON THE FACTS AND IN RESPECT TO THE CIRC UMSTANCES, THE LD. CIT(A)- 15,KOLKATA ERRED IN RESTRICTING THE NET PROFIT TO 1 % OF TURNOVER JUST RELYING ON THE NET PROFIT RATES DECLARED IN EARLIER YEARS WITH OUT APPRECIATING THE FACT THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED DURING THE A SSESSMENT YEAR UNDER CONSIDERATION AND THE ASSESSEE HAD FAILED TO JUSTIF Y THE BOOK RESULT BEING DECLARED BY HIM. II) WHETHER ON THE FACTS AND IN RESPECT TO THE CIRC UMSTANCES, THE LD. CIT(A)- 15,KOLKATA ERRED TO RESTRICT THE ADDITION ON SALE O F DEPB @ 1% ON RS.42,93,826/-- EVEN WHEN THE ASSESSEE IS NOT IN PO SSESSIONS OF THE RELEVANT DOCUMENTS LIKE THE DEPB LICENSE AND THEN VALUE AND THE ENTIRE DEPB HAS BEEN DECLARED RECEIVED IN ONE GO BY THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION AS LD. CIT(A) HAS HIMSELF ADMITTED IN HIS ORDER. THE ASSESSEE COULD NOT ESTABLISH THE ENTIRE SALE DURING THE YEAR AND HENCE, ENTIRE VALUE OF DEPB AT RS.42,93,825/- IS TAXABLE DURING THE YEAR U NDER CONSIDERATION AS PER SECTION 28(IIB). 3. FIRST ISSUE RAISED BY REVENUE IN GROUND NO. (I) IS THAT LD. CIT(A) ERRED IN REDUCING THE ESTIMATED PROFIT FROM 5% TO 1% OF T HE TURNOVER. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IN THE PR ESENT CASE IS AN INDIVIDUAL AND CARRYING ON THE EXPORT BUSINESS OF RICE AND PUL SES UNDER THE NAME AND STYLE OF M/S R.N.S. ENTERPRISES. THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION FILED HIS RETURN OF INCOME DECLARING TAXABLE INCOME OF 84,397/- ONLY WHEREAS THE TOTAL TURNOVER DECLARED BY ASSESSE E AT 7,26,63,305.63 ONLY. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UND ER CASS MODULE AND ACCORDINGLY NOTICE U/S 143(2)/142(1) OF THE ACT WAS SERVED UPON THE ASSESSEE. BUT ASSESSEE MADE NO COMPLIANCE TO THE NO TICE ISSUED U/S 142(1) OF THE ACT. ACCORDINGLY, AO FRAMED THE ASSESSMENT E X PARTE U/S 144 OF THE ACT BY ESTIMATING THE PROFIT ON THE TOTAL TURNOVER OF 7,26,63,305/- @ 5%. THUS THE PROFIT WAS ESTIMATED AND WORKED OUT AT 36,33,165/- ONLY. THEREFORE THE SAME INCOME WAS ADDED AFTER REDUCING THE PROFIT ALREADY DECLARED BY THE ASSESSEE TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT PROFIT ON THE TOTAL TURNOVER @ 5% IS HIGHLY EXCESSIVE AND UNREASONABLE. THE AO HAS ALSO NOT GIVEN ANY BASIS FOR ESTIMATING THE PROFIT @ 5% OF THE TURNOVER. THE ASS ESSEE ALSO SUBMITTED THAT THE RATE OF ESTIMATED PROFIT @ 5% HAS BEEN IMPORTED FROM THE PROVISION OF ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 3 SECTION 44AF OF THE ACT WHICH IS APPLICABLE TO THE TRADERS HAVING TURNOVER UP TO 40 LACS ONLY. IT IS A WELL SETTLED LAW THAT THE AO WHILE ESTIMATING THE INCOME UNDER BEST JUDGMENT ASSESSMENT DOES NOT POSS ESS THE ARBITRARY POWERS. THUS, THE AO SHOULD BE GUIDED BY THE RULES OF JUSTICE & EQUITY AND GOODS CONCISE. THE ASSESSEE IN SUPPORT OF HIS CLAIM ED RELIED ON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RANICHERRA TEA CO. LTD. REPORTED IN 207 ITR 979 (CAL). SIMILARLY, THE ASSESSEE ALSO SUBMITTED THAT THERE I S NO DENIAL THAT THE AO HAS TO USE SOME KIND OF GUESSWORK WHILE MAKING THE ASSE SSMENT U/S 144 OF THE ACT. BUT THE GUESSWORK MUST BE REASONABLE AND CONNE CTED WITH THE MATERIAL AVAILABLE ON RECORD. IN THIS REGARD, THE ASSESSEE R ELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS. C VELUKUTTY 60 ITR 239 (SC). THE ASSESSEE FURTHER SUBMITTED THAT BEST JUDGMENT A SSESSMENT MUST BE BASED ON AN HONEST AND FAIR ESTIMATE OF INCOME. IN THIS REGARD THE ASSESSEE RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF BRIJ BHUSAN LAL PRADUMANK KUMAR VS. CIT 115 ITR 524 (SC). IT WAS ALSO SUBMITTED THAT THE PROFIT DECLARED BY A SSESSEE IN EARLIER YEARS SHOULD BE CONSIDERED WHILE DETERMINING THE INCOME O N ESTIMATED BASIS UNDER THE PROVISION OF SECTION 144 OF THE ACT. THE ASSESS EE IN THIS CONNECTION FILED THE DETAILS OF NET PROFIT VIS--VIS TURNOVER OF THE EARLIER YEARS AS REPRODUCED BELOW:- A.Y NET PROFIT TURNOVER NET PROFIT % 2004-05 2,13,300/- 4,14,70,858/- 0.51% 2005-06 4,94,178/- 2,17,20,4766/- 0.23% 2006-07 1,75,180/- 726,63,305/- 0.24% IT IS CRYSTAL CLEAR FROM THE ABOVE CHART, THAT THE APPELLANT NEVER ACHIEVED A NET PROFIT OF 5% OF TURNOVER IN THE PAST. EVEN THE NET PROFIT FOR 3 YEARS ON AN AVERAGE WORKS TO 0.326% ONLY. APPLYING THE AVERAGE GP ON 0.326% ON TOTAL TURNOVER OF RS.7,26,63,305/- THE ADDITION ON ACCOUN T OF NET PROFIT CANNOT EXCEED RS.61,702/- (0.326% OF 7,26,63,305 ACTUAL NP I.E. RS.1,75,180) ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 4 LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSE SSEE DELETED THE ADDITION MADE BY THE AO IN PART BY OBSERVING AS UNDER:- GROUND OF APPEAL NO.3 THIS GROUND ASSAILS THE ACTION OF THE AO IN ESTIMAT ING THE BUSINESS PROFIT OF THE ASSESSEE AT RS.36,33,165/- CALCULATED @ 5% OF T HE DECLARED TURNOVER AFTER REJECTING THE TRADING RESULTS CLAIMED. THE AO TOOK THE FIGURE OF THE TURNOVER FROM THE PROFIT & LOSS ACCOUNT OF THEE ASS ESSEE AT RS.7,26,63,305/-. THE AO HAD NOTED THAT THE NET PROFIT DECLARED BY TH E ASSESSEE IN HIS PROFIT T& LOSS ACCOUNT IS VERY LOW AT RS.1,75,180/-. THE ASSE SSEE HAS NOT BEEN ABLE TO MAKE AN SUBSTANTIAL ARGUMENTS TO CHALLENGE THE ACTI ON OF THE AO EXCEPT TO ARGUE THAT THE BOOKS OF ACCOUNT SHOULD NOT HAVE BEE N REJECTED IN THE FIRST PLACE. THE ASSESSEE HAS RELIED ON SEVERAL CASE LAWS TO ARGUE THAT THE ESTIMATING OF THE BUSINESS PROFITS SHOULD HAVE A RE ASONABLE BASIS AND THAT THE AO HAS ARBITRARILY ADOPTED A NET PROFIT RATE OF 5% WHICH WAS NEVER ACHIEVED BY THE ASSESSEE ALSO IN ASSESSMENT YEAR OF THE EARL IER ASSESSMENT YEARS. THE ASSESSEE HAS CLAIMED THAT THE NET PROFIT @ 5% O F TURNOVER IS USUALLY APPLIED INCASE COVERED U/S. 44AF IN THE CASE OF A R ETAIL TRADER AND THAT THIS DEEMED PROFIT RATE CANNOT BE EXTENDED TO THE APPELL ANT SINCE HIS TURNOVER IS IN EXCESS OF RS.40 LAKHS AND HE IS AN EXPORTER. THE AR GUMENT OF THE ASSESSEE IS THAT HE EXPORTS RICE AND PULSES AND AS THE EXPORT M ARKET IS HIGHLY COMPETITIVE THE GOVT. OF INDIA HAS TO STEP IN AND PROVIDE DEPB LICENSE TO COMPENSATE THE EXPORTERS. THE APPELLANT HAS FILED A COMPARATIVE CH ART OF HIS EARLIER ASSESSMENT YEARS DATA TO SHOW THAT HE HAD NEVER EA RLIER ACHIEVED A NET PROFIT OF 5% AND THE NET PROFIT EARNED BY THE ASSES SEE IN LAST THREE ASSESSMENT YEARS WAS AS UNDER:- ASSESSMENT YEAR NET PROFIT TURNOVER PERCENTAGE 2004-05 2,13,300/- 4,14,70,858/- 0.51% 2005-06 4,49,418/- 2,17,20,476/- 0.23% 2006-07 1,75,180/- 77,26,63,305/- 0.24% THE ASSESSEE HAS ALSO RELIED ON A RECENT DECISION O F ITT B BENCH, KOLKATA DATED 01..01.2015 IN ITA NO.2317/KOL/2013 IN THE CASE OF ACIT V. SITALAMATA RICE MILLS PVT. LTD. WHEREIN THE ITAT H AS RELIED UPON THE PAST TRADING RESULTS OF THE APPELLANT ASSESSEE AND REDUC ED THE N.P RATE ESTIMATED BY THE AO. THE AR ALSO RELIED ON THE OTHER CASE LAW S MENTIONED IN THE WRITTEN SUBMISSIONS. THE SUBMISSION OF THE APPELLANT ARE LINKED TO THE G ROUNDS OF APPEAL NO 1 & 2 ABOVE AND THOSE GROUNDS ARE ALREADY HELD AGAINST TH E ASSESSEE. THE ISSUE NARROWS DOWN TO A REASONABLE ESTIMATION OF THEE NET PROFIT OF THE ASSESSEE FROM HIS TRADING ACTIVITY. IN VIEW OF THE NATURE OF EXPORT TRADE AND THE NEED FOR THE GOVERNMENT TO INTRODUCE DEPB SCHEME IT IS APPAR ENT THAT THE ESTIMATED RATE OF NET PROFIT FROM EXPORT BUSINESS ADOPTED BY AO @ 5% IS UNSUPPORTED. IS ALSO AN ESTABLISHED RATIO OF THE CASE LAWS ON TH E SUBJECT THAT WHILE MAKING A BEST JUDGMENT ASSESSMENT THE AO IS INDEED REQUIRE D TO MAKE A FAIR ESTIMATE. THOUGH ARBITRARINESS CANNOT BE AVOIDED IN SUCH ESTIMATES, THE NAME SHOULD NOT APPEAR TO BE WHIMSICAL AND ERRATIC. HAVING REGARD TO THE TOTALITY OF FACTS AND LEGAL POSITION CONCERNING THE MANNER OF ESTIMATING THE NET PROFIT AND THE PAST RECORDS OF THE ASSESSEE IT IS H ELD THAT A DETERMINATION OF NET PROFIT FROM TRADING ACTIVITY @ 1% OF TOTAL TURN OVER I.E. RS.7,26,333/- WILL ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 5 MEET THE ENDS OF JUSTICE AND EQUITY. THE UNPRECEDEN TED EXPORT DEMAND IN FY 2005-06 ALSO INDICATES THAT THE ASSESSEE MUST HAVE ENJOYED ECONOMICS OF SCALE IN PROCUREMENT OF GOODS. AS A RESULT THE ADDI TION ON ACCOUNT OF THE ESTIMATED NET PROFIT OF THE ASSESSEE FROM HIS EXPOR T TRADING IS RESTRICTED TO RS.7,26,333/-- AND THE BALANCE AMOUNT OF RS.29,06,8 32/- (RS.36,33,165/- MINUS RS.7,26,333/-) IS DIRECTED TO BE DELETED. THE GROUND OF APPEAL NO. 3 OF THE ASSESSEE IS PARTLY ALLOWED AS ABOVE. THE REVENUE, BEING AGGRIEVED IS IN APPEAL BEFORE US . 6. LD. DR BEFORE US SUBMITTED THAT NECESSARY DOCUME NT AS DESIRED BY AO DURING THE COURSE OF ASSESSMENT PROCEEDING WERE NOT PRODUCED THEREFORE THE AO HAD TO RESORT TO THE PROVISION OF SECTION 144 OF THE ACT WHILE FRAMING THE ASSESSMENT. THE ASSESSEE HAS NOT ALSO FILED THE BOO KS OF ACCOUNT AND OTHER DOCUMENT EVEN BEFORE LD. CIT(A). THE PROFIT DECLARE D IN THE RETURNS OF INCOME FILED BY ASSESSEE IN EARLIER YEARS WERE PROCESSED U /S 143(1) OF THE ACT. AS SUCH, NO SCRUTINY ASSESSMENT WAS CARRIED OUT U/S 14 3(3) OF THE ACT. THEREFORE, THE PROFIT DECLARED BY ASSESSEE IN EARLIER YEARS CA NNOT BE CONSIDERED WHILE ESTIMATING THE INCOME UNDER BEST JUDGMENT ASSESSMEN T. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE SUBMITTE D THAT ASSESSEE WAS ENGAGED IN THE EXPORT BUSINESS TO BANGLADESH, NEPAL . THE AO HAS NOT DISPUTED THE SALES AND PURCHASE DECLARED BY ASSESSE E IN ITS BOOKS OF ACCOUNT. THE AO FAILED TO GIVE THE BASIS FOR ESTIMA TING THE INCOME @ 5% AS WELL AS NO COMPARABLE CASES WAS BROUGHT ON RECORD. ONCE THE BOOKS OF ACCOUNT ARE REJECTED THEN THE PAST HISTORY BECOMES THE GUIDING FACTOR FOR ESTIMATING THE INCOME. LD. CIT(A) ESTIMATED THE INC OME @ 1% AFTER CONSIDERING THE PAST HISTORY OF ASSESSEE AS WELL AS THE REMAND REPORT FROM THE AO. THEREFORE, THE PROFIT DETERMINED @ 1% IS BASED ON SCIENTIFIC BASIS. LD. AR RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND THE JUDICIAL DECI SIONS CITED BY THE PARTIES. IN THE PRESENT CASE ASSESSEE FAILED TO COMPLY THE NOTI CE ISSUED U/S 142(1) OF THE ACT THEREFORE THE AO FRAMED THE ASSESSMENT U/S 144 OF THE ACT BY ESTIMATING ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 6 THE PROFIT @ 5% OF THE TOTAL TURNOVER DECLARED BY A SSESSEE. HOWEVER, LD. CIT(A) REDUCED THE RATE OF PROFIT FROM 5% TO 1% AFT ER CONSIDERING THE PAST HISTORY OF ASSESSEE. FROM THE FOREGOING DISCUSSION, WE NOTE THAT THE BEST JUDGMENT ASSESSMENT FRAMED U/S 144 OF THE ACT HAS N OT BEEN DISPUTED / CHALLENGED BY ASSESSEE. NOW THE LIMITED ISSUE WHICH ARISES FOR OUR CONSIDERATION IS THE RATE OF PROFIT TO BE APPLIED O N THE TURNOVER OF THE ASSESSEE. IN THIS REGARD, WE NOTE THAT THE AO HAS A PPLIED RATE OF PROFIT @ 5% WITHOUT GIVING ANY BASIS AND AFTER IGNORING THE PRO FIT DECLARED BY ASSESSEE IN THE EARLIER YEARS. IN OUR CONSIDERED VIEW, IT IS TH E DUTY OF THE AO TO PROVIDE SOME BASIS FOR ADOPTING THE RATE OF PROFIT @ 5%. IT APPEARS THAT AO HAS BEEN GUIDED BY THE PROVISION OF SEC. 44AF OF THE ACT WHE REIN THE INCOME IS DETERMINED ON PRESUMPTION BASIS. IT IS UNDISPUTED F ACT THAT PROVISION OF SEC. 44AF ARE APPLICABLE ONLY TO THOSE ASSESSEES HAVING TURNOVER UP TO 40 LAKH ONLY AND ENGAGED IN THE BUSINESS OF RETAIL TRADING. IN THE CASE ON HAND NONE OF THE CONDITION AS SPECIFIED U/S 44AF OF THE ACT W AS SATISFIED. THEREFORE, IN OUR CONSIDERED VIEW THE AO HAS ERRED IN ESTIMATING THE INCOME AT A RATE BY TAKING THE SHELTER U/S 44AF OF THE ACT. IT IS SETTL ED PROPOSITION OF LAW THAT AO WHILE ESTIMATING THE PROFIT UNDER BEST JUDGMENT ASS ESSMENT HAS TO ACT JUDICIALLY AND HONESTLY. THE AUDITED FINANCIAL STATEMENT OF THE CURRENT YEAR AS WELL AS PROFIT DECLARED BY ASSESSEE IN EARLIER YEARS CANNOT BE IGNORED WHIL E ESTIMATING THE PROFIT UNDER BEST JUDGMENT ASSESSMENT. THE ASSESSEE FOR AL L THE YEARS HAD DULY FILED RETURN OF INCOME WHICH WAS NOT SELECTED UNDER SCRUTINY U/S 143(3) OF THE ACT. REGARDING THE SELECTION FOR SCRUTINY PROCEEDIN GS IT IS THE POLICY OF THE REVENUE AND THE ASSESSEE HAS NO ROLE TO PLAY IN SEL ECTING THE SAME UNDER SCRUTINY. THEREFORE, IN OUR CONSIDERED VIEW, IT IS IMPERATIVE TO TAKE THE GUIDANCE FROM THE HISTORY OF ASSESSEE. IN THIS REGARD WE RELY ON THE ORDER OF THIS CO-ORDI NATE BENCH IN THE CASE OF ACIT VS. SITALAMATA RICE MILLS PVT. LTD. IN ITA NO.2317/KOL/2013 DATED 01.01.2015, THE RELEVANT EXTRACT OF THE ORDER IS RE PRODUCED BELOW:- ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 7 NOW WHEN THE BOOKS OF ACCOUNTS ARE NOT AVAILABLE AN D ESTIMATING THE GROSS PROFIT IS TO BE RESORTED TO THE SITUATION PREVAILIN G IN THE INDUSTRY HAS TO BE TAKEN IN ACCOUNT. IT HAS BEEN BROUGHT OUT BY THE LD . COUNSEL OF THE ASSESSEE THAT IN THE REPORT OF GOVT. OF INDIA, MINISTRY OF S MALL SCALE INDUSTRY IN THE RICE MILL INDUSTRY THE AVERAGE GROSS PROFIT ON SALES WAS CONSIDERED AT 7.5%. SIMILARLY IN THE CASE OF FATHUDHINGA RICE MILLS (SU PRA) HON'BLE PUNJAB & HARYANA HIGH COURT HAS AFFIRMED THE GROSS PROFIT OF 4.2%. IN THIS VIEW OF THE MATTER ALSO THE PROFIT DECLARED BY THE ASSESSEE CAN NOT BE SAID TO BE LOWER THAN PREVAILING IN THE INDUSTRY. 7.1 WE ALSO FIND SUPPORT & GUIDANCE FROM THE JUDGME NT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RANICHERRA TEA CO. LTD. (SUPRA) WHEREIN IT WAS HELD AS UNDER : IT WAS NO DOUBT TRUE THAT THE FACTS OF THE INSTANT CASE JUSTIFIED EX PARTE BEST JUDGMENT ASSESSMENT UNDER SECTION 144 BECAUSE OF TH E DEFAULTS COMMITTED BY THE ASSESSEE BUT IN MAKING A 'BEST JUDGMENT ASSE SSMENT', THE ASSESSING OFFICER CANNOT ACT DISHONESTLY OR VINDICTIVELY OR C APRICIOUSLY BECAUSE HE MUST EXERCISE THE JUDGMENT IN THE MATTER. IN MAKING A 'B EST JUDGMENT', THE ASSESSING OFFICER DOES NOT POSSESS ABSOLUTE ARBITRA RY AUTHORITY TO ASSESS ANY FIGURE HE LIKES AND ALTHOUGH HE IS NOT BOUND BY STR ICT JUDICIAL PRINCIPLES HE SHOULD BE GUIDED BY RULES OF JUSTICE, EQUITY AND GO OD CONSCIENCE. THE LIMITS OF THE POWER OF THE ASSESSING OFFICER ARE IMPLICIT IN THE EXPRESSION 'BEST OF THE JUDGMENT'. THOUGH THERE IS AN ELEMENT OF GUESS WORK IN A 'BEST JUDGMENT ASSESSMENT', IT SHALL NOT BE A WILD ONE BUT SHALL H AVE REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF EACH CA SE. AS REFLECTED FROM THE FACTS OF THE INSTANT CASE THE ITO DID NOT DISCLOSE ANY BASIS OR REASONS FOR DETERMINING THE QUANTUM OF LOS S AS 'NIL'. HE SHOULD HAVE GIVEN HIS REASONS FOR ARRIVING AT A PARTICULAR FIGU RE OF INCOME SO THAT THE ASSESSEE MAY BE ENABLED TO APPRECIATE THE MENTAL PR OCESS LEADING TO THE ASSESSMEN T AND THE FIGURE ASSESSED SUCH ORDER BEIN G SUBJECT TO APPEAL NEED ALSO TO BE A SPEAKING ORDER. THE ASSESSING OFF ICER DID NOT AT ALL LOOK INTO THE AUDITED BALANCE SHEET ACCOMPANYING THE RETURN N OR DID HE REJECT THE ACCOUNTS AS UNRELIABLE. THEREFORE, THE ITO WAS NOT JUSTIFIED IN REJECTING THE LOSS RETURN FILED BY THE ASSESSEE-COMPANY IN TOTO WITHOUT EXAMINING THE AUDITED ACCOUNTS AND OTHER STATEMENTS ON FILE AS WE LL AS THE PAST RECORDS OF THE ASSESSEE-COMPANY. AS REGARDS THE JUSTIFICATION OF COMPUTATION OF LOSS BY THE COMMISSIONER (APPEALS) AFTER LOOKING INTO THE AUDITED ACCOUNTS A S WELL AS THE PAST RECORDS HIMSELF, IT HAS BEEN HELD BY THE SUPREME COURT IN CIT V. KANPUR COAL SYNDICATE [1964] 53 ITR 225 AND REITERATED IN JUTE CORPN. OF INDIA LTD. V. CIT [1991] 187 ITR 688 THAT THE AAC HAS PLENARY POWERS IN DISPOSING OF AN APPEAL THE SCOPE OF HIS POWER IS CO-TERMINUS WITH THAT OF THE ITO. HE COULD DO WHAT THE ITO COULD DO AND ALSO DIRECT HIM TO DO WHAT HE HAD FAILED TO DO IN VIEW OF THESE DECISIONS, IT WAS TO BEHELD THA T IN DISPOSING OF AN APPEAL FROM AN ASSESSMENT ORDER UNDER SECTION 144, THE FIR ST APPELLATE AUTHORITY NEED NOT CONFINE ITSELF ONLY TO THE MATERIALS ON RE CORD AT THE TIME OF ASSESSMENT BUT IT MAY MAKE SUCH ENQUIRIES AS IT THI NKS FIT. THEREFORE, THE ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 8 PROCEDURE ADOPTED BY THE COMMISSIONER (APPEALS) IN THE INSTANT CASE WAS FULLY JUSTIFIED IN DECIDING THE CASE ON HIS OWN INS TEAD OF REMANDING THE SAME. IN FACT, THE ITO SHOULD HAVE HIMSELF FOLLOWED THE S AME PROCEDURE WHICH THE COMMISSIONER (APPEALS) DID. IN THIS REGARD, WE ALSO FIND SUPPORT & GUIDANCE FRO M THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS. C VELUKUTTY 60 ITR 239 (SUPRA) WHEREIN IT WAS HELD AS UNDER:- THE LIMITS OF THE POWER ARE IMPLICIT IN THE EXPRES SION 'BEST OF HIS JUDGMENT'. JUDGMENT IS A FACULTY TO DECIDE MATTERS WITH WISDOM TRULY AND LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY CAPRICE OF A JUDGE, BUT ON SETTLED AND INVARIABLE PRINCIPLES OF JUSTICE. THOUG H THERE IS AN ELEMENT OF GUESS-WORK IN A 'BEST JUDGMENT ASSESSMENT', IT SHAL L NOT BE A WILD ONE, BUT SHALL HAVE A REASONABLE NEXUS TO THE AVAILABLE MATE RIAL AND THE CIRCUMSTANCES OF EACH CASE. 7.2 IN THIS REGARD, WE ALSO FIND SUPPORT & GUIDANCE FROM THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF BRIJ BHUSAN LAL PRADUMANK KUMAR VS. CIT 115 ITR 524 (SC) (SUPRA) WHEREIN IT WAS HELD AS UN DER : THE AUTHORITY MAKING A BEST JUDGMENT ASSESSMENT MUS T MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME OF THE ASSESSEE AND THOUGH ARBITRARINESS CANNOT BE AVOIDED IN SUCH ESTIMATE THE SAME MUST NO T BE CAPRICIOUS BUT SHOULD HAVE A REASONABLE NEXUS TO THE AVAILABLE MAT ERIAL AND THE CIRCUMSTANCES OF THE CASE. IN VIEW OF THE ABOVE, WE HOLD THAT THE RATE OF PROF IT ESTIMATED BY LD. CIT(A) IS CORRECT AND IN ACCORDANCE WITH THE PROVISION OF LAW . THUS, WE UPHOLD THE ORDER OF LD. CIT(A) AND THIS GROUND OF REVENUE IS DISMISS ED. 8. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN TREATING 1% OF SALE VALUE OF DEPB AS INCOME OF THE ASSESSEE. 9. THE ASSESSEE DURING THE YEAR HAS SHOWN SALE OF D EPB LICENSE OF 42,93,826/- ONLY WHICH WAS TREATED BY THE AO AS INC OME FROM OTHER SOURCES. THUS, THE SALE OF DEPB WAS ADDED TO THE TOTAL INCOM E OF ASSESSEE. ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 9 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THERE IS NO AMBIGUITY THAT SALE OF DEPB LICENSE IS PART AND PARCEL OF BUSINESS INCOME IN TERMS OF PROVISION OF SECTION 28(IIIB) & (IID) OF THE ACT. THEREFORE, AO ERRED IN TREATING THE SAME AS INCOME FROM OTHER SOURCES. THE ASSESSEE ALSO SUBMIT TED THAT PROFIT MARGIN IN CASE OF EXPORT BUSINESS IS VERY MEAGER. THEREFORE, THE GOVT. OF INDIA PROVIDES INCENTIVES TO THE EXPORTERS TO COMPETE IN INTERNATI ONAL MARKET. THEREFORE, THE SAME IS A PART AND PARCEL OF TOTAL TURNOVER OF THE ASSESSEE. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE TREATED THE SALE OF DEPB LICENSE AS BUSINESS TURNOVER OF ASSESSEE AND ACCORDINGLY APPLI ED THE PROFIT @ 1% ON THE SALE VALUE OF DEPB. THUS, LD. CIT(A) DELETED THE AD DITION MADE BY THE AO IN PART BY OBSERVING AS UNDER:- GROUND OF APPEAL NO.4: IN THIS GROUND OF APPEAL THE ASSESSEE ASSAILS THE A CTION OF THE AO. IN TREATING THE ENTIRE DECLARED SALE CONSIDERATION OF DEPB LICE NSE OF RS. 42,93,826/- AS INCOME FROM OTHER SOURCES AND IN MAKING A SEPARATE ADDITION TO THE ESTIMATED INCOMES FROM TRADING. THE ASSESSEE HAS AR GUED THAT THE ACTION OF THE AO. IS CONTRARY TO THE PROVISIONS OF SECTION 28 (IIIB) & (IIID) OF THE ACT ITSELF. THE ASSESSEE HAS ALSO RELIED ON THE DECISION OF THE SUPREME COURT IN TOPMAN EXPORTS V. CIT (2012) 18 TAXMAN.COM 120 (SC) WHEREIN IT WAS HELD THAT WHILE THE FACE VALUE OF THE DEPB WILL FALL UND ER CLAUSE (IIIB) OF SECTION 28. THE DIFFERENCE BETWEEN SALE VALUE AND THE FACE VALU E OF THE DEPB WILL FALL UNDER CLAUSE (IIID) OF SECTION 28 OF IT. ACT. 1961. THE CONTENTIONS OF THE ASSESSEE ARE CONSIDERED. IT IS DULY NOTED THAT, AS PER THE ACT, THE SALE PROCEEDS OF THE DEPB LICENSES CAN NOT BE TREATED AS INCOME FROM OTHER SOURCES IN VIEW OF THE MANDATE OF SECTIO N 28 (IIIB) & (IIID) OF THE ACT. THERE IS ANOTHER ANGLE TO THIS ISSUE. THE A.R HAS ARGUED THAT THE SALE OF DEPB LICENSE CANNOT BE CONSIDERED AS A SEPARATE AND DISTINCT ITEM BECAUSE OF ITS DIRECT AND CLOSE NEXUS WITH EXPORT TURNOVER, AND THEREFORE THE A.R. HAS SOUGHT TO INCLUDE THE SUM RECEIVED AS PART OF THE B USINESS TURNOVER ONLY FOR THE PURPOSES OF ESTIMATION OF PROFITS FROM EXPORT T RADE. THE ORAL ARGUMENTS OF THE AR WERE THAT IT IS A STANDARD PRACTICE FOR EXPO RTERS OF GOODS TO COMPUTE THEIR PROFITABILITY, BY FACTORING IN THE EXPORT INC ENTIVES RECEIVED FROM THE GOVERNMENT AND IT IS ALSO THE BUSINESS PRACTICE TO DETERMINE COST OF GOODS NET OF EXPORT INCENTIVE FOR THE PURPOSE OF PRICING! PROFITABILITY OF SUCH EXPORT. FURTHER, IT WAS CLAIMED THAT IN ORDER TO GAIN ENTRY INTO FOREIGN MARKETS AND TO BE COMPETITIVE THEREIN, EXPORTERS OPERATE ON THIN M ARGINS, IN WHICH CASE THEIR SELLING PRICE MAY NOT BE VERY DIFFERENT FROM THEIR COST OF PURCHASES AS IN THE CASE OF THE PRESENT ASSESSEE, ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 10 THE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SU PRA) HAD OBSERVED THAT THE OBJECTIVE OF DEPB SCHEME IS- TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAID ON FUTURE IMPORT FOR THE PURPOSES OF EXPORT OF PRODUCTS. THE NEUTRALIZATION OF THE COST OF CUSTOMS DUTY UNDER THE DEPB SCHEME I S THROUGH GRANTING A DUTY CREDIT AGAINST THE EXPORT PRODUCT AND THIS CRE DIT CAN BE UTILIZED FOR PAYING CUSTOMS DUTY ON ANY ITEM WHICH IS FREELY IMPORTABLE . THE DEPB IS ISSUED AGAINST THE EXPORTS TO THE EXPORTER AND IS TRANSFER ABLE BY THE EXPORTER. THE DEPB IS A KIND OF ASSISTANCE GIVEN BY THE GOVERNMEN T OF INDIA TO AN EXPORTER TO PAY CUSTOMS DUTY ON ITS IMPORTS AND IT IS RECEIV ABLE ONCE EXPORTS ARE MADE AND AN APPLICATION IS MADE BY THE EXPORTER FOR DEPB . THE SUPREME COURT HAS ALSO HELD THAT THE COST OF ACQUIRING DEPB IS NOT NI L BECAUSE THE PERSON ACQUIRES IT BY PAYING CUSTOMS DUTY ON THE IMPORT CO NTENT OF THE EXPORT PRODUCT AND THE DEPB WHICH ACCRUES TO A PERSON AGAINST EXPO RTS HAS A COST ELEMENT IN IT. THE SUPREME COURT IN THIS CASE WHILE DISAPPR OVING THE HIGH COURT'S ORDER WHICH HAD BEEN IMPUGNED BEFORE IT HAD DECLARE D THAT 'THE HIGH COURT HAS FAILED TO APPRECIATE THAT DEPB REPRESENTS PART OF THE COST INCURRED BY A PERSON FOR MANUFACTURE OF THE EXPORT PRODUCT AND HE NCE EVEN WHERE THE DEPB IS NOT UTILIZED BY THE EXPORTER BUT IS TRANSFE RRED TO ANOTHER PERSON, THE DEPB CONTINUES TO REMAIN AS A COST TO THE EXPORTER. WHEN, THEREFORE, DEPB IS TRANSFERRED BY A PERSON, THE ENTIRE SUM RECEIVED BY HIM ON SUCH TRANSFER DOES NOT BECOME HIS PROFITS. IT IS ONLY THE AMOUNT THAT HE RECEIVES IN EXCESS OF THE DEPB WHICH REPRESENTS HIS PROFITS ON TRANSFE R OF THE DEPB.' FURTHER THE HON'BLE SUPREME COURT OF INDIA, IN THE CASE OF VIKA S SALES CORPORATION V. COMMISSIONER OF COMMERCIAL TAXES [1996] 102 STC 106 ;(1996) (2) SUPP. SCR 204 HAD ALREADY HELD THAT 'REP LICENSES' ARE GO ODS AND ARE CHARGEABLE TO TAX UNDER THE STATE SALES TAX ACT. AS PER THE IM PORT POLICY IN VOGUE FOR THE YEARS BEFORE THE SUPREME COURT, THERE WERE PROVISIO N FOR ISSUANCE OF 'REPLENISHMENT LICENCES' (FOR SHORT 'REP LICENCES') . THE OBJECTIVE BEHIND THE LICENCES WAS TO PROVIDE TO THE REGISTERED EXPORTERS THE FACILITY OF IMPORTING THE ESSENTIAL INPUTS REQUIRED FOR THE MANUFACTURE OF TH E PRODUCTS EXPORTED. THE ESSENTIAL IDEA WAS TO ENCOURAGE EXPORTS AND FOR THA T PURPOSE IMPORT LICENCES CALLED REP. LICENCES WERE ISSUED EQUAL TO THE PRESC RIBED PERCENTAGE OF THE VALUE OF EXPORTS. THESE LICENCES WERE MADE FREELY T RANSFERABLE. THE SUPREME COURT HELD THE REP TO BE GOODS. SIMILARLY IN THE CA SE OF PHILCO EXPORTS V. SALES TAX OFFICER 93 (2001) DLT 56, 2002 (64) DRJ 2 11, THE HON'BLE DELHI HIGH COURT HELD THAT 'DEPB' ARE GOODS AND UPHELD TH E RIGHT OF THE STATE OF DELHI TO TAX THE SAME ON THEIR TRANSFER. IN THE CASE OF THE ASSESSEE THE FACE VALUE OF THE D EPB IS A CASH ASSISTANCE TAXABLE U/S 28(IIIB) OF THE ACT AND IS DEFINITELY A BUSINESS RECEIPT BUT IT HAS A COST ALREADY INCLUDED IN THE PURCHASES AND EXPORT C OSTS AS INDICATED BY THE SUPREME COURT IN TOPMAN EXPORTS (SUPRA). THE ACT DE CLARES THE RECEIPTS AS TAXABLE BUSINESS INCOME U/S 28(IIIB) OF THE ACT TO PREVENT ANY CLAIM OF BEING TERMED AS A CAPITAL RECEIPT AND FOR THE PURPOSES OF CALCULATION OF DEDUCTION U/S. 80HHC OF THE ACT. FURTHER WHEN THE DEPB IS SOL D THE DIFFERENCE BETWEEN ITS FACE VALUE AND THE SALE VALUE IS ITS PROFIT ON ITS TRANSFER AND IS TAXABLE U/S 28(IIID) OF THE ACT. THE LEGAL POSITION IS VERY CLE AR UP TO THIS STAGE. THE CONFUSION ARISES BECAUSE THE ASSESSEE HAS NOT B EEN ABLE TO PROVE THE SALE PROCEEDS OF THE DEPB AND THE ASSESSEE IS ALSO NOT IN POSSESSION OF THE ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 11 RELEVANT DOCUMENTS LIKE THE DEPB LICENCES AND THEIR VALUES. EVEN THE EXPORT SALES ARE BELIEVED TO BE MADE BY THE ASSESSEE AS AN ASSOCIATE OF ONE R. G TRADERS AND THE FEW EXPORT BILL PAYMENT ADVICES PRO DUCED BY THE ASSESSEE ALSO CARRY THE NAMES OF BOTH THE PARTIES. THE ASSES SEE, HOWEVER, HAS NOT EXPLAINED THE SAME. THE ENTIRE DEPB HAS BEEN DECLAR ED RECEIVED IN ONE GO BY THE ASSESSEE ON 16.1.2006 WHEREAS THE FEW DEPB S ALE PAPERS SOUGHT TO BE PRODUCED ARE FOR VARIOUS DATES AND MADE OUT IN T HE NAME OF VARIOUS PARTIES. UNDER THE CIRCUMSTANCES IT CANNOT BE HELD THAT THE SUM OF RS. 42,93,826/- REPRESENTS ONLY THE DEPB SALE AND THE F ACE VALUE SALE VALUE OF THE DEPB IS NOT AVAILABLE, THEREFORE THE SUM DECLAR ED AS DEPB IS ALSO TAKEN AS TURNOVER OF THE ASSESSEE ONLY AND 1% OF THE SAID RECEIPTS ARE FURTHER HELD TO REPRESENT TAXABLE PROFITS OF THE ASSESSEE. AS A RESULT, IN ADDITION TO THE NET PROFIT DECLARED IN GROUND OF APPEAL NO. 3 ABOVE, TH E INCOME OF THE ASSESSEE IS FURTHER ENHANCED BY A SUM OF RS.4,29,383/-. AS A CO ROLLARY, THE ADDITION OF RS.42,93,826/- IS REDUCED TO RS.4,29,383/- AND THE ASSESSEE GETS A RELIEF OF RS.38,64,443/-. CONSEQUENTLY THE GROUND OF APPEAL N O.4 OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THE REVENUE BEING AGGRIEVED BY THIS ORDER OF LD. CI T(A) IS IN APPEAL BEFORE US. 11. LD. DR BEFORE US SUBMITTED THAT THE GROSS VALUE OF DEPB LICENSE SHOULD BE ADDED TO THE TOTAL INCOME OF ASSESSEE. LD. CIT(A ) HIMSELF HAS RECORDED IN HIS ORDER THAT NECESSARY DETAILS REPRESENTING THE F ACE VALUE AS WELL AS SALE VALUE OF DEPB WERE NOT AVAILABLE. HE ALSO SUBMITTED THAT NOTHING WAS PRODUCED BEFORE THE AO. THEREFORE, THE MATTER SHOUL D BE RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION. HE VEHEMENTLY RE LIED ON THE ORDER OF AO. ON THE OTHER HAND, LD. AR SUBMITTED THAT THERE IS N O AMBIGUITY UNDER THE PROVISION OF THE ACT THAT THE SALE VALUE OF DEPB IS PART AND PARCEL OF TOTAL TURNOVER OF THE BUSINESS OF ASSESSEE. LD. AR ALSO S UBMITTED THAT ASSESSEE IN THE EARLIER YEARS HAS DECLARED PROFIT LESS THAN 1% OF ITS TOTAL TURNOVER WHICH IS INCLUSIVE OF DEPB. THEREFORE, FOR THE YEAR UNDER CO NSIDERATION THE RATE OF 1% SHOULD BE ADOPTED ON THE ABOVE AMOUNT OF SALE OF DE PB. HE RELIED ON THE ORDER OF LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, AO HAS TREATED THE REVENUE FROM THE SALE OF DEPB AS INCOME FROM OTHER SOURCE. HOWEVER, LD. CIT(A) ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 12 REVERSED THE ORDER OF AO BY HOLDING THAT THE AMOUNT OF SALE FOR DEPB IS PART AND PARCEL OF THE TOTAL TURNOVER OF ASSESSEE. NOW T HE ISSUE BEFORE US ARISES WHETHER THE AMOUNT OF DEPB REPRESENTS THE INCOME FR OM OTHER SOURCE OR INCOME FROM BUSINESS. WE FIND THAT THERE IS A EXPLI CIT PROVISION U/S 28(IIIB) OF ACT WHICH CLEARLY SAYS THAT THE AMOUNT OF DEPB WILL BE TAXED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION THE RELEVANT PORTION OF SECTION 28(IIIB) READS AS UNDER:- PROFITS AND GAINS OF BUSINESS OR PROFESSION. 83 28. 84 THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME- TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, (I) THE PROFITS AND GAINS 85 OF ANY BUSINESS OR PROFESSION 85 WHICH WAS CARRIED ON BY THE ASSESSEE AT ANY TIME DURING THE P REVIOUS YEAR ; (II) ANY COMPENSATION 85 OR OTHER PAYMENT DUE TO 85 OR RECEIVED BY 85 , (A) ANY PERSON, BY WHATEVER NAME CALLED, M ANAGING THE WHOLE OR SUBSTANTIALLY THE WHOLE OF THE AFFAIRS OF AN INDIAN COMPANY, AT OR IN CONNECTION WITH THE TERMINATION OF HIS MANAGEMENT O R THE MODIFICATION OF THE TERMS AND CONDITIONS RELATING THERETO; (B) ANY PERSON, BY WHATEVER NAME CALLED, M ANAGING THE WHOLE OR SUBSTANTIALLY THE WHOLE OF THE AFFAIRS IN INDIA OF ANY OTHER COMPANY, AT OR IN CONNECTION WITH THE TERMINATION OF HIS OFFICE OR THE MODIFICATION OF THE TERMS AND CONDITIONS RELATING THERETO ; (C) ANY PERSON, BY WHATEVER NAME CALLED, HOLDING AN AGENCY IN INDIA FOR ANY PART OF THE ACTIVITIES RELATING TO THE BUSINESS OF ANY OTHER PERSON, AT OR IN CONNECTION WITH THE TERMINATION OF THE AGENCY OR THE MODIFICATION OF THE TERMS AND CONDITIONS RELATING THERETO ; 86 [(D) ANY PERSON, FOR OR IN CONNECTION WITH THE VE STING IN THE GOVERNMENT, OR IN ANY CORPORATION OWNED OR CONTROLLED BY THE GOVER NMENT, UNDER ANY LAW FOR THE TIME BEING IN FORCE, OF THE MANAGEMENT OF ANY PROPERTY OR BUSINESS ;] (III) INCOME DERIVED BY A TRADE, PROF ESSIONAL OR SIMILAR 87 ASSOCIATION FROM SPECIFIC SERVICES 87 PERFORMED FOR ITS MEMBERS ; 88 [(IIIA) PROFITS ON SALE OF A LICENCE GRANTED UNDE R THE IMPORTS (CONTROL) ORDER, 1955, MADE UNDER THE IMPORTS AND EXPORTS (CONTROL) ACT, 1947 (18 OF 1947) ;] 89 [(IIIB) CASH ASSISTANCE (BY WHATEVER NAME CALLED) RECEIVED OR RECEIVABLE BY ANY PERSON AGAINST EXPORTS UNDER ANY SCHEME OF THE GOVE RNMENT OF INDIA ;] A PLAIN LOOK AT THE ABOVE STATUTORY PROVISION MAKES IT CLEAR WITHOUT ANY AMBIGUITY THAT THE AMOUNT OF PROFIT / SALE FROM THE DEPB WILL BE PART AND PARCEL OF THE TOTAL TURNOVER OF THE BUSINESS OF ASS ESSEE. WE ALSO NOTE THAT THE INCENTIVES IN THE FORM OF DEPB ARE GIVEN TO THE EXP ORTERS AS THERE IS CUT THROAT ITA NO.1097/KOL/2015 A.Y. 2006-0 7 ITO WD-51(4) KOL. VS. SH. RABINDRA NATH SIKDAR PAGE 13 COMPETITION IN THE INTERNATIONAL MARKET. ONCE WE HA VE HELD THAT THE GROSS SALE VALUE OF DEPB IS PART AND PARCEL OF THE TURNOVER OF THE BUSINESS OF ASSESSEE THEN IN OUR CONSIDERED VIEW THE SAME RATE OF PROFIT WILL BE APPLIED IN DETERMINING THE TAXABLE INCOME OF ASSESSEE. FROM TH E ABOVE PROPOSITION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A ) AND ACCORDINGLY WE UPHOLD THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMIS SED. 13. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 20/ 04/2018 SD/- SD/- ($ &) ( &) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (- 20 / 04 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-51(4), UTTARAPAN COMPLEX, ULTAD ANGA, MANIKTALA CIVIC CENTRE, SCH.-VII/ M, KOLKATA-54 2. /RESPONDENT-SHRI RABINDRA NATH SIKDAR,AJ-253,SECTOR -II, SALT LAKE CITY,KOLKATA-91 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 $$3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,