DCIT RG 8(2), MUMBAI V. HERTZ CHEMICALS LTD, MUMBAI

ITA 111/MUM/2013

• Counselvise Citation: 11119914 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 16-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reassessment proceedings
• Section: 143(3); 80HHC; 32; 148; 263; 63; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.111/MUM/2013 ASSESSMENT YEAR: 2004-05 DCIT-8(2), R.NO.216-A, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S HERTZ CHEMICALS LTD., 2/3, SARAF KASKAR INDUSTRIAL ESTATE, S.V.ROAD, JOGESHWARI (WEST) MUMBAI-400101 ( / REVENUE) ( !'# $ /ASSESSEE) P.A. NO. AAACH2664L / REVENUE BY SHRI JEETENDRA KUMAR-DR !'# $ / ASSESSEE BY SHRI DARSHAK SHAH % & ' $ ( / DATE OF HEARING : 22/06/2015 ' $ ( / DATE OF ORDER: 24/07/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 03/10/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, BROADLY, THE GROUND RAISED PERTAINS TO ALLOWING THE APPEAL M/S HERTZ CHEMICALS LTD. ITA NO.111/MUM/2013 2 OF THE ASSESSEE ON THE GROUND THAT THERE WAS NO MIS TAKE APPARENT FROM RECORD WHICH COULD NOT HAVE BEEN RECT IFIED U/S 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER TH E ACT) SPECIALLY WHEN, THE ORDER OF THE LD. COMMISSIONER I NVOKING REVISIONAL JURISDICTION U/S 263 OF THE ACT WITH RES PECT TO CLAIM OF 80HHC OF THE ACT WAS QUASHED BY THE TRIBUN AL. 2. DURING HEARING OF THIS APPEAL, THE LD. DR, SHRI JEETENDRA KUMAR ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY ASSERTING THAT TH E LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN ALLOWING TH E APPEAL OF THE ASSESSEE BY OPINING THAT THERE WAS NO APPARENT MISTAKE WHICH CAN BE RECTIFIED U/S 154 OF THE ACT. ON THE OTHER HAND, SHRI DARSHAK SHAH, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF COSMETICS AND TOILET RIES FROM THE DAMAN UNIT AND ALSO IN THE BUSINESS OF TRA DING AND INVESTMENT IN SHARES, MUTUAL FUNDS AND BONDS, OPERATED FROM MUMBAI UNIT. THE ASSESSEE CLAIMED TOT AL INCOME OF RS.4,43,858/- IN ITS RETURN FILED ON 01/1 1/2004, AFTER CLAIMING EXEMPTION OF RS.3,33,57,663/- U/S 80 IB AND DEDUCTION OF RS.3,32,39,666/- U/S 80HHC FROM THE GR OSS TOTAL INCOME OF RS.3,98,01,340/-. THE CLAIMED DEDUC TION U/S 80HHC WAS SCRUTINIZED AT DIFFERENT LEVELS LIKE U/S M/S HERTZ CHEMICALS LTD. ITA NO.111/MUM/2013 3 143(3) OF THE ACT ON 19/12/2006, BY THE LD. COMMISS IONER OF INCOME TAX (APPEALS) ON 16/08/2007, BY THE TRIBU NAL ON 08/10/2009 AND ALSO BY THE LD. COMMISSIONER U/S 263 VIDE ORDER DATED 25/03/2008. THE ASSESSEE THEREAFTE R RECEIVED NOTICE U/S 148 OF THE ACT. IN THE REASSES SMENT PROCEEDINGS, IT WAS BROUGHT TO THE NOTICE OF THE AS SESSING OFFICER VIDE LETTER DATED 20/08/2010 THAT THE LD. COMMISSIONER IN ITS REVISIONARY JURISDICTION, U/S 2 63 OF THE ACT, HAS DISALLOWED THE CLAIMED DEDUCTION U/S 80HHC OF THE ACT. HOWEVER, THAT ORDER WAS QUASHED BY THE TR IBUNAL, WHICH AS PER THE ASSESSING OFFICER WAS NOT IN HIS KNOWLEDGE WHILE FRAMING REASSESSMENT PROCEEDINGS; THEREFORE, HE ISSUED NOTICE U/S 154 OF THE ACT TO R ECTIFY THE REASSESSMENT ORDER. THE ORDER OF RECTIFICATION U/S 154 OF THE ACT WAS CHALLENGED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WHEREIN, IT WAS HELD THAT THE ISSUE IS DEBATABLE AND IN EITHER CASE, THE ASSESSING OFFICER CANNOT RESORT TO RECTIFICATION U/S 154 OF THE ACT. NOW, TH E REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.1. IF THE OBSERVATION MADE IN THE ORDER U/S 154 OF THE ACT, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MA TERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT THE TRIBUNAL VIDE ORDER DATED 28 TH OCTOBER, 2010 (ITA NO.3467/MUM/2008) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, FOLLOWING THE DECISION FROM HONBLE HIGH COURT OF GUJARAT (248 ITR 126) IN THE CASE OF SHASH I THEATERS PVT. LTD. HELD THE REVISIONAL ORDER PASSED U/S 263 M/S HERTZ CHEMICALS LTD. ITA NO.111/MUM/2013 4 OF THE ACT WITHOUT JURISDICTION, CONSEQUENTLY, SET ASIDE THE SAME. SUBSEQUENTLY, NOTICE U/S 154 OF THE ACT WAS I SSUED TO THE ASSESSEE ON 12/11/2011 AND ORDER U/S 154 WAS PASSED ON 07/12/2011. THE ISSUE OF CLAIMED DEDUCTIO N U/S 80HHC OF THE ACT HAD ALREADY BEEN QUASHED BY TH E TRIBUNAL. EVEN OTHERWISE, THE HONBLE APEX COURT IN ITO VS VOLKART BROTHERS & ORS. (82 ITR 50) (SC) HELD THAT . A MISTAKE APPARENT ON RECORD MUST BE OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIO NS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MIS TAKE APPARENT FROM THE RECORD. LIKEWISE, IN CIT VS COMPUTER GRAPHICS LTD. (285 ITR 84) (MAD.), THE HONBLE HIGH COURT HELD THAT. THE THREE ADDITIONS, SUCH AS DISALLOWANCES U/S 32 AB AND 80I AND FOREIGN EXCHANGE FLUCTUATION LOSS WERE HIGHLY DEBATABLE ISSUE AND THERE WERE TWO OPINIONS POSSIBLE, AND IN SUCH A SITUATION, IT WAS NOT POSSI BLE TO RECTIFY BY INVOKING SECTION 154 IDENTICAL RATIO WAS LAID DOWN BY HONBLE CALCUTTA H IGH COURT IN HINDUSTAN LEVER LTD. VS JCIT 284 ITR 42 (C AL.). THE LEGAL POSITION, IF ANALYZED, CLEARLY STATES THAT A DEBATABLE ISSUE/TWO OPINION POSSIBLE, CANNOT BE RECTIFIED U/S 154 OF THE ACT. IN THE INSTANT CASE, THE CLAIMED EXEMPTIO N U/S 80HHC HAD ALREADY REACHED FINALITY BY THE ORDER OF THE M/S HERTZ CHEMICALS LTD. ITA NO.111/MUM/2013 5 TRIBUNAL AND FURTHER APPEAL AGAINST THE ORIGINAL AS SESSMENT AND ALSO AGAINST REVISIONARY JURISDICTION U/S 263 O F THE ACT, CHALLENGED BEFORE THE TRIBUNAL WAS ALSO QUASHED. TH E ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S 143(3)/147 OF THE ACT CLEARLY STATED THAT NO DISALL OWANCE IS CALLED FOR. HOWEVER, SUBSEQUENTLY, ISSUED NOTICE U/ S 154 TO RECTIFY THE SAME ORDER ON THE SAME ISSUE, MEANING T HEREBY, HE WAS NOT IN AGREEMENT WITH EARLIER ALLOWANCE/ DISALLOWANCE. THUS, IT CAN BE CONCLUDED THAT IN A ORDER UNDER SECTION 154 ONLY A MISTAKE WHICH ARE APPARENT FROM RECORD AND DOES NOT NEED A LONG DRAWN PROCESS/DEBAT E TO RESOLVE IT CAN ONLY BE RECTIFIED, THUS, WE AFFIRM TH E CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 24/07/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % & MUMBAI; * DATED : 24/07/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 % 3$ ( ,- ) / THE CIT, MUMBAI. 4. 2 2 % 3$ / CIT(A)- , MUMBAI M/S HERTZ CHEMICALS LTD. ITA NO.111/MUM/2013 6 5. 56 0$ ! , 2 ,-( ,! 7 , % & / DR, ITAT, MUMBAI 6. 8' 9& / GUARD FILE. / BY ORDER, 15-$ 0$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI