ACIT Range II, V. Brass City Creations,

ITA 1120/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9998 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2009
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 17-08-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 27-03-2008
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: P K MISHRA
• Keywords: Set aside
• Section: 80HHC; 80IB; 80IA; 80HH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO. 1120/DEL/2008 ASSESSMENT YEAR : 2003-04 ASSTT. COMMISSIONER OF INCOME- TAX, RANGE II, MORADABAD. VS. M/S BRASS CITY CREATION, NEEL KANTH COLONY, MORADABAD. PAN : AADFB2588D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.K. MISHRA, CA REVENUE BY : SHRI MANISH GUPTA, DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF THE CIT (A) DATED 2 ND JANUARY, 2008 FOR ASSESSMENT YEAR 2003-04. THE GR OUNDS OF APPEAL READ AS UNDER:- 1. LD. COMMISSIONER OF INCOME TAX (APPEALS), BAREIL LY HAS ERRED IN LAW AND FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTIONS U/S 80IB AND 80HHC ON T HE GROSS TOTAL INCOME IN SPITE OF THE CLEAR PROVISIONS OF SE CTION 80IB (13) READ WITH SECTION 80IA (9) THAT DOUBLE DEDUCTI ON IS NOT ALLOWABLE ON THE SAME INCOME. 2.. THAT THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), BAREILLY MAY KINDLY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. ANY OTHER GROUNDS OF APPEAL WHICH MAY BE TAKEN AT THE TIME OF APPEAL PROCEEDINGS. ITA NO.1120/DEL/2008 2 2. WHILE CALCULATING DEDUCTION U/S 80HHC, THE ASSES SING OFFICER REDUCED DEDUCTION ALLOWED U/S 80IB AMOUNTING TO RS.7,62,874 /-. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE LD. CIT (A) THAT DEDUCTION U/S 80-IB COULD NOT BE REDUCED WHILE COMPUTING DEDUCTION U/S 80HHC. THE L D. CIT (A) HAS HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AGAINST WHICH THE D EPARTMENT IS AGGRIEVED, HENCE, IN APPEAL. 3. LD. DR RELYING ON THE ORDER OF SPECIAL BENCH IN THE CASE OF ASSTT. COMMISSIONER OF INCOME-TAX VS. HINDUSTAN MINT AND A GRO PRODUCTS PVT. LTD. 119 ITD 107 (DEL) (SB) CONTENDED THAT THE COMPUTATION M ADE BY THE ASSESSING OFFICER WAS IN ACCORDANCE WITH THE LAW AND LD. CIT (A) HAS ERRED IN HOLDING THAT DEDUCTION U/S 80-IB COULD NOT BE REDUCED WHILE COMP UTING DEDUCTION U/S 80HHC. HE SUBMITTED THAT THE ORDER OF THE ASSESSIN G OFFICER SHOULD BE RESTORED AND THAT OF LD. CIT (A) SHOULD BE SET ASIDE. 4. LD. LD. AR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LD. CIT (A). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE ISSUE RAISED BY THE DEPARTMENT IN ITS APPEAL WAS CONSIDERED IN THE AFOREMENTIONED DECISION OF SPECIA L BENCH AND IT WAS HELD THAT WHILE ALLOWING DEDUCTION UNDER ANY PROVISION OF CHA PTER VI-A WITH HEADING C (COVERING SECTION 80H, 80HHC, ETC.) IS TO BE REDUCE D BY AN AMOUNT OF DEDUCTION ALLOWED U/S 80IA/80IB. THE RELEVANT OBSERVATIONS F ROM THE SAID DECISION ARE REPRODUCED BELOW::- 32. WE HAVE CONSIDERED AND DISCUSSED ABOVE SUBMI SSIONS OF SHRI VOHRA, BUT HAVE NOT FOUND ANY FORCE IN THEM. I N OUR CONSIDERED OPINION, THE LANGUAGE USED IN SECTION 80 -IA(9)/80- IB(9A) IS CLEAR AND UNAMBIGUOUS AND IS REQUIRED TO BE GIVEN EFFECT TO. DEDUCTION OF PROFITS AND GAINS ALLOWED U NDER SECTION 80-IA/80-IB IS NOT TO BE ALLOWED AGAIN UNDER ANY OT HER PROVISION. THERE IS THEN FURTHER RESTRICTION ON TOTAL DEDUCTIO N NOT EXCEEDING ELIGIBLE PROFIT OF THE UNDERTAKING. NO USEFUL PURPO SE WOULD BE SERVED IN REPEATING WHAT WE HAVE OBSERVED ABOVE. ITA NO.1120/DEL/2008 3 33. SHRI VOHRA THEN CONTENDED THAT SECTIONS 80HH C AND 80-IA OR 80-IB OPERATE IN DIFFERENT FIELDS INASMUCH AS SE CTION 80HHC IS APPLICABLE ONLY TO ALL ELIGIBLE UNITS EXPORTING GOO DS OR MERCHANDISE WHEREAS SECTION 80-IA OR 80-IB IS APPLI CABLE ONLY TO ALL ELIGIBLE UNITS EVEN IF GOODS MANUFACTURED IN TH OSE UNITS ARE NOT EXPORTED, AND IN THAT EVENT, THE QUESTION OF RE DUCING DEDUCTION ALLOWED UNDER SECTION 80-IA OR 80-IB WOUL D NOT ARISE. SHRI VOHRA HAD PLACED RELIANCE ON DECISION OF HONB LE BOMBAY HIGH COURT IN THE CASE OF GODREJ AGROVET LTD. V. AS STT. CIT [2007] 290 ITR 252 . AS FAR AS THIS LIMITED ISSUE IS CONCERNED, WE ARE INCLINED TO AGREE WITH THE SUBMISSION ADVANCED BY S HRI VOHRA. RESTRICTION CONTAINED IN SECTION 80-IA OR 80-IB NOT TO ALLOW REPEATED DEDUCTIONS ARE APPLICABLE TO SAME PROFIT. THIS IS MORE THAN CLEAR FROM USE OF WORD SUCH PROFIT IN SECTIO N 80-IA/80-IB. IN OTHER WORDS, THERE HAS TO BE IDENTITY OF PROFITS ON WHICH DEDUCTION UNDER MORE THAN ONE PROVISION UNDER CHAPT ER VI-A IS CLAIMED BY THE ASSESSEE. THE PROVISIONS ARE APPLICA BLE WHERE ON THE PROFIT OF THE UNDERTAKING OR ENTERPRISE, DEDUCT ION IS CLAIMED UNDER SECTION 80-IA OR 80-IB AND THEN ON THE SAME P ROFIT OF THE UNDERTAKING, DEDUCTION UNDER OTHER PROVISIONS LIKE 80HHC IS CLAIMED. IN SUCH CASES, RESTRICTION CONTAINED IN AB OVE PROVISIONS WOULD APPLY. IF PROFITS ARE DERIVED FROM SEPARATE U NDERTAKING, RESTRICTION CONTAINED IN ABOVE PROVISION WOULD NOT BE APPLICABLE. 34. SHRI VOHRA ALSO RELIED UPON DECISION OF SUPR EME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. (SUPRA) TO CO NTEND THAT SECTION 80-IA(9) CANNOT CONTROL THE MECHANISM OF CO MPUTING THE DEDUCTION UNDER SECTION 80HHC(3) OF INCOME-TAX ACT. HE FURTHER SUBMITTED THAT WHERE ASSESSEE WAS FOUND THAT PROVIS ION ALLOWING DEDUCTION OF ASSUMPTION IS APPLICABLE, THEN THOSE P ROVISIONS ARE TO BE INTERPRETED LIBERALLY. RELIANCE WAS PLACED ON DECISION OF SUPREME COURT IN THE CASE OF P.R. PRABHAKAR (SUPRA) . 35. WE HAVE ALREADY DEALT WITH ABOVE CONTENTION. IN OUR CONSIDERED OPINION, ALL STATUTORY PROVISIONS ARE IN TER-RELATED AND ARE PART OF ONE SCHEME. THIS CANNOT BE READ DE HORS ONE AND OTHER. RESTRICTION IMPOSED IN SECTION 80-IA(9)/80-I B(9A) ARE TO BE READ IN ALL SECTIONS AND GIVEN EFFECT TO. THIS WOUL D ONLY GIVE HARMONIOUS READING. THE DECISION OF SUPREME COURT R ELIED UPON BY SHRI VOHRA ALSO SUPPORT ABOVE PROPOSITION ALTHOU GH THEY DO NOT DEAL WITH SECTION 80-IA/80-IB OF THE ACT. WE AR E UNABLE TO FIND ANY SUBSTANCE IN ABOVE ARGUMENT OF THE LEARNED COUNSEL. 36. SHRI VOHRA, ON THE APPLICABILITY OF THE DECIS ION OF HONBLE MADRAS HIGH COURT IN THE CASE OF SCM CREATIONS (SUP RA), ITA NO.1120/DEL/2008 4 SUBMITTED THAT PRINCIPLE OF SUB-SILENCIO RULE COULD NOT BE APPLIED TO THE DECISION. THE AFORESAID DECISION OF HIGH COU RT BEING DECISION OF A SUPERIOR COURT HAS TO BE GIVEN PREFER ENCE OVER THE DECISION OF ROGINI GARMENTS CASE (SUPRA) (SPECIAL BENCH). IN SUPPORT OF THIS CONTENTION, IT WAS SUBMITTED THAT E VEN DECISION OF NON-JURISDICTIONAL HIGH COURT IS TO BE GIVEN PREFER ENCE OVER THE SPECIAL BENCH DECISION. IN THIS CONNECTION, RELIANC E WAS PLACED ON THE DECISION OF MADHYA PRADESH HIGH COURT IN THE CASE OF NATIONAL TEXTILE CORPN. LTD. V. CIT [2008] 171 TAXMAN 339 AS ALSO ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ALL INDIA LAKSHMI COMMERCIAL BANK OFFICERS UNION V. UNI ON OF INDIA [1984] 150 ITR 1. SHRI VOHRA ALSO SUBMITTED THAT CE RTAIN OBSERVATIONS OF THE BENCH OF ITAT IN THE CASE OF NO DI EXPORTS (SUPRA), MORADABAD, CLEARLY EXCEEDED ITS JURISDICTI ON. AFTER CAREFUL CONSIDERATION OF DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF SCM CREATIONS (SUPRA), WE HAVE ALREADY HELD THAT THE SAID DECISION CANNOT BE TREATED AS A PRECEDENT. THE ISSUE HAS BEEN DISCUSSED THREADBARE AND THOSE REASONS NEE D NOT BE REPEATED AGAIN. OBSERVATIONS OF HONBLE MADRAS HIGH COURT IN THE LATER DECISION DATED 20-12-2008 IN CASE OF GENE RAL OPTICS (ASIA) LTD. (SUPRA) HAS PUT THE CONTROVERSY BEYOND ANY SHADOW OF DOUBT. IN THE ABOVE CASE, AMENDMENT BROUGHT WITH EF FECT FROM 1- 4-1999 INTRODUCING SECTIONS (9) AND (9A) IN 80-IA A ND 80-IB RESPECTIVELY WERE CLEARLY NOTICED. THESE AMENDMENTS WERE NOT BROUGHT TO THE KNOWLEDGE OF THE HONBLE COURT IN TH E CASE OF SCM CREATIONS. THEREFORE, THERE IS NO QUESTION OF S UPERSESSION OF SPECIAL BENCH DECISION IN THE CASE OF ROGINI GAR MENTS (SUPRA). THE SAID DECISION IS APPLICABLE WITH FULL FORCE. WE DO AGREE THAT CORRECT PROPOSITIONS IN THE CASE OF NODI EXPORTS (SUPRA) ARE OVERSTATED. THERE IS NO QUESTION OF TRI BUNAL NOT FOLLOWING AND APPLYING DECISION OF SUPERIOR COURT. THE QUESTION INVOLVED HERE IS WHETHER DECISION OF SCM CREATIONS CAN BE TREATED AS A PRECEDENT. FOR THE REASONS ALREADY GIV EN, THE SAID DECISION DID NOT LAY DOWN THAT SECTION80-IA(9) OR 8 0-IB(13) SHOULD BE DISREGARDED WHILE COMPUTING DEDUCTION UND ER SECTION 80HHC OR OTHER DEDUCTION UNDER CHAPTER C OF VI-A. 37. WE ACCORDINGLY HOLD THAT DEDUCTION TO BE ALLO WED UNDER ANY OTHER PROVISION OF CHAPTER VI-A WITH THE HEADING C IS TO BE REDUCED BY AMOUNT OF DEDUCTION ALLOWED UNDER SECTIO N 80-IB/80- IA OF THE INCOME-TAX ACT. WE ANSWER THE QUESTION RE FERRED TO THE SPECIAL BENCH IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE REVENUE. 6. THEREFORE, RESPECTFULLY FOLLOWING THE AFOREMENTI ONED DECISION OF SPECIAL BENCH CONSISTING OF FIVE MEMBERS, WE HOLD THAT THE LD. CIT (A) HAS ERRED IN ITA NO.1120/DEL/2008 5 DIRECTING THE ASSESSING OFFICER TO COMPUTE DEDUCTIO N U/S 80HHC WITHOUT REDUCING DEDUCTION U/S 80-IB. LD. ASSESSING OFFICE R WAS RIGHT IN COMPUTING THE DEDUCTION U/S 80HHC WHEN HE HAS REDUCED THE DEDUCTI ON ALLOWED U/S 80-IB WHILE COMPUTING DEDUCTION U/S 80HHC. WE, THEREFORE , RESTORE THE ORDER OF THE ASSESSING OFFICER SO AS IT RELATES TO COMPUTATION O F DEDUCTION U/S 80HHC AND THE ORDER OF THE LD. CIT (A) ON THIS ISSUE IS SET ASIDE . WITH THESE OBSERVATIONS THE DEPARTMENTAL APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. . 8. THE ORDER PRONOUNCED IN THE OPEN COURT ON 17.08. 2009. [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 17.08.2009. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES