Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 6860 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 11 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-04-2011
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
31-03-2011
Assessment Year
2004-2005
Appeal Filed On
13-04-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1142/AHD/2009 A. Y.: 2004-05 AMBUJA INTERMEDIATES PVT. LTD, 910/A, NAR-NARAYAN COMPELEX, SWASTIK CROSS ROAD, NAVRANGPURA, AHMEDABAD VS THE INCOME TAX OFFICER, WARD 1(1), AHMEDABAD PA NO. AACCA 1236 B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI N. C. AMIN, AR RESPONDENT BY SHRI R. K. DHANISTA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VI , AHMEDABAD DATED 4 TH DECEMBER, 2008 FOR ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW A ND ON THE FACTS OF THE CASE IN AGREEING WITH THE LEARN ED A. O. AND THEREBY DISMISSING THE APPEAL OF THE APPELLANT. 2. THAT THE WORKING MADE BY THE LEARNED A. O. IS INCORRECT AND NOT IN ACCORDANCE WITH THE LAW AND RE VISED WORKING SUBMITTED BY THE APPELLANT DURING THE COURS E OF APPELLATE PROCEEDINGS MAY BE CONSIDERED IN PROPER PERSPECTIVE AND APPEAL OF THE APPELLANT BE DECIDED ON MERITS. DEDUCTION OF CLAIM U/S 80 HHC OF RS.10,23,2 16 BE ALLOWED. ITA NO.1142/AHD/2009 AMBUJA INTERMEDIATES PVT. LTD. VS ITO, WARD-1 (1), AHMEDABAD 2 3. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE OF APPELLANT, THE DEDUCTION CLAIMED BY THE APPELLAN T IN REVISED WORKING DURING THE COURSE OF ASSESSMENT PROCEEDING AND APPELLATE PROCEEDINGS BE ALLOWED. 4. THAT THE APPELLANT HAS FURNISHED ITS PAPER BOOK DATED 22.10.08 AND WITHOUT CONSIDERING IT PROPERLY, THE APPEAL OF THE APPELLANT WAS DISMISSED WHICH MAY PLE ASE BE CONSIDERED ON MERITS. 5. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE GROUNDS TILL THE APPEAL IS FINALLY HEARD AND DECIDED. 2. THE LEARNED CIT(A) AFTER CONSIDERING THE ISSUE A ND FACTS PASSED THE FOLLOWING ORDER: WHEN THE AFORESAID IS CONSIDERED VIS--VIS THE FACTS AND CIRCUMSTANCES OF THE GROUNDS OF APPEAL UN DER CONSIDERATION; THE FACT EMERGES THAT THE BUSINESS INCOME/PROFIT TAKEN BY THE APPELLANT IS RS.2,39,96, 585/- WHICH INCLUDES OTHER INCOME (I.E. COMMISSION) TO TH E EXTENT OF RS.17,48,998/- WHICH IS NOT AT ALL DERIVE D FROM THE EXPORT. THE SCRUTINY OF THE PROFIT AND LOSS ACC OUNT OF THE APPELLANT ABUNDANTLY ESTABLISHES THIS FACT. WIT H THE RESULT, THE APPELLANTS CALCULATION OF ADJUSTED PRO FIT IS NOT AT ALL CORRECT AS IT HAS NOT EXCLUDED 90% OF OTHER RECEIPTS FROM BUSINESS PROFIT. THE PROVISIONS OF SECTION 80 HHC (3) OF THE INCOME-TAX ACT, 1961 ARE CRYSTAL CLEAR ON TH IS ACCOUNT (I.E. ALL THE ITEMS ATTRIBUTABLE TO BUSINES S ACTIVITY BUT ARE NOT DERIVED FROM EXPORT ACTIVITY HAVE TO BE EXCLUDED TO THE EXTENT OF 90%). IT IS NOT OUT OF PLACE TO MENTION HERE THAT THE APPELLANT ITSELF HAS STATED IN THE ORDER-SHEET DURI NG THE ASSESSMENT PROCEEDINGS THAT DEDUCTION U/S. 80 HHC MAY BE REVISED AFTER EXCLUDING 90% OF COMMISSION INCOME ITA NO.1142/AHD/2009 AMBUJA INTERMEDIATES PVT. LTD. VS ITO, WARD-1 (1), AHMEDABAD 3 KEEPING IN VIEW THE AFORESAID FACTS; CIRCUMSTANCES AND VARIOUS JUDICIAL PRONOUNCEMENTS, THE ASSESSING OFFICER HAS RIGHTLY EXCLUDED THE 90% OF SUCH RECEIP TS FROM THE APPELLANTS PROFIT OF THE BUSINESS. WITH THE RE SULT, THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED ON THI S ACCOUNT. HENCE, THE APPEAL IS DISMISSED ON THIS GRO UND. IN THE RESULT, THE APPEAL IS DISMISSED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITTED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY T HE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RAVINDR ANATHAN NAIR 295 ITR 228 IN WHICH IT WAS HELD AS UNDER: THE FORMULA IN SECTION 80 HHC (3) FOR A FRACTION OF EXPORT TURNOVER DIVIDED BY THE TOTAL TURNOVER TO BE APPLIED TO BUSINESS PROFITS CALCULATED AFTER DEDUCT ING 90 PER CENT OF THE SUMS MENTIONED IN CLAUSE (BAA) O F THE EXPLANATION. PROFIT INCENTIVES LIKE RENT, COMMISSION, BROKERAGE CHARGES, ETC., THOUGH THEY FORMED PART OF THE GROSS TOTAL INCOME, HAD TO BE EXCLUDED AS THEY WERE INDEPENDENT INCOMES WHICH HAD NO ELEMENT OF EXPORT TURNOVER. ALL THE FOUR IN THE SECTION WERE TO REQUIRED TO BE KEPT IN MIND. IF ALL THE FOUR VARIABLES KEPT IN MIND, IT BECOMES CLEAR THAT EVERY RECEIPT IS NOT INCOME AND EVERY INCOME WOULD NOT NECESSARILY INCLUDE THE ELEMENT OF EXPORT TURNOVER. CLAUSE (BAA) OF THE EXPLANATION STATES THAT 90 PER CENT OF THE INCENTIVE PROFITS BY WAY OF BROKERA GE, COMMISSION, INTEREST, RENT CHARGES OR ANY OTHER RECEIPT OF LIKE NATURE INCLUDED IN BUSINESS PROFITS HAVE TO BE DEDUCTED FROM BUSINESS PROFITS COMPUTED IN TERMS OF SECTION 28 TO 44D. IN OTHER WORDS, RECE IPTS CONSTITUTING INDEPENDENT INCOME HAVING NO NEXUS WITH EXPORTS WERE REQUIRED TO BE DEDUCTED FROM ITA NO.1142/AHD/2009 AMBUJA INTERMEDIATES PVT. LTD. VS ITO, WARD-1 (1), AHMEDABAD 4 BUSINESS PROFITS UNDER CLAUSE (BAA). A BARE READING OF CLAUSE (BAA) (1) INDICATES THAT RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT CHARGES, ETC. , FORMED PART OF THE GROSS TOTAL INCOME BEING BUSINES S PROFITS. BUT FOR THE PURPOSE OF WORKING OUT THE FORMULA AND IN ORDER TO AVOID DISTORTION IN ARRIVIN G AT THE EXPORT PROFITS CLAUSE (BAA) STOOD INSERTED TO S AY THAT ALTHOUGH INCENTIVE PROFITS AND INDEPENDENT INCOMES CONSTITUTED PART OF THE GROSS TOTAL INCOME , THEY HAD TO BE EXCLUDED FROM GROSS TOTAL INCOME BECAUSE SUCH RECEIPTS HAD NO NEXUS WITH THE EXPORT TURNOVER. PROCESSING CHARGES, WHICH ARE PART OF GROSS TOTAL INCOME, FORM AN ITEM OF INDEPENDENT INCOME LI KE RENT, COMMISSION, BROKERAGE, ETC. AND, THEREFORE, 9 0 PERCENT OF THE PROCESSING CHARGES HAS TO BE REDUCED FROM THE GROSS TOTAL INCOME TO ARRIVE AT THE BUSINE SS PROFITS AND, THEREFORE, IT HAS ALSO TO BE INCLUDED IN THE TOTAL TURNOVER IN THE FORMULA FOR ARRIVING AT THE BUSINESS PROFITS IN TERMS OF CLAUSE (BAA) OF TH4E EXPLANATION TO SECTION 80 HHC (3). 4. THE LEARNED DR ALSO CONCEDED THAT THE ISSUE IS N OW COVERED AGAINST THE ASSESSEE BY THE ABOVE JUDGMENT OF THE H ONBLE SUPREME COURT. 5. CONSIDERING THE ABOVE FACTS IN THE LIGHT OF THE FINDINGS OF THE LEARNED CIT(A), WE ARE OF THE VIEW THAT THE ISSUE I S COVERED AGAINST THE ASSESSEE BY THE ABOVE JUDGMENT OF THE HONBLE S UPREME COURT. THE LEARNED CIT(A) ALSO NOTED IN HIS FINDINGS THAT THE ASSESSEE ITSELF SUBMITTED AT THE ASSESSMENT PROCEEDINGS THAT DEDUCT ION U/S 80 HHC OF THE IT ACT MAY BE REVISED AFTER EXCLUDING 90% OF THE COMMISSION INCOME. THEREFORE, IT IS CLEAR ADMISSION ON THE PAR T OF THE ASSESSEE THAT THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE AS PER LAW. WE, ITA NO.1142/AHD/2009 AMBUJA INTERMEDIATES PVT. LTD. VS ITO, WARD-1 (1), AHMEDABAD 5 THEREFORE, DO NOT FIND ANY MERIT IN THE APPEAL OF T HE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01-04-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 01-04-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD
