ACIT, JODHPUR V. M/s. Makers Mart, JODHPUR

ITA 116/JODH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5229 (ITAT-JODHPUR)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MOURYA
• Assessee Lawyers: DINESH BOOB
• Section: 10AA; 80HHC; 10B; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO S . 115 & 1 16 / JODH /201 5 (ASST. YEAR : 20 1 0 - 11 & 2011 - 12 ) AC IT, CIRCLE - 1, JODHPUR . VS. M/S. MAKERS MART, BLOCK NO. 19 - A , 2 ND PHASE , BASNI , JODHPUR. PAN NO. AAMFM 0174 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH BOOB ADV. DEPARTMENT BY : S HRI S. L. MOURYA - DR DATE OF HEARING : 1 5 / 0 3 /201 6 . DATE OF PRONOUNCEMENT : 1 5 / 03 /201 6 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER TH E S E ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , JODHPUR , DATED 2 1 /0 1 /201 5 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C.I.T. (A) HAS ERRED IN: 1. IGNORING THE FACT THAT THE ASSESSEE HAD EXPORTED SUBSTANTIAL HANDICRAFT ITEMS/GOODS PURCHASED FROM DEALERS OR OUTSIDE MANUFACTURES WITHOUT CARRYING OUT MANUFACTURING ACTIVITY. 2. HOLDING THAT THE DDB AND DEPB RECEIPTS ARE ELIGIBLE FOR EXEMPTION U/S 10AA BY FOLLOWING THE DECISION OF THE ITAT, JODHPUR IN THE CASE OF M/S SURAJ EXPORTS WHICH WAS BASED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (67DTR 185 )IGNORING THE FACT THAT THE JUDGMENT IN CASE OF TOPMAN EXPORT WAS IN THE CONTEXT OF SECTION 80HHC IN WHICH THERE IS SPECIFIC PROVISION (PROVISOS TO SUB SECTION (3)) THAT THE ELIGIBLE PROFITS COMPUTED HAS TO 2 ITA NO S . 115 & 116 / JODH /201 5 BE FURTHER INCREASED BY 90% OF THE RECEIPTS SUCH AS DDB, DEPB ETC. WHEREAS THERE IS NO SIMILAR PROVISION IN SEC. 10AA. 3. DELETING THE DISALLOWANCE OF DEDUCTION U/S 10AA AND HOLDING DDB RECEIPTS ELIGIBLE FOR DEDUCTION UNDER THIS SECTION BY ACCEPTING THE DECISION OF THE ITAT IN ITA NO. 333/JODH/2013 IN AS SESSEES OWN CASE FOR A.Y. 2009 - 10 AS THE SAME HAS BEEN CONTESTED BEFORE THE HON'BLE HIGH COURT BY THE DEPARTMENT AND THE MATTER IS SUB - JUDICE. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF HANDICRAFTS ITEMS. DURING THE YEARS UNDER APPEAL , THE ASSESSEE CLAIMED DEDUCTION OF RS. 2,41,76,662/ - UNDER SEC. 10AA OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAD SHOWN DUTY DRAWBACK RECEIPTS OF RS. 34,53,160/ - IN ASSESSMENT YEAR 2010 - 11 AND RS. 34,03,902/ - IN ASSESSMENT YEAR 2011 - 12 . ACCORDING TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S. LIBERTY INDIA VS. CIT [317 ITR 218 (SC)] , THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SEC. 10AA ON THE SAME. THEREFORE, HE , DISALLOWED DEDUCTION UNDER SEC. 10AA ON DUTY DRAWBACK RECEIPTS TO THE ASSESSEE. 4 . ON APPEAL , COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: - 06. AS FAR AS THE ASSESSING OFFICERS ACTION IN EXCLUDING AM OUNT OF DDB FROM EXPORT PROFIT FOR THE PURPOSE OF COMPUTING EXEMPTION U/S 10AA IS CONCERNED, I FIND THAT ISSUE IS SQUARELY COVERED WITH THE FINDINGS OF THE HON'BLE ITAT, JODHPUR BENCH GIVEN IN THE ASSESSEES OWN CASE FOR AY 2009 - 10. THE RELEVANT FINDINGS A RE REPRODUCED HEREINUNDER: - WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT SIMILAR ISSUE HAS ALREADY BEEN DECIDED BY THIS BENCH OF THE TRIBUNAL IN THE AFORESAID REFERRED TO ORDER DATED 31/03/2013 IN THE CASE OF M/S. SURAJ EXPORTS INDIA SARDAR SHAHAR, CHURU VS. ITO, CHURU (SUPRA) WHICH HAS BEEN FOLLOWED BY THE ID. CIT(A). WE THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE ID. CIT(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT ON THIS ISSUE ALSO IN THE APPEAL OF THE DEPARTMENT. 6.1. FROM THE ABOVE FINDINGS, IT APPEARS THAT WHILE DECIDING THE ISSUE IN FAVOUR OF THE APPELLANT, THE HON'BLE ITAT JODHPUR BENCH, JODHPUR HAD FOLLOWED THEIR EARLIER FINDINGS GIVEN IN SURAJ EXPORTS INDIA (SUPRA). THEREFORE, FOR THE SAKE OF CLARITY, IT WOULD NOT BE OUT OF PLACE TO REPRODUCE THE FINDING GIVEN IN THE SURAJ EXPORT, WHICH ARE REPRODUCED HEREINUNDER: - 8. WE HAVE COGITATED RIVAL ARGUMENTS VIS - A - VIS E VIDENCE ON 3 ITA NO S . 115 & 116 / JODH /201 5 RECORD. WE HAVE EXAMINED THE DECISIONS ON WHICH PARTIES HAVE PLACED THEIR RESPECTIVE RELIANCE. WE HAVE FOUND THAT THE RATIO OF THE DECISION OF HON'BLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA VS. CIT REPORTED 225 CTR 233 (HON'BLE SUPREME COURT) IS NOT APPLICABLE TO THE FACTS OF THIS CASE. THE SECTION UNDER INTERPRETATION BEFORE HON'BLE SUMMIT COURT WAS 801 A. IN SEC 80IA, NO FORMULA FOR COMPUTATION OF PROFITS DERIVED BY THE UNDERTAKING IS LAID DOWN, WHEREAS IN SECTION 10BA AND SECTION 80H HC FORMULA IS PRESCRIBED FOR THE PURPOSE. THEREFORE, IN OUR CONSIDERED OPINION, SECTION 10BA AND 80HHC ARE MORE NEARER TO EACH OTHER, AND WHATEVER INTERPRETATION OF 'DERIVED FROM' IS GIVEN IN ANY DECISION IN WHICH SECTION 80HHC IS INVOLVED, WOULD ALSO MUTA TIS MUTANDIS TO THE INTERPRETATION OF SECTION 10BA. THE HON'BLE APEX COURT IN THE CASES OF TOPMAN EXPORTS VS. CIT REPORTED IN 67 DTR 185 (S.C.) AND ACG ASSOCIATED CAPSULES PVT. LTD. VS. CIT REPORTED IN 67 DTR 205 HAS RECENTLY HELD THAT DEPB IS CHARGEABLE A S INCOME AND CL. (IIIB) OF SECTION 28 IN THE YEAR IN WHICH THE ASSESSEE APPLIES FOR DEPB CREDIT AGAINST THEEXPORTS WHEREAS THE PROFIT ON TRANSFER OF DEPB BY THE ASSESSEE IS CHARGEABLE AS INCOME UNDER CL. (IIIB) SECTION 28 IN HIS HANDS IN THE YEAR IN WHICH HE MAKES THE TRANSFER. THE MUMBAI BENCH OF HON'BLE INCOME TAX APPELLATE TRIBUNAL IN THE CASE ARTS AND CRAFTS EXPORTS VS INCOME - TAX OFFICER REPORTED IN 66 DTR 69 (MUMBAI), AFTER CONSIDERING THE DECISION OF LIBERTY INDIA (SUPRA) HAS TAKEN A CLEAR CUT DECISIO N IN FAVOUR OF THE ASSESSEE. THE HELD PORTION OF THE MUMBAI BENCH IS AS UNDER: - 'PARA - 11,14 - AS REGARDS DEDUCTION U/S 10 BA IN RESPECT OF DEPB, WE FIND THAT SUB - SECTION (4) OF SECTION 10B A DEFINES PROFITS DERIVED FROM ELIGIBLE ARTICLES. SECTION 28 (IIIC), (HID) AND (IIIE) PROVIDES THAT THESE INCOME ARE PROFITS AND GAINS OF BUSINESS. THE SAID SUB - SECTION (4) OF SECTION 10B A IS REPRODUCED BELOW: FOR THE PURPOSES OF SUB - SECTION (1), THE PROFITS DERIVED FROM EXPORT OUT OF INDIA OF THE ELIGIBLE ARTICLES OR THINGS SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. THE RELEV ANT PART OF SECTION 28 READS AS UNDER: 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME - TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. (IIIC) ANY DUTY OF CUSTOMS OR EXCISE RE - PAID OR RE - PAYABLE AS DRAWBACK TO ANY PERSON AGAINST EXPORTS UNDER THE CUSTOMS AND CENTRAL EXCISE DUTIES DRAWBACK RULES, 1971; (IIID) ANY PROFIT ON THE TRANSFER OF THE DUTY ENTITLEMENT PASS BOOK SCHEME, BEING THE DUTY REMISSION SCHEME UNDER THE EXPORT AND IMPORT POLICY FORMULATED AND ANNOUNCED UNDER SECTIO N 5 OF THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992 (22 OF 1992); 4 ITA NO S . 115 & 116 / JODH /201 5 (IIIE) ANY PROFIT ON THE TRANSFER OF THE DUTY FREE REPLENISHMENT CERTIFICATE, BEING THE DUTY REMISSION SCHEME UNDER THE EXPORT AND IMPORT POLICY FORMULATED AND ANNOUNCED UNDER SECTION 5 OF THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992 (22 OF 1992); IN THE LIGHT OF ABOVE DISCUSSION, WE FIND THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10BA ON DEPB AS IN ACCORDANCE WITH SECTION 28 OF THE ACT THESE ARE BUSINESS INCOM E.' 6.2. IN THE LIGHT OF THE ABOVE DECISIONS, I HOLD THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION ON ACCOUNT OF DDB AMOUNT WHICH IS PART OF THE ELIGIBLE PROFIT DERIVED U/S 10AA. THE GROUND RAISED IN THIS REGARD IS ALLOWED. 5. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER, WHEREAS AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6 . WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED DEDUCTION UNDER SEC. 10AA OF THE ACT TO THE ASSESSEE BY FOLLOWING THE DECISION OF THE JODHPUR BENCH OF THIS TRIBUNAL IN THE CASE OF SURAJ EXPORTS INDIA (SUPRA) . FURTHER, NO MATERIAL WAS BRO UGHT ON RECORD BY THE DEPARTMENTAL REPRESENTATIVE TO SHOW THAT THE ORDER OF THE TRIBUNAL IN THE CASE OF SURAJ EXPORTS INDIA (SUPRA) RELIED ON BY THE ASSESSEE WAS VARIED BY ANY HIGHER FORUM . HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. I N THE RESULT, BOTH APPEAL S FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON TUESDAY , THE 1 5 TH DAY OF MARCH , 201 6 AT JODHPUR . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 1 5 TH MARCH , 201 6 . 5 ITA NO S . 115 & 116 / JODH /201 5 VR/ - COPY TO: 1. THE ASSESS E E. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER .