DCIT 8(3), MUMBAI V. TOKYO PLAST INTERNATIONAL LTD, MUMBAI

ITA 1177/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49419 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-06-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 12-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law; Reasonable cause
• Section: 80HHC; 28

Judgement Text

1 ITA NO. 1177/MUM/2010 (ASST YEAR1999-00) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI PRAMOD KUMAR, AM & SHRI VIJAY PAL RAO , JM ITA NO. 1177/MUM/2010 (ASST YEAR1999-00) THE DY.COMMR OF INCOME TAX 8(3), MUMBAI VS TOKYO PLAT INTERNATIONAL LTD 102 THOSAR HOUSE HANUMAN CROSS ROAD NO. 1 VILE PARLE (E) MUMBAI 400 057 (APPELLANT) (RESPONDENT) & CROSS OBJECTION NO.167/MUM/2010 TOKYO PLAT INTERNATIONAL LTD 102 THOSAR HOUSE HANUMAN CROSS ROAD NO. 1 VILE PARLE (E) MUMBAI 400 057 VS THE DY.COMMR OF INCOME TAX 8(3), MUMBAI (CROSS OBJECTOR) (RESPONDENT) PAN NO. AAACT1985E ASSESSEE BY NONE REVENUE BY C G K NAIR PER VIJAY PAL RAO, JM THIS APPAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 2.12.2009 OF THE C IT(A) FOR THE ASSESSMENT YEAR 1999-00. 2 NOBODY HAS APPEARED ON BEHALF OF THE ASSESSEE DES PITE THE NOTICE OF HEARING WAS SENT BY RPAD POST. SINCE THE ISSUE INV OLVED IN THE CASE IS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT; THER EFORE, WE PROPOSED TO HEAR AND DISPOSE OF THE APPEAL AND THE CROSS OBJECTION EX-PA RTE. 2 ITA NO. 1177/MUM/2010 (ASST YEAR1999-00) 3 THE REVENUE HAS RAISED THE FOLLOWING GROUND IN TH IS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S 80HHC ON THE IN CENTIVE IN THE FORM OF DEPB LICENSE WITHOUT APPRECIATING THE FACTS THAT TH E ASSESSEE HAD FAILED TO SATISFY CERTAIN CONDITIONS. 4 WE HAVE HEARD THE LD DR AND CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE IS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS KAL PATARA COLOURS & CHEMICALS REPORTED IN 328 ITR 451 (BOM) WHEREIN THE HONBLE H IGH COURT HAS HELD IN PARAS 32 & 36 AS UNDER; 32. WE DO NOT FIND ANY LOGICAL JUSTIFICATION IN BIF URCATING THE VALUE OF THE SALE CONSIDERATION REALIZED BY THE EXPORTER ON THE TRANSFER O F THE DEPB CREDIT. FOR ONE THING CLAUSE (IIID) OF SECTION 28 MUST COVER WI THIN ITS PURVIEW, THE ENTIRETY OF THE ALE CONSIDERATION WHICH IS REALIZED BY THE EXP ORTER ON THE TRANSFER OF THE DEPB CREDIT SINCE THAT REPRESENTS THE PROFIT WHIC H THE EXPORTER OBTAINS ON THE TRANSFER OF THE CREDIT. NO PART OF THE CREDIT THAT IS AVAILABLE UNDER THE DEPB SCHEME CAN FALL FOR CLASSIFICATION UNDER CLAUSE (IIIB) OF SECTION 28 WHICH DEALS WITH CASH ASSISTANCE, RECEIVED OR RECEIVABLE A GAINST ANY SCHEME OF THE GOVERNMENT OF INDIA. AS THE LEGISLATIVE HISTORY OF T HE PROVISION WOULD SHOW CAUSE (IIIB) WAS ENACTED BY PARLIAMENT AT A TIME WHE N THE EXPORT INCENTIVES THAT WERE AVAILABLE WERE (I) IMPORT ENTITLEMENT LIC ENCES; (II) CASH COMPENSATORY SUPPORT; AND (III) DUTY DRAWBACK. THE D EPB SCHEME WAS NOT EVEN IN EXISTENCE WHEN CLAUSE (IIIB) CAME TO BE ENA CTED INTO SECTION 28 BY THE FINANCE ACT OF 1990. THE DEPB SCHEME WAS BROUGHT INTO EXISTENCE WITH EFFECT FROM APRIL, 1 1997. CLAUSE (IIID) OF SECTION 28 WAS INSERTED BY THE AMENDING ACT OF 2005 WITH EFFECT FROM APRIL 1, 1998. THE VALUE OF THE DEPB CREDIT CAN BY NO MEANS BE REGARDED AS A CASH ASSISTAN CE WHICH S RECEIVED OR RECEIVABLE BY A PERSON AGAINST EXPORTS UNDER ANY SCHEME OF THE GOVT OF INDIA. 36 IN SO FAR AS THE SECOND QUESTION IS CONCERNED, WE ARE NOT I AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT THE FACE VALUE OF THE DUTY ENTITLEMENT PASSBOOK REALIZED ON THE TRANSFER OF THE ENTITLEMENT IS CHARGEABLE TO TAX UNDER SECTION 28(IIIB). WE HAVE ALREADY CLARIFIED TH AT THE ENTIRETY OF THE SALE CONSIDERATION WOULD FALL WITHIN THE PURVIEW OF SECTI ON 28(IIID). WE ANSWER THE SECOND QUESTION OF LAW ACCORDINGLY IN THE AFORESAID TERMS. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 3 ITA NO. 1177/MUM/2010 (ASST YEAR1999-00) CROSS OBJECTION NO.167/MUM/2010(BY THE ASSESSEE) 5 THE ASSESSEE HAS RAISED THE FOLLOWING GROUND IN T HIS CO: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE POWER OF ASSESSING OFFIC ER TO DEAL WITH THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S 80HHC ON DEP B BENEFITS WHILE GIVING EFFECT TO THE ORDER OF THE ITAT, THOUGH THE S AME WAS NOT SUBJECT MATTER OF ORDER UNDER APPEAL. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE DEPB RECEIVED UNDER DUTY EXEMPTION SCHEME UNDER THE IMPORT AND EXPORT POLICY FORMULATED AND ANNOUNCED U/S 5 OF THE FOREIGN TRADE (DEVELOPMENT & REGULATION) ACT, 1992 AS DEPB BENEFIT U/S 28(IIID) III) WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN CONFIRMI NG THE CHARGE OF INCOME TAX ON THE AMOUNT OF ANY PROFIT ON TRANSFER OF DEPB.... AS DEFINED U/S 28(IIID) WHEREAS THE SUM COVERED U/S 28(I IID) SHOULD BE EXCLUDED FROM THE TOTAL INCOME, AS THE SAME DOES NO T FORM PART OF INCOME DEFINED U/S 2(24) OF THE I T ACT. 6 THERE IS A DELAY IN FILING THE CROSS OBJECTION B Y THE ASSESSEE. THE ASSESSEE HAS FILED AN AFFIDAVIT TO EXPLAIN THE DELAY IN FILING T HE CROSS OBJECTION. 7 AFTER CONSIDERING THE EXPLANATION AND THE REASONS AS STATED IN THE AFFIDAVIT, WE ARE SATISFIED THAT THE ASSESSEE HAS A REASONABLE CAUSE IN NOT FILING THE CROSS OBJECTION WITHIN THE TIME PRESCRIBED. ACCORDINGLY, WE CONDONE THE DELAY OF 17 DAYS IN FILING THE CROSS OBJECTION. 8 AS REGARDS THE GROUNDS RAISED IN THE CROSS OBJECT ION, SINCE THE ISSUE IS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KALPATARA COLOURS & CHEMICALS (SUPRA), WE DO NOT FIND ANY MERIT OR SUBS TANCE IN THE GROUNDS OF CROSS OBJECTION; ACCORDINGLY, WE DISMISS THE SAME. 4 ITA NO. 1177/MUM/2010 (ASST YEAR1999-00) 9 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED WHEREAS THE CROSS OBJECTION BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 13 TH DAY OF JULY 2011. SD/- SD/- (PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 13 TH ,JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI