Cavinkare Pvt.Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1232/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0868 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-01-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Reasonable cause
• Section: 80HHC; 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN,VICE-PRESID ENT AND SHRI VIKAS AWASTHY, JUDICIAL MEM BER ITA NOS.1231 & 1232/MDS/2012 (ASSESSMENT YEARS: 2002-03 & 2003-04) M/S. CAVINKARE PVT.LTD. 12, CENOTAPH ROAD, CHENNAI-600 018. PAN: AAACB3754B VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(3) CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. T.BANUSEKAR, C.A., RESPONDENT BY : SHRI SHAJI P.JACOB, ADDL. CIT DATE OF HEARING : 15 TH JANUARY, 2013 DATE OF PRONOUNCEMENT : 22 ND FEBRUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE IMPUGNING THE ORDERS OF THE COMMISSIONER OF INCOME TAX-I, PASSED UNDER SECTION 263 FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 BOTH ORDERS DATED 27.03.2012. SINCE T HE ISSUE INVOLVED IN BOTH THE APPEALS IS COMMON, THEY ARE T AKEN UP TOGETHER FOR ADJUDICATION. ITA NO.1231 & 1232/MDS/2012 2 THIS IS A SECOND ROUND OF LITIGATION BEFORE THE TRI BUNAL FOR BOTH THE ASSESSMENT YEARS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN THE BUSINESS OF MANUFACTURING OF PLASTIC CONTAINERS AND TRADING IN COSMETICS. FOR THE ASSESSMENT YEAR 2002 -03, THE ASSESSEE HAD FILED RETURN OF ITS INCOME ON 31.10.20 02 DISCLOSING ITS TAXABLE INCOME OF ` 17,23,79,310/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) AND WAS ACCEPTED . SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148. THE ASSESSING OFFICER QUE STIONED THE CLAIM OF DEDUCTION UNDER SECTION 80HHC AND VIDE ASSESSMENT ORDER DATED 31.1.2006, THE ASSESSING OFF ICER MADE CERTAIN ADDITIONS. THE ASSESSEE HAD CLAIMED D EDUCTION U/S.80HHC TO THE TUNE OF ` 2,43,84,466/-. THE ASSESSING OFFICER AFTER REJECTING THE EXPLANATION FURNISHED B Y THE ASSESSEE RESTRICTED THE DEDUCTION U/S.80HHC TO ` 32,71,519/- AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESS EE HAD PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC. AGGR IEVED ITA NO.1231 & 1232/MDS/2012 3 AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE FILE D SECOND APPEAL ( ITA NO.156/MDS/2007) BEFORE THE TRIBUNAL. 3. SIMILARLY, FOR THE ASSESSMENT YEAR 2003-04, ADDI TION WAS MADE BY THE ASSESSING OFFICER VIDE ASSESSMENT O RDER DATED 30.1.2006 BY RESTRICTING THE DEDUCTION CLAIME D BY THE ASSESSEE UNDER SECTION 80HHC TO ` 19,84,402/- AGAINST THE CLAIM OF THE ASSESSEE OF ` 2,48,83,102/-.. ON APPEAL BY THE ASSESSEE, THE CIT(A) PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE. IMPUGNING THE ORDER OF THE CIT(A) THE ASS ESSEE HAD COME IN SECOND APPEAL BEFORE THE TRIBUNAL VIDE ITA NO.157/MDS/2007. 4. THE ISSUE WITH RESPECT TO THE CLAIM OF DEDUCTION U/S.80HHC HAD CROPPED UP IN EARLIER ASSESSMENT YEAR I.E. A.Y.2001-02. FOR THE ASSESSMENT YEAR 2001-02 BOTH T HE ASSESSEE AND THE REVENUE HAD FILED APPEALS BEFORE T HE TRIBUNAL. THE TRIBUNAL WHILE ADJUDICATING THE APPEA LS IN ITA NOS.154/MDS/2007 & 1848/MDS/2005 FILED BY THE ASSES SEE AND REVENUE RESPECTIVELY FOR THE ASSESSMENT YEARS 2001-02 HELD AS UNDER:- 3.2 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE REL EVANT RECORDS. THE FORMULA BY WHICH DEDUCTION U/S 80HHC H AS BEEN ITA NO.1231 & 1232/MDS/2012 4 ARRIVED AT BY THE ASSESSING OFFICER, ADMITTEDLY, RE LATES TO THE PROVISIONS, WHICH WERE APPLICABLE PRIOR TO 1 . 4 . 1992. HENCE, THE SAME IS NOT AT ALL APPLICABLE. IT IS CLEAR IN THIS CASE THAT SEPARATE BOOKS OF ACCOUNTS RELATING TO EXPORT AND OTHER ACTI VITIES HAS NOT BEEN MAINTAINED. MOREOVER, SECTION 80HHC(3)(B), WHI CH IS APPLICABLE IN THIS CASE STATES THAT, WHERE THE EXPO RT OUT OF INDIA IS OF TRADING GOODS , THE PROFITS DERIVED FROM SUCH EXPORT SHALL BE E X PORT T URNOVER IN RESPECT OF SUCH TRADING GOODS AS REDUCED , BY THE DIRECT COSTS AND INDIRECT COSTS ATTRIBUTABLE TO SUCH EXPORT. ' DIREC T COST ' HAS BEEN DEF I NED AS COST DIRECTLY ATTRIBUTABLE TO THE TRADING GOODS E X PORTED O UT OF INDIA INCLUDING THE PURCHASE PRICE OF SUCH GOODS. ' INDIRECT COST ' HAS BE E N DEFINED TO MEAN COST NOT BEING DIRECT COST AL L OCATED IN THE RATIO OF E X POR T TURNOVER IN RESPECT OF TRADING GOODS TO THE TOTAL TURNOVER . THERE IS NO DISPUT E HERE REGARDING THE DIRECT COST OF TRADING. IT IS TH E CLAIM OF THE ASSESSEE THAT THE I N DIRECT COS T WHICH ARE TO BE ALLOCATED ACCORDING TO THE RATIO OF EXPORT TO TOTA L T UR NOVER IS 12,93 ,11 ,652/- HOWEVER , TH I S FIGURE HAS ONLY BEEN GENERAT E D BY T H E ASSESSEE. THERE ARE NO BOOKS MAINTA I NED FOR EXPORT D I VISION; SO THERE IS N O COGENT BASIS FOR THIS CLAIM BY THE ASSESS EE. UNDER THE C I RCUMSTANC E S , TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY HELD THAT THE TOTAL INDIRECT COST OTHER THAN MANUFACTURING DIVISION AMOUNTING TO ` 71,81,62,796/- HAS TO BE ALLOCATED AS PER THE RATIO. TO CONCLUDE, IN ABSENCE OF PROPER BOOKS SEPARATEL Y IDENTIFYING THE EXPENDITURE OF EXPORT DIVISION AND DOMESTIC DIVISION, THERE IS NO BASIS OTHER THAN ALLOCATING T HE TOTAL INDIRECT COST IN THE RESPECTIVE RATIOS AS HELD BY THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS). HENCE, IN OUR OPINION, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S TAKEN A CORRECT VIEW OF THE MATTER, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. HENCE, THE ASSESSEES AS WELL AS REVEN UES APPEALS ON THIS ISSUE ARE DISMISSED. 5. WHILE DEALING WITH THE SAME ISSUE IN THE APPEAL OF THE ASSESSEE I.E. ITA NO.156/MDS/2007 IN THE SUBSEQUEN T ASSESSMENT YEAR 2002-03, THE TRIBUNAL HELD AS UNDER :- 4.6 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RELEVANT RECORDS. ADMITTEDLY , IN THIS CASE, SEPARATE BOOKS OF ACCOUNTS FOR EXPORT AND DOMESTIC DIVISIONS HAVE NOT BEEN MAINTAINED. UNDER THE CIRCUMSTANCES, WE FIND ASSESS ING ITA NO.1231 & 1232/MDS/2012 5 OFFICER HAS ERRED IN HOLDING THAT METHOD OF RESORTI NG TO APPORTIONMENT OF INDIRECT EXPENSES AS PRESCRIBED U/S.80HHC(3)(B) SHOULD BE GIVEN A GO BY IN THIS CA SE AND AND COMMON SENSE APPROACH SHOULD BE ADOPTED. WE FIND THAT LAW IS TRITE THAT, WHEN THE LANGUAGE OF THE ACT IS PLA IN AND SIMPLE THERE IS NO CASE OF INTERPO L ATION OR PUTTING ANY SENSE, EVEN IF IT IS COMMON SENSE, AS CALLED BY THE ASSESSING OFFICER . AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF SMT . TARULATA SHYAM AND OTHERS VS. CIT 108 ITR 345, EVEN IF THERE BE A CASUS OMISSUS, COURTS ARE NOT SUPPOSED TO SUPPLY THE SAME. IT IS CLEAR IN THIS CASE THAT THE DISPUTE ONLY REVOLVES A ROUND THE TREATMENT OF RS.3,11,71,438/- MENTIONED BY THE ASSE SSEE AS RELATABLE TO EXPORT IN DETAILS FURNISHED BEFORE THE ASSESSING OFFICER . THE ASSESS I NG OFFICER HAS TAKEN THEM AS TANTAMOUNT TO COST D I RE C TLY ATTRIBUTABLE TO TRADING GOODS EXPORTED I . E. DIRECT COST . IN THIS REGARD, IT IS THE PLEA OF THE ASSESSEE THAT ITS SOFTWARE HAD IDENTIFIED THEM AS RELATABLE TO EXPORT I . E . THEY HAVE SOME RELATIONSHIP WITH EXPORT. IT IS AVERRED THAT IT WAS NEVER CLAIMED THAT THESE ARE DIRECTLY ATTRIBUTABLE TO TRADING GOODS EX PORTED SO AS TO BE TREATED AS DIRECT COST . IT IS FURTHER CLAIMED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ALSO DO NOT SUPPORT THE CL AIM OF THE ASSESSING OFFICER THAT THESE ARE DIRECTLY ATTRIBUT ABLE TO TRADING GOODS EXPORTED. WE FIND CONSIDERABLE COGENCY IN THI S SUBMISSIONS AS IT WOULD BE EVIDENT FROM THE DESCRIP TION OF THE EXPENDITURES IN THIS REGARD THAT IT WOULD BE PRESUM PTUOUS TO TREAT THEM AS FALLING IN THE SAME CLASS AS PURCHASE PRICE OF TRADING GOODS OR SIMILAR COSTS DIRECTLY ATTRIBUTABLE OF EXP ORTS IN ABSENCE OF SEPARATE BOOKS MAINTAINED FOR EXPORT DIVISION. THE DESCRIPTION OF THESE EXPENDITURES ARE SALARIES, STAFF WELFARE, INT EREST, ADVERTISEMENT, SALES PROMOTION, FREIGHT, TRAVELLING & CONVEYANCE, REPAIRS & MAINTENANCE, POSTAGE, PHONE A ND GRAMS, PRINTING & STATIONERY, RATES & TAXES, INSURA NCE AND GENERAL EXPENSES. 4.7 THE RELIANCE UPON THE CASE LAWS PLACED BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE IS NOT GERMANE HERE AS THEY WERE CONCERNED WITH HOLDING THAT THE TERM 'ATTRIBUTABLE' IS WIDER THAN 'DERIVED FROM' AND THE TERM 'ATTRIBUTABLE' CAN BE USED FOR THINGS INTIMATELY RELATED . IN OUR OPINION, THESE E X PENDITURES CANNOT BE TERMED AS INTIMATELY RELATED ONLY TO EXPORT AS THEY ARE AS MUCH RE L ATED TO EXPORT AS WITH DOMEST I C TRADE . 4.8 I N THIS REGARD IT WOULD BE WORTHWHILE TO NOTE HERE T HE ARGUMENT O F TH E LEARNED COUNSEL OF THE ASSESSEE THAT ADVERTISEMENT EXPENDITURE IN FOREIGN MEDIA, FOR E. G TELEVISION CHANNELS CANNOT BE SAID TO BE MEANT ONLY FOR EXPORT ED GOODS. HE CONTENDED THAT THE ADVERTISEMENTS IN VARIOUS CHANNE LS ARE ITA NO.1231 & 1232/MDS/2012 6 BROADCASTED OUTSIDE INDIA AS WELL AS IN INDIA LIKE STAR TELEVISION NETWORK. THESE HAVE VAST AUDIENCE IN INDIA AND ALSO HAVE ADVERTISEMENT VALUE FOR GOODS TRADED IN INDIA. WE F IND THAT THIS AMPLY FORTIFIES THE PROPOSITION THAT THESE EXPENDIT URES ARE NOT DI R ECT COST ATTRIBUTABLE TO EXPORT BUT ARE EXPENDITURES RE LATABLE TO EXPORT WHICH NEED TO BE ALLOCATED IN ACCORDANCE WITH THE F ORMULA AS PRESCRIBED IN THAT . IN THE BACKGROUND OF AFORESAID DISCUSSION WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DECIDE TH E ISSUE IN FAVOUR OF THE ASSESSEE. 4.9 IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALLOWED. IN ITA NO.157/MDS/2007 FOR THE ASSESSMENT YEAR 2003 -04, THE TRIBUNAL FOLLOWED THE ORDER PASSED IN ITA NO.156/MDS/2007. IT IS RELEVANT TO MENTION HERE THA T ALL THE ABOVE SAID APPEALS WERE DECIDED TOGETHER BY THE TRI BUNAL VIDE SINGLE ORDER DATED 25.4.2008. 6. NOT SATISFIED WITH THE ORDER OF THE TRIBUNAL, FO R THE ASSESSMENT YEARS 2002-03 AND 2003-04 THE DEPARTMENT FILED MISCELLANEOUS PETITIONS FOR AMENDING THE ORDER AND TO FOLLOW THE ORDER PASSED IN ASSESSMENT YEAR 2001-02. THE GR IEVANCE OF THE REVENUE WAS THAT THE TRIBUNAL IN ITS ORDER D ATED 25.4.2008 UPHELD THE FORMULA ADOPTED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2001-02. HOWEVER, FOR THE ASSESSMEN T YEARS 2002-03 AND 2003-04 THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE. BY FOLLOWING THE DECISION FOR THE ASSESSMENT YEAR 2001-02, THE APPEAL OF THE ASSESSEE FOR THE AS SESSMENT ITA NO.1231 & 1232/MDS/2012 7 YEARS 2002-03 AND 2003-04 WOULD HAVE BEEN ONLY PA RTLY ALLOWED. 7. BOTH THE MISCELLANEOUS PETITIONS I.E. M.P.NOS. 380 & 381/MDS/2008 WERE DISMISSED BY THE TRIBUNAL WITH TH E FOLLOWING OBSERVATIONS:- 8. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RELEVANT RECORDS. WE FIND THAT THE TRIBUNALS ORDER FOR ASSESSMENT YEAR 2001-02 WAS RENDERED IN A CONTEXT WHERE ASSESSEE WANTED THE INDIRECT COST TO BE ALLOCATED TO EXPORTS AS ` 12,93,11,652/-. THIS FIGURE WAS ONLY GENERATED BY THE ASSESSEE AND IN ABSENCE OF SPECIFIC BOOKS MAINTAINED FOR EXPORT DIVISION, ASSESSEES CLAIM, WAS NEGATED AND IT WAS HELD THAT LEARNED CIT(A) HAD RIGHTLY HELD THAT TOTAL INDIRECT COST TO BE ALLOCATED WAS ` 71,81,62,796/-. FOR THE ASSESSMENT YEAR 2002-03 THE MATTER WAS THAT UPON ASSESSING OFFICERS ENQUIRY ASSESSEE HAD SUBMITTED DETAILS OF INDIRECT EXPENSES RELATABLE TO EXPORT AMOUNTING TO ` 3,11,71,438/-. THIS WAS HELD BY THE ASSESSING OFFICER TO BE ATTRIBUTABLE TO EXPORTS. NOW THE TOTA L INDIRECT COST IN THIS CASE WAS ` 14,16,12,737/-. THE FIGURE OF ` 3,11,71,438/- WAS A FIGURE SAID TO BE RELATABLE TO EXPORTS, GIVEN BY THE ASSESSEE. THIS W AS AGAIN NOT BASED UPON SEPARATE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. ON THE FACTS OF THE CASE, THERE WAS NO REASON TO DEPART FROM THE MANDATE OF SECTION 80HHC3(B) AND ON THESE FACTS, THE TRIBUNAL HAD UPHELD THE LEARNED CIT(A)S ORDER. FOR THE ASSESSMENT YEAR 2003-04, THE FACTS WERE ITA NO.1231 & 1232/MDS/2012 8 IDENTICAL TO ASSESSMENT YEAR 2002-03 AND THE SAME DECISION WAS RENDERED. 9. IN THIS BACKGROUND, WE FIND THAT THE REVENUES CLAIM THAT TRIBUNAL SHOULD AMEND THE ORDER FOR ASSESSMENT YEARS 2002-03 AN 2003-04 FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2001-02 IS BEYOND COMPREHENSION. THE ITAT HAD UNIFORMLY HELD THAT, IN ABSENCE OF SPECIFIC BOOKS RELATED TO EXPORT TURNOVER, THE INDIRECT COST HAD TO BE IDENTI FIED ON THE BASIS OF FORMULA GIVEN IN SECTION 80HHC3(B). REVENUE FOR ASSESSMENT YEAR 2001-02 HAS AGITATED AGAINST THE ASSESSEES CLAIM FOR A PARTICULAR AMOUN T TO BE TAKEN AS ATTRIBUTABLE TO EXPORTS. IN THAT YEA R THE TRIBUNAL HAD HELD THE INDIRECT COST ATTRIBUTABL E TO EXPORTS SHOULD BE FOUND OUT BY FORMULA PRESCRIBED IN THE STATUTE IN THIS REGARD. THE TRIBUNAL HAS FOLLOWED THE SAME REASONING FOR THE NEXT TWO ASSESSMENT YEARS AND FOLLOWED THE MANDATE OF SECTION 80HHC(3)(B). UNDER THE CIRCUMSTANCES, THE REVENUES PLEA THAT THERE IS A MISTAKE APPARENT FROM RECORD AND THIS ORDER IS LIABLE TO BE RECTIFIE D U/S.254(2) OF THE INCOME TAX ACT, 1961 CANNOT BE ACCEPTED. THE TRIBUNAL FURTHER CLARIFIED THAT IN THE GRAB OF RECTIFICATION, REVIEW OF AN ORDER PASSED BY THE TRIBUNAL IS NOT PO SSIBLE. 8. SHRI T.BANUSEKAR APPEARING ON BEHALF OF THE ASSE SSEE SUBMITTED THAT THE REVENUE HAS ALSO FILED AN APPEAL BEFORE THE HONBLE MADRAS HIGH COURT AGAINST THE ORDERS OF THE TRIBUNAL, WHICH IS STILL PENDING FOR FINAL ADJUDIC ATION. THE FACTS OF THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 ITA NO.1231 & 1232/MDS/2012 9 AND 2003-04 ARE DIFFERENT FROM THE FACTS IN THE ASS ESSMENT YEAR 2001-02. IN THE ASSESSMENT YEAR 2001-02 THE AS SESSEE WAS NOT MAINTAINING SEPARATE BOOKS OF ACCOUNT. MORE OVER, IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2001-02, THE ASSESSEE WAS IN THE BUSINESS OF MANUFACTURING AS WE LL AS IN TRADING. HOWEVER, IN THE PERIOD RELEVANT TO THE ASS ESSMENT YEAR 2002-03 AND 2003-04, THE ASSESSEE WAS ONLY IN THE BUSINESS OF TRADING AND NOT IN MANUFACTURING. THE A .R. SUBMITTED THAT THE CIT(A) HAS EXCEEDED HIS JURISDIC TION IN PASSING THE ORDER UNDER SECTION 263 OF THE INCOME T AX ACT, WHEN THE MATTER HAD ALREADY BEEN ADJUDICATED BY THE TRIBUNAL AND THE MATTER WAS PENDING BEFORE THE ASSESSING OFF ICER FOR ONLY GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. 9. ON THE OTHER HAND, SHRI SHAJI P.JACOB APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT THE CIT WAS JU STIFIED IN PASSING THE ORDER UNDER SECTION 263 AND STRONGLY RE LIED ON THE ORDER OF THE CIT. 10. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND HAVE GONE THROUGH THE RECORDS. A PERUSA L OF THE ORDER OF THE TRIBUNAL IN ITA NOS.154 TO 158/MDS/200 7 FOR THE ITA NO.1231 & 1232/MDS/2012 10 ASSESSMENT YEARS 2001-02 TO 2003-04 RESPECTIVELY DATED 25.4.2008 SHOWS THAT THE ISSUE HAS ALREADY BEEN DEA LT WITH IN DETAIL AND HAS BEEN ADJUDICATED BY THE TRIBUNAL. EV EN THE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE HA VE BEEN DISMISSED BY THE TRIBUNAL ON 27.3.2009. ON THE SAME ISSUE, THE REVENUE HAS FILED AN APPEAL BEFORE THE HONBLE MADRAS HIGH COURT ASSAILING THE ORDER OF THE TRIBUNAL. THE LEARNED A.R. HAS STATED AT THE BAR THAT THE APPEALS FILED B Y THE REVENUE ARE STILL PENDING FOR FINAL ADJUDICATION BE FORE THE HIGH COURT. THE LEARNED DR HAS NOT CONTROVERTED TH E STATEMENT MADE BY THE LEARNED A.R. IN VIEW OF THE A BOVE STATED FACTS AND CIRCUMSTANCES OF THE CASE, WE DO N OT FIND ANY REASONABLE CAUSE AS TO WHY THE COMMISSIONER OF INCOME TAX-I HAS INVOKED HIS JURISDICTION UNDER SECTION 26 3 OF THE ACT AND RAKE UP THE SAME ISSUE WHICH HAS ALREADY BEEN P ENDING FOR FINAL ADJUDICATION BEFORE THE HONBLE HIGH COUR T. 11. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE CIT HAS GIVEN REASONS FOR ISSUE OF NOTICE UNDER SECTION 263 IN ITA NO.1231 & 1232/MDS/2012 11 PARA 3 & 4 OF THE IMPUGNED ORDER, WHICH ARE REPRODU CED HEREIN BELOW:- 3. THE CHENNAI BENCH OF ITAT VIDE ITS ORDER DATED 27.3.2009 HAD ONLY GIVEN PARTIAL RELIEF TO TH E ASSESSEE BY SHIFTING CERTAIN DIRECT EXPENSES WHICH HAVE 100% BEARING ON THE DEDUCTION TO INDIRECT EXPENSES WHICH HAVE A PROPORTIONATE EFFECT ON THE DEDUCTION U/S.80HHC. IT DIRECTED TO REWORK THE DEDUCTION AS PER APPELLATE COMMISSIONERS DIRECTION IN THE ASSESSEES OWN CASE FOR A.Y.2001-02. DUE TO WRONG INTERPRETATION OF THE CONTENTS OF THE ORDER OF ITAT AND ITS DIRECTIONS, THE COMPANY WAS GRANTED EXCESSIVE RELIEF U/S.80HHC, MORE THAN THE ELIGIBLE QUANTUM, BY THE ASSESSING OFFICER THROUGH THE IMPUGNED ORDER. 4. THE ITAT HAD TAKEN CONSISTENT POSITION IN ARRIVING AT THE DEDUCTION U/S.80HHC BY ENFORCING A PROPER ALLOCATION OF DIRECT AND INDIRECT COSTS ATTRIBUTABLE TO THE TRADING GOODS EXPORTED. THE ITAT FOR THE A.Y.2001-02, 02-03 AND 03-04 HAD PRONOUNCED THE DECISION IN A CONSOLIDATED ORDER AND THE CONTENTS OF THIS ORDER CLEARLY EXPOSE THE TRUE AND CORRECT COMPUTATION TO BE ADOPTED. THE ORDER OF THE ITAT FOR THE A.Y.2004-05 IN ITA NO.516/MDS/2009 IS MORE CATEGORICAL IN ALLOCATING THE INDIRECT AND DIRECT EXPENSES AND THEREBY THE ELIGIBLE DEDUCTION U/S.80HHC. HOWEVER, FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER HAD GRANTED EXCESSIVE RELIEF WITHOUT TAKING COGNIZANCE ABOUT THE DISCUSSION ON THE ASPECTS OF ALLOCATION OF COSTS. ITA NO.1231 & 1232/MDS/2012 12 THE CIT HAS FURTHER OBSERVED IN HIS ORDER THAT, TH E ORDER DATED 22.7.2009 GIVING EFFECT TO THE ORDER OF THE T RIBUNAL, INSTEAD OF RECOMPUTING DEDUCTION UNDER SECTION 80HH C AS UNDERTAKEN IN ASSESSMENT YEAR 2001-02 FOLLOWING TH E DIRECTIONS OF CIT(A) IN THAT YEAR, HAD ERRONEOUSLY ALLOWED THE ORIGINAL CLAIM OF DEDUCTION MADE BY THE ASSESSEE. T HE ORDER GIVING EFFECT TO THE ORDER OF ITAT DATED 22.7.2009 WAS CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE. THE AFORESAID OBSERVATIONS OF THE CI T AND REASONS GIVEN BY THE CIT FOR INVOKING THE PROVISION S OF SECTION 263 ARE AGAINST THE FACTS OF THE CASE. THE OPERATIVE PART OF THE ORDER OF THE TRIBUNAL IN ITA NO.156/MD S/2007 HAS ALREADY BEEN REPRODUCED ABOVE IN PARA 5 OF THIS ORD ER. THE TRIBUNAL IN THE SAID ORDER HAD SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND HAD DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE WHICH CLEARLY REVEALS THAT THE CLAIM OF TH E ASSESSEE HAS TO BE ALLOWED IN FULL. MOREOVER, THE CIT HAS CL EARLY EXCEEDED HIS JURISDICTION IN RAKING UP THE ISSUE AG AIN WHICH HAS ALREADY BEEN DECIDED BY THE TRIBUNAL AND IS PE NDING ITA NO.1231 & 1232/MDS/2012 13 BEFORE THE HONBLE JURISDICTIONAL HIGH COURT FOR AD JUDICATION ON AN APPEAL OF THE REVENUE. 12. IN VIEW OF OUR ABOVE DISCUSSION, BOTH THE ORDER S OF THE CIT FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 AR E SET ASIDE AND BOTH THE APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, TH E 22 ND DAY OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) (VIKAS AWASTHY) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 22 ND FEBRUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.