M/s TRB Exports (P) Ltd., Ludhiana V. ACIT, Ludhiana

ITA 1255/CHANDI/2011

• Counselvise Citation: 125521514 RSA 2011
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 30-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1255/CHD/2011 ASSESSMENT YEAR:2004-05 M/S TRB EXPORTS (P) LTD., VS THE ACIT, CIRCLE V, LUDHIANA LUDHIANA PAN NO. AAACT8590M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI N.K. SAINI DATE OF HEARING : 16.2.2012 DATE OF PRONOUNCEMENT : 21.2.2012 ORDER PER H.L.KARWA, VP THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-II, LUDHIANA DATED 25.10.2011 RELATING TO ASSESSMENT YE AR 2004-05 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDE R OF THE ASSESSING OFFICER IN NOT ALLOWING DEDUCTION U/S 80HHC IN RESPECT OF INCENTIVE ON ACCOUNT OF DFRC AN D DEPB LICENSES. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING TH AT THE 2 HON'BLE ITAT HAD SET-ASIDE THE ISSUE IN RESPECT OF DEDUCTION U/S 80HHC TO THE FILE OF ASSESSING OFFICE R TO BE DECIDED IN THE LIGHT OF JUDGMENT OF MUMBAI BENCH OF THE ITAT IN THE CASE OF M/S TOPMAN EXPORTS. 3. THAT THE LD. CIT (A) HAS ERRED IN NOT CONSIDERING THAT THE ASSESSING OFFICER WAS DUTY BOUND TO FOLLOW THE SPEC IFIC INSTRUCTION OF HON'BLE ITAT TO FOLLOW THE DECISION OF THE MUMBAI BENCH OF ITAT IN THE CASE OF M/S TOPMAN EXPORTS. 4. THAT WITHOUT PREJUDICE TO ABOVE SAID GROUNDS OF APP EAL, IT IS SUBMITTED THAT EVEN OTHERWISE DEDUCTION U/S 8 0HHC HAD BEEN RIGHTLY CLAIMED BY THE APPELLANT AND AS SUCH, THE WORTHY CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN NOT GIVING THE BENEFITS OF DEDUCTION U/S 80HHC ON DEPB/DFRC LICENSES AS CLAIMED BY THE APPELLANT. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED THE ORIGINAL RETURN OF INCOME AT AN INCOME OF RS. 1,41 ,06,460/- WHICH WAS SUBSEQUENTLY REVISED AT AN INCOME OF RS. 1,30,37,19 8/-. FIRST ASSESSMENT IN THIS CASE WAS MADE U/S 143(3) OF THE INCOME TAX AC T, 1961 (IN SHORT 'THE ACT') VIDE ORDER DATED 28.12.2006 WHEREIN THE INCOM E WAS ASSESSED AT RS. 1,63,85,747/- BY DISALLOWING DEDUCTION U/S 80HHC ON VARIOUS ISSUES AND DISALLOWANCES OF PERSONAL AND DIRECTORS WIFE EXPEN SES ON FOREIGN VISIT. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHO VIDE ORDER DATED 20.2.2008 PARTLY ALLOWED THE APPEAL ON THE ISSUE OF DEDUCTION U/S 80HHC AND THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES WAS CONFIRM ED. IN SECOND APPEAL, THE TRIBUNAL VIDE ORDER DATED 31.8.2009 RESTORED THE IS SUE IN RESPECT OF DEDUCTION U/S 80HHC TO THE FILE OF THE ASSESSING OFFICER TO B E DECIDED IN THE LIGHT OF THE DECISION OF MUMBAI (SPECIAL BENCH ) OF ITAT IN THE CASE OF M/S TOPMAN 3 EXPORTS. BASED ON THE ABOVE ORDER OF TRIBUNAL, THE ASSESSING OFFICER FRAMED THE ASSESSMENT VIDE ORDER DATED 20.12.2010 WHEREIN HE HAS AGAIN ASSESSED INCOME AT A FIGURE OF RS. 1,63,85,747/- WHICH WAS I NCOME ASSESSED IN THE ORIGINAL ASSESSMENT ORDER. ON APPEAL, THE CIT(A) R EJECTED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER:- 5. THE NEXT ISSUE RAISED BY THE APPELLANT IS THE L EGALITY OF THE ACTION OF THE AO IN DISALLOWING THE DEDUCTION U /S 80HHC ON THE DEPB/DFRC LICENSES. THE LD. AR HAS BASICALL Y STRESSED UPON THE FACT THAT THE AO WAS REQUIRED TO FOLLOW THE DECISION OF THE HON'BLE CHANDIGARH BENCH IN THE CAS E OF M/S TOPMAN EXPORTS HAD BEEN REFERRED. HOWEVER, THE FAC T OF THE MATTER IS THAT THE ABOVE DECISION OF THE SPECIAL BE NCH HAS SINCE BEEN REVERSED BY THE HON'BLE BOMBAY HIGH COUR T IN THE CASE OF CIT V. KALAPTRU COLOURS AND CHEMICALS, 42 D TR 193 AND THEREAFTER EVEN THE HON'BLE PUNJAB & HARYANA HI GH COURT IN THE NUMBER OF CASES WHICH HAVE BEEN MENTIONED BY THE AO IN ITS ASSESSMENT ORDER HAVE HELD THAT THE SAID DEC ISION OF THE HON'BLE BOMBAY HIGH COURT SHOULD BE CONSIDERED BY THE HON'BLE CHANDIGARH ITAT AND ITS EARLIER DECISION HA S BEEN SET ASIDE. THUS, UNDER THE CIRCUMSTANCES, THE ACTION O F THE AO IS JUSTIFIED. THOUGH, I AM IN AGREEMENT WITH THE LD. COUNSEL FOR THE APPELLANT THAT THE HON'BLE CHANDIGARH BENCH HAS DIRECTED THE AO TO DECIDE THE ISSUE AFRESH ON MERITS, BUT NE VERTHELESS, THE DECISION OF THE KALAPTRU COLOURS (SUPRA) WHEREI N IT HAS BEEN CLEARLY DECIDED THAT THE COMPLETE SALES PROCEE DS OF THE DEPB/DFRC LICENSES IS TO BE CONSIDERED AS PROFITS F OR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. THIS BEI NG THE LEGAL POSITION, I HAVE NO HESITATION IN UPHOLDING T HE ACTION OF THE AO. THEREFORE, THE ASSESSMENT MADE BY THE AO I S IN ORDER AND THE APPEAL OF THE APPELLANT IS DISMISSED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE VERY OUTSET, SHRI SUDHIR SEHGAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE I S NO LONGER RES-INTGRA. THE HON'BLE SUPREME COURT IN THE CASE OF M/S TOPMAN EXP ORTS V CIT, MUMBAI IN CIVIL APPEAL NO. 1699 OF 2012 (ARISING OUT OF SLP ( C) NO. 26588 OF 2010) & OTHERS VIDE JUDGMENT DATED FEBRUARY 8, 2012 SET-ASI DE THE JUDGMENT AND ORDERS OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V KALAPATARU 4 COLOURS AND CHEMICALS (2010) 328 ITR 451, M/S TOPMA N EXPORTS AND OTHER CONNECTED APPEALS. A COPY OF THE JUDGMENT OF THE H ON'BLE SUPREME COURT WAS FILED BEFORE US. SHRI SUDHIR SEHGAL, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FIL E OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH IN ACCOR DANCE WITH LAW FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S TOPMAN EXPORTS V CIT, MUMBAI (SUPRA) AND COMPUTE THE DEDUC TION U/S 80HHC ON DEPB/DFRC LICENSES IN THIS CASE AS PER JUDGMENT OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. 5. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF FEBRUARY, 2012 SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 21 ST FEBRUARY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR