ACIT, CHENNAI V. M/s. The Scientific Fertiliser Company Pvt. Ltd., CHENNAI

ITA 1323/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58032 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 15-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR; ANIRUDH RAI
• Assessee Lawyers: T BANUSEKAR
• Section: 143(3); 80HHC; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1323/MDS/2011 (ASSESSMENT YEAR : 2 002-03) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(2), NEW BLOCK, 4 TH FLOOR, 121, M.G.ROAD,NUNGAMBAKKAM, CHENNAI-600 034. VS. M/S.THE SCIENTIFIC FERTILIZER COMPANY LTD., C/O. B.THIAGARAJAN & CO., VIGFIN HOUSE, OLD NO.15, NEW NO.24, YOGAMBAL STREET, T.NAGAR, CHENNAI-600 017. PAN:AAACT2401R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT DR & SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL RESPONDENT BY : SHRI T.B ANUSEKAR, CA DATE OF HEARING : 7 TH MARCH, 2012 DATE OF PRONOUNCEMENT : 13 TH MARCH, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE RELATING TO THE ASSESSMENT YEAR 2002-03 IMPUGNING T HE ORDER OF THE CIT(A)-III, CHENNAI DATED 12.04.2011. 2. AS PER THE CASE OF THE ASSESSE, THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEA LING IN PESTICIDES AND FERTILIZERS. THE ASSESSEE BESIDES SE LLING ITS ITA NO.1323 /M DS/2011 2 PRODUCTS IN INDIA WAS ALSO IN THE BUSINESS OF EXPOR TS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2002-03 ON 15.10.2002. IN THE SAID RETURN THE ASSES SEE CLAIMED DEDUCTION UNDER SECTION 80HHC TO THE TUNE O F ` 12,97,302/-. THE BOOKS OF ACCOUNT WERE MAINTAINED SEPARATELY FOR ITS EXPORT BUSINESS. THE ASSESSEE H AD ALSO FURNISHED CERTIFICATE IN THE PRESCRIBED FORM NO.10C CAC DISCLOSING COMPUTATION OF DEDUCTION UNDER SECTION 8 0HHC. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 21.07.2003 WITHOUT MAKING ANY ADJUSTMENTS. SUBSEQUE NTLY ON 24.03.2004 THE ASSESSING OFFICER ISSUED NOTICE U NDER SECTION 154 TO CONSIDER REWORKING OF DEDUCTION UNDE R SECTION 80HHC. AS PER THE CONTENTION OF THE ASSESSING OFFIC ER THE TOTAL TURNOVER AND PROFIT OF BUSINESS WERE NOT TAKE N PROPERLY FOR CALCULATION OF DEDUCTION UNDER SECTION 80HHC. IN REPLY TO THE NOTICE THE ASSESSEE CATEGORICALLY STATED THAT I T HAD MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR ITS EXPORT SALES AND DOMESTIC SALES. THE ASSESSEE FURTHER SUBMITTED THAT IT HAD CLAIMED DEDUCTION UNDER SECTION 80HHC IN TERMS OF T HE JUDGEMENT PASSED BY THE HONBLE MADRAS HIGH COURT I N THE ITA NO.1323 /M DS/2011 3 CASE OF CIT VS. RATHORE BROTHERS REPORTED AS 254 IT R 656(MAD). THEREAFTER NO ACTION WAS TAKEN BY THE ASS ESSING OFFICER. HOWEVER, ANOTHER NOTICE UNDER SECTION 154 WAS ISSUED ON 12.01.2007 I.E. THREE YEARS AFTER THE ORI GINAL NOTICE. AGGRIEVED BY THE ORDER PURSUANT TO THE 2 ND NOTICE UNDER SECTION 154, THE ASSESSEE FILED THE APPEAL BEFORE T HE LEARNED CIT(A). THE LEARNED CIT(A) AFTER CONSIDERING THE FA CTS OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE RECTIFICATION DONE BY THE ASSESSING OFFICER IS NOT AN APPARENT MISTAKE THAT CAN BE RECTIFIED UNDER SECTION 154 OF THE ACT. HE FURTHER HELD THAT COMPUTATION OF DEDUCTION UNDER S ECTION 80HHC INVOLVES GOING INTO WORKING FOR VARIOUS COMPO NENTS AND CAN BE RESOLVED ONLY BY LONG DRAWN PROCESS OF R EASONING ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. AF TER RELYING UPON THE JUDGEMENT OF THE HONBLE MADRAS HI GH COURT IN CIT VS. ASMA EXPORTS REPORTED AS 305 ITR 335(MAD ), THE LEARNED CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED AGAINST THIS ORDER OF THE LEARNED CIT( A), THE REVENUE HAS FILED THE PRESENT APPEAL. THE LEARNED D.R. SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN HOLD ING THAT THE ITA NO.1323 /M DS/2011 4 PROVISIONS OF SECTION 80HHC ARE COMPLICATED AND TH US PROVISIONS OF SECTION 154 OF THE ACT CANNOT BE INVO KED TO RECTIFY A MISTAKE IN COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. HE FURTHER SUBMITTED THAT THE ASS ESSEE HAD NEITHER ATTACHED ANY INFORMATION ALONG WITH THE RET URN OF INCOME WITH REGARD TO MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR THE EXPORT BUSINESS NOR SUCH SEPARATE BOOKS OF ACCOUNTS WERE SUBMITTED DURING THE COURSE OF HEARING BEFORE THE ASSESSING OFFICER. THE LEARNED D.R. FURTHER RELIED UPON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. K.RAVINDRANATHAN NAIR REPORTED AS 295 ITR 228 WHEREIN IT WAS HELD THAT PROFIT INCENTIVES AND ITEMS LIKE RENT, COMMISSION, BROKERAGE, CHARGES ETC. THOUGH FORMED P ART OF GROSS TOTAL INCOME HAD TO BE EXCLUDED AS THEY WERE INDEPENDENT INCOMES WHICH HAD NO ELEMENT OF EXPOR T TURNOVER. HE THEREFORE PRAYED THAT THE ORDER OF TH E CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD FILE D PROFIT ITA NO.1323 /M DS/2011 5 AND LOSS ACCOUNT BASED ON SEPARATE BOOKS OF ACCOUNT MAINTAINED BY IT FOR EXPORT BUSINESS AND A REPORT O F THE CHARTERED ACCOUNTANT IN FORM NO.10CCAC CLAIMING DEDUCTION UNDER SECTION 80HHC WAS ALSO FILED. THE L EARNED A.R. CONTENDED THAT THE CASE OF THE ASSESSEE IS SQU ARELY COVERED BY THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. NAMEEL LEATHERS & UPPERS RE PORTED AS 273 ITR 350(MAD). 5. WE HAVE HEARD THE PARTIES AND GONE THROUGH THE F ACTS OF THE CASE, DOCUMENTS ON RECORD AND THE JUDGEMENTS ON WHICH THE RESPECTIVE PARTIES HAVE RELIED. WE ARE O F THE CONSIDERED OPINION THAT THE JUDGEMENT OF THE HONBL E SUPREME COURT IN CIT VS. K.RAVINDRANATHAN NAIRS CA SE (SUPRA) DOES NOT PROVIDE ANY SUPPORT TO THE ARGUMEN TS OF THE LEARNED D.R. IN ORDER TO INVOKE THE PROVISIONS OF SECTION 154, THE MISTAKE SOUGHT TO BE RECTIFIED SHOULD BE A MIST AKE APPARENT ON THE RECORD AND MUST BE AN OBVIOUS AND P ATENT MISTAKE AND NOT SOMETHING WHICH COULD BE ESTABLISH ED BY LONG DRAWN PROCESS OF REASONING ON THE POINT IN ISS UE ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. THUS, THE ITA NO.1323 /M DS/2011 6 RECTIFICATION IS NOT POSSIBLE IF THE QUESTION IS D EBATABLE. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE JUD GEMENT OF THE JURISDICTIONAL HIGH COURT PASSED IN CIT VS. NA MEEL LEATHERS & UPPERSS CASE (SUPRA). THE HONBLE MADR AS HIGH COURT IN THAT CASE HAS HELD THAT SINCE THE QUESTI ON OF RELIEF UNDER SECTION 80HHC OF THE ACT IS A DEBATABLE ISSUE WHICH DOES NOT FALL WITHIN THE PURVIEW OF PRIMA-FACIE ADJ USTMENT UNDER SECTION 143(1)(A) OF THE ACT AND THE SAME COU LD BE TAKEN UP IN REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ACTION OF THE REVENUE INVOKING SECTION 154 OF THE ACT TO RECTIFY THE INTIMATION UNDER SECTION 143(1)(A) O F THE ACT IS NOT VALID. 6. IN VIEW OF THE ABOVE, WE HOLD THAT THERE IS NO M ERIT IN THE CASE OF THE REVENUE AND WE UPHOLD THE ORDER PA SSED BY THE CIT(A). AS A RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2012. SD/- SD/- ( DR. O.K.NARAYANAN) ( VIKAS AWASTHY ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 13 TH MARCH, 2012. SOMU ITA NO.1323 /M DS/2011 7 COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.