Kersi Homi Tangri, Navsari V. The ACIT., Navsari Circle, Navsari

ITA 1439/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8826 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 11-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:18/03/2010 DRAFTED ON: 18/03/ 2010 ITA NO.1439/AHD/2007 ASSESSMENT YEAR : 2004-2005 KERSI HOMI TANGRI (PROP. OF HILDOSE), PINJAR STREET, NUNA THANA, NAVSARI-396445 VS. JOINT COMMISSIONER OF INCOME TAX, NAVSARI RANGE, NAVSARI. PAN/GIR NO. AARPT 2762 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI TUSHAR P. HEMANI A.R. RESPONDENT BY: SHRI C.K.MISHRA SR.D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VALSA D, DATED 31/01/2007. 2. THE GROUNDS OF THE APPEAL READS AS FOLLOWS. 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE CIT(APPEALS), VALSAD, ERRED IN CON FIRMING THE DISALLOWANCE OF RS. 8,68,491/- BEING PROPORTIONATE DEDUCTION OUT OF TOTAL CLAIM FOR DEDUCTION OF RS.59,52,592 MADE U /S.80HHC, IN RESPECT OF DEPB BENEFIT AVAILED BY THE APPELLANT. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEAL), VALSAD, HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.8,68,491/- OUT OF TOTAL RS.59,52,592/- U/S.80HHC OF THE ACT AS CLAIMED BY THE APPELLANT. 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS), VALSAD, HAS FAI LED TO APPRECIATE THAT THE TAXATION LAWS (AMENDMENT) ACT, 2005 MAKES UNDUE DISTINCTION BETWEEN EXPORTERS ON THE BA SIS OF TURNOVER AND AMENDS THE LAW, BY LAYING DOWN VARIOUS CONDITIONS, ITA NO .1439/AHD/2007 - 2 - ON A RETROSPECTIVE BASIS, WHICH IS UNCONSTITUTIONAL AND ULTRA- VIRES, REQUIRING OUTRIGHT ANNULMENT. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE CIT (APPEALS), VALSAD, HAS ERRED IN NO T APPRECIATING THE FACT THAT THE AMOUNT OF DEPB LICENSE RECEIVED B Y THE APPELLANT IS NOTHING BUT REIMBURSEMENT OF COST OF D UTIES SUFFERED BY THE INPUTS AND THUS, THE ENTIRE PROFIT EARNED BY THE APPELLANT IS DERIVED ONLY FROM EXPORTS AND IS FULLY ELIGIBLE FOR DEDUCTION U/S. 80HHC OF THE ACT AND CONSEQUENTLY THE CLAIM FO R DEDUCTION OF RS. 59,52,592/- U/S. 80HHC HAS BEEN RIGHTLY MADE BY THE APPELLANT. 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE CIT (APPEAL) OUGHT TO HAVE GIVEN DIREC TION TO THE AO TO REDUCE THE 'DIRECT COST' OF THE APPELLANT BY RS. 32,16,636/- BECAUSE AS PER THE PROVISIONS OF DEPB SCHEME, IT IS A BENEFIT GIVEN FOR REDUCING THE 'INPUT COST' OF THE APPELLAN T AND ANY PROFITS ON SALE OF SUCH LICENSE WILL GO TO REDUCE T HE INPUT COST AS PER SPIRIT OF THE SCHEME. 6. ALL THE AFORESAID GROUNDS ARE INDEPENDENT TO EAC H OTHER REQUIRING SEPARATE ADJUDICATION BY YOUR HONOUR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF EXPORT OF BULK DRUGS. THE ASSESSEE FILE D RETURN OF INCOME DECLARING INCOME AT RS.1,40,00,210/- AFTER CLAIMING DEDUCTION UNDER SECTION 80HHC OF RS.59,52,592/-. THE AO OBSERVED THAT THE ASSESSEE H AS CLAIMED DEDUCTION UNDER SECTION 80HHC ON PROFIT FROM SALE OF DEBP. AC CORDING TO THE AO, THE ASSESSEE WAS REQUIRED TO FURNISH EVIDENCES TO SHOW THAT IT FULFILLED THE CONDITIONS AS LAID DOWN IN THE FORTH PROVISO TO SEC TION 80HHC(3) WHICH THE ASSESSEE FAILED TO PRODUCE AND THEREFORE, THE AO DI D NOT ALLOW THE DEDUCTION OF RS.8,68,491/- UNDER SECTION 80HHC ON PROFIT ON S ALE OF DEBP. 4. ON APPEAL, THE LD.CIT(A) HELD THAT THE AO WAS JU STIFIED IN MAKING DISALLOWANCE IN VIEW OF THE AMENDED PROVISIONS OF S ECTION 80HHC. HE OBSERVED THAT IT WAS LAID DOWN IN THE AMENDED PROVI SION UNDER SECTION 80HHC TO EXCLUDE THE INCOME OF DEBP LICENSE WHILE WORKING OUT DEDUCTION UNDER SECTION 80HHC OF THE ACT IF THE REQUIRED CONDITION ARE NOT FULFILLED BY THE ASSESSEE. HENCE, HE REJECTED THE GROUND OF APPEAL O F THE ASSESSEE. ITA NO .1439/AHD/2007 - 3 - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE AO DISALLOWED DEDUCTION OF RS.8,68,491/- TO THE ASS ESSEE UNDER SECTION 80HHC ON PROFIT DERIVED FROM SALE OF DEBP. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. THE LD. A.R. HAS RELIED ON THE OR DER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS (SUPRA) AND SUBMITTED THAT THE ISSUE OF DEDUCTION UNDER SECTION 80HHC ON PROFIT FR OM SALE OF DEBP IS COVERED BY THE SAID DECISION. HE CONTENDED THAT AS THE DEC ISION OF THE SPECIAL BENCH WAS RENDERED SUBSEQUENT TO THE DECISION IN THE INST ANT CASE BY THE LOWER AUTHORITIES AND THEREFORE THE LOWER AUTHORITIES COU LD NOT TAKE INTO CONSIDERATION THE SAID DECISION. THEREFORE HE SUBMI TTED THAT THE ISSUE SHOULD BE RESTORED TO THE FILE OF THE LEARNED ASSESSING OF FICER FOR READJUDICATION AFTER CONSIDERING THE DECISION OF THE SPECIAL BENCH IN TH E CASE OF TOPMAN EXPORTS(SUPRA). THE LEARNED DEPARTMENTAL REPRESENTA TIVE ALSO AGREED WITH THE ABOVE SUBMISSIONS OF THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE AND SUBMITTED THAT HE HAD NO OBJECTION ON RESTORING THE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER. WE TH EREFORE RESTORE THIS MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER F OR ADJUDICATION AFRESH AFTER CONSIDERING THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN THE CASE OF TOPMAN EXPORTS(SUPRA) AFTER ALLOWING REASONABLE OPP ORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 18/03/2010. SD/- SD/- (T.K.SHARMA) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/03/2010 ITA NO .1439/AHD/2007 - 4 - PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS) 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD