Tata Metaliks Ltd., Kolkata V. ITO, WD-3(2), KOLKATA, Kolkata

ITA 1480/KOL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4970 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2015
• Court: TRIBUNAL
• Department Lawyers: TANUJ NEOGI
• Assessee Lawyers: ASHISH AGARWAL ACA
• Keywords: Retrospective amendment; Revised return
• Section: 80HHC; 115JB

Judgement Text

1 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.1480/KOL/2015 ASSESSMENT YEAR : 2010-11 TATA METALIKS LTD. -VERSUS- I.T.O., WARD-3(2) KOLKATA KOLKATA (PAN:AABCT1389B) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SMT. SHREYA LOYALKA, FCA & S HRI ASHISH AGARWAL, ACA FOR THE RESPONDENT: SHRI TANUJ NEOGI, JCIT, SR.DR DATE OF HEARING : 11.02.2016. DATE OF PRONOUNCEMENT : 02.03.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.9.2015 OF CIT(A)- I, KOLKATA, RELATING TO AY 2010-11. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE O RDER OF THE CIT(A) WHEREBY THE CIT(A) CONFIRMED THE ORDER OF THE AO IMPOSING PENAL TY ON THE ASSESSEE U/S.271(1)( C) OF THE INCOME TAX ACT, 1961 (ACT). 3. THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PIG IRON. FOR AY 2010-11, THE ASSESSEE FILED RETUR N OF INCOME ON 30.9.2010 DECLARING TOTAL INCOME OF NIL AS PER THE NORMAL PROVISIONS OF THE ACT. SINCE THE ASSESSEE WAS A COMPANY IT DECLARED TOTAL INCOME AS PER PROVISIONS OF SEC.115JB OF THE ACT DECLARING BOOK PROFIT OF RS.25,82,81,684/-. A REVISED RETURN OF INCOME WAS FILED ON 28.9.2011 IN WHICH THE SAME BOOK PROFIT WAS DECLARED. TAX WA S PAID ON BOOK PROFIT U/S.115JB OF THE ACT ON BOOK PROFIT OF RS.25,82,81,684/-. WH ILE COMPUTING BOOK PROFIT THE ASSESSEE HAD REDUCED FROM THE PROFIT AS PER PROFIT AND LOSS ACCOUNT PREPARED IN 2 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 ACCORDANCE WITH THE COMPANIES ACT, 1956 A SUM OF RS .2,00,10,452/- BEING AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION U/S.80HHC OF THE ACT . ACCORDING TO THE ASSESSSEE IN TERMS OF EXPLN.(IV) TO SEC.115JB OF THE ACT, SUCH A DEDUCTION WAS PERMISSIBLE. THE AO HOWEVER MADE REFERENCE TO THE AMENDMENT TO THE P ROVISIONS OF SEC.115JB OF THE ACT BY THE FINANCE ACT, 2011 WHEREBY EXPLN.(IV) TO SEC.115JB OF THE ACT WAS DELETED WITH RETROSPECTIVE EFFECT FROM 1.4.2005. THE ASSES SEE VIDE ITS LETTER DATED 10.1.2013 ACCEPTED THE STAND OF THE AO IN VIEW OF THE RETROSP ECTIVE AMENDMENT TO THE LAW. THE AO ACCORDINGLY DETERMINED BOOK PROFIT BY ADDING THE AFORESAID SUM OF RS.2,00,10,452 TO THE BOOK PROFITS U/S.115JB OF THE ACT. IN RESPECT OF THE AFORESAID ADDITION MADE WHILE DETERMINING BOOK PROFITS, THE A O INITIATED PENALTY PROCEEDINGS U/S.271(1) (C) OF THE ACT AND BY AN ORDER DATED 12. 9.2013 IMPOSED PENALTY ON THE ASSESSEE. THE ORDER OF THE AO WAS CONFIRMED BY THE CIT(A). THE AO AS WELL AS THE CIT(A) WERE OF THE VIEW THAT WHEN THE ASSESSEE FILE D REVISED RETURN ON 28.9.2011, IT OUGHT TO HAVE RECOMPUTED BOOK PROFIT U/S.115JB OF T HE ACT TAKING NOTE OF THE RETROSPECTIVE AMENDMENT. IT WAS ONLY AFTER THE AO POINTED OUT THE RETROSPECTIVE AMENDMENT TO THE LAW THE ASSESSEE ACCEPTED THAT BOO K PROFITS BE COMPUTED AS PER AMENDED PROVISIONS OF LAW. THUS ACCORDING TO THE A O/CIT(A) BY NOT RECALCULATING BOOK PROFITS U/S.115JB OF THE ACT IN THE REVISED RE TURN OF INCOME, THE ASSESSEEE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACC URATE PARTICULARS THEREOF. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNE D DR RELIED ON THE ORDER OF CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE RELIE D ON SUBMISSIONS MADE BEFORE CIT(A) AND CERTAIN JUDICIAL PRONOUNCEMENTS, IN ONE OF SUCH DECISION ON IDENTICAL FACTS PENALTY IMPOSED U/S.271(1)(C) OF THE ACT WAS HELD T O BE UNSUSTAINABLE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE B OOK PROFITS OF COMPANIES ARE SUBJECTED TO THE LEVY OF MINIMUM ALTERNATE TAX IN C ASES WHERE THE COMPUTATION OF TOTAL INCOME AND TAX PAYABLE THEREON IS NIL OR LESS THA N THE AMOUNT OF MINIMUM ALTERNATE 3 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 TAX WORKED OUT ON ADJUSTED BOOK PROFITS OF THE COMP ANY FOR THE RESPECTIVE ASSESSMENT YEAR. THE EXCLUSION OF EXPORT PROFITS FROM SUCH BOO K PROFITS OF THE COMPANY IS PROVIDED BY DEDUCTION/REDUCTION FOR THE SAME UNDER THE EXPLANATION 1 TO SECTION 115JB OF THE INCOME-TAX ACT, 1961 UNDER WHICH THE A DJUSTED BOOK PROFITS HAVE TO BE ARRIVED AT BY INCREASING THE BOOK PROFITS BY THE 9 (NINE) SPECIFIED ITEMS INDICATED IN THE EXPLANATION AND BY REDUCING THE BOOK PROFITS BY THE 10 (TEN) ITEMS SPECIFIED FOR SUCH REDUCTION. THE EXCLUSION FOR EXPORT PROFITS BY WAY OF REDUCTION FROM BOOK PROFITS IS EXPLICITLY PROVIDED IN CLAUSE (IV) OF THE EXPLAN ATION 1 TO SECTION 115JB OF THE ACT, WHICH READS THUS: '(IV) THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC, COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF SUB -SECTION (3) OR SUB-SECTION (3A), AS THE CASE MAY BE, OF THAT SECTION, AND SUBJECT TO TH E CONDITIONS SPECIFIED IN THAT SECTION; THE OBJECTIVE OF THE STATUTE IN SECTION 115JB FOR T HE RESPECTIVE PERIOD OF ITS APPLICATION WAS TO KEEP EXPORT PROFITS AWAY FROM TH E LEVY OF MINIMUM ALTERNATE TAX ON COMPANIES WHO ARE EXPORTERS REGARDLESS OF THE QUEST ION WHETHER THE ASSESSEE HAD BEEN ACTUALLY GRANTED DEDUCTION UNDER SECTION 80HHC OF T HE INCOME-TAX ACT FROM THE GROSS TOTAL INCOME TO ARRIVE AT THE TOTAL INCOME FOR THE RESPECTIVE ASSESSMENT YEAR. IN OTHER WORDS WHERE THE COMPUTATION OF GROSS TOTAL INCOME A RRIVED AT IN ANY YEAR IS SUCH THAT IT DOES NOT PERMIT DEDUCTION OF THE PROFITS FROM EX PORTS UNDER SECTION 80HHC AS WORKED OUT IN ACCORDANCE WITH THAT SECTION, THE AMO UNT OF DEDUCTION FOR EXPORT PROFITS FROM GROSS TOTAL INCOME WOULD BE DENIED DUE TO NON- AVAILABILITY OF GROSS TOTAL INCOME AS COMPUTED BUT THE ADMISSIBILITY OF THE BENEFIT OF THE EXEMPTION/EXCLUSION OF EXPORT PROFITS IN THE COMPUTATION OF ADJUSTED BOOK PROFITS FOR LEVY OF MINIMUM ALTERNATE TAX CANNOT BE DENIED. THE ASSESSEE SHOULD HOWEVER COMPL Y WITH THE OTHER REQUIREMENTS ENVISAGED IN SECTION 80HHC FOR THE RELEVANT PERIOD INCLUDING THE COMPUTATION TO BE MADE SEPARATELY AND TO BE ACCOMPANIED BY SEPARATE A UDIT REPORT AND CERTIFICATE ETC. SO AS TO BE ENTITLED TO THE DEDUCTION. THE PROCEDURAL REQUIREMENTS BEING COMPLIED WITH WOULD BE REQUIRED TO BE SEEN AND ANY PROCEDURAL DEL AY OF NON-COMPLIANCE MAY BE 4 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 DISREGARDED SO AS TO ENSURE THAT SUBSTANTIVE BENEFI T OF EXEMPTION/EXCLUSION FROM MINIMUM ALTERNATE TAX IS NOT DENIED. 7. THE ISSUE IN REGARD TO THE EXCLUSION OF EXPORT P ROFITS FOR LEVY OF MINIMUM ALTERNATE TAX HAD BEEN AN AREA OF DISPUTE BETWEEN T HE ASSESSEE AND THE REVENUE AND THE TRIBUNAL HAD IN VARIOUS CASES TAKEN THE VIEW TH AT THE DENIAL OF DEDUCTION UNDER SECTION 80HHC OF THE INCOME-TAX ACT UNDER CHAPTER V I-A DUE TO INADEQUACY OF GROSS TOTAL INCOME OR OTHER SIMILAR REASONS WOULD NOT LEA D TO THE CONCLUSION THAT SAME DISALLOWANCE SHOULD BE REPEATED FOR PURPOSES OF MIN IMUM ALTERNATE TAX AND THAT THE CRITERIA FOR DEDUCTION OF EXPORT PROFITS FROM BOOK PROFITS TO ARRIVE AT ADJUSTED BOOK PROFITS FOR LEVY OF MINIMUM ALTERNATE TAX IS MATERI ALLY DIFFERENT FROM THE IMPOSITION OF TAX ON THE TOTAL INCOME ARRIVED AT BY THE REVENUE. THE SPECIAL BENCH OF THE TRIBUNAL IN DY. CIT VS. SYNCOME FORMULATIONS (I) LTD. (2007) 108 TTJ (MUMBAI)(SB) 105 DEALT WITH THIS ISSUE ELABORATELY AND RESOLVED THE DIVERGENT VIEWS WHICH PREVAILED EARLIER SO AS TO LAY DOWN THAT THE ASSESSEE WOULD B E ENTITLED TO THE REDUCTION OF EXPORT PROFITS FROM THE BOOK PROFITS UNDER THE EXPLANATION 1 TO SECTION 115JA OR SECTION 115JB AS THE CASE MAY BE IN VIEW OF THE EXPLICIT AN D SPECIFIC PROVISION FOR ALLOWING SUCH EXCLUSION/REDUCTION AND THE SAME CANNOT BE DIS REGARDED MERELY BECAUSE THE REVENUE HAD TAKEN THE VIEW THAT DEDUCTION UNDER SEC TION 80HHC IS NOT ADMISSIBLE UNDER CHAPTER VI-A OF INCOME-TAX ACT FOR THE DETERM INATION OF TOTAL INCOME OF THE ASSESSEE. THE COMMONNESS BETWEEN SECTION 80HHC AND SECTION 115JB IN THE MATTER OF TREATMENT FOR EXPORT PROFITS IS ONLY LIMITED TO THE AMOUNT OF EXPORT PROFITS ARRIVED AT AS PER THE PROVISIONS OF SECTION 80HHC AND NOT FOR ACTUAL ALLOWANCE OF DEDUCTION THERE UNDER AND THEREFORE IT WAS HELD THAT ONCE DED UCTION UNDER SECTION 80HHC IS HELD TO BE ADMISSIBLE TO THE ASSESSEE WHICH COULD NOT BE ALLOWED DUE TO INADEQUACY OF GROSS TOTAL INCOME, THE BOOK PROFITS BEING A POSITI VE FIGURE, DEDUCTION FOR EXPORT PROFITS FROM THE BOOK PROFITS TO ARRIVE AT THE ACTU AL AMOUNT OF ADJUSTED BOOK PROFITS MUST BE GRANTED SO AS TO ASCERTAIN THE CORRECT FIGU RE OF ADJUSTED BOOK PROFITS FOR LEVY OF MINIMUM ALTERNATE TAX FAILING WHICH THE ASSESSEE WOULD BE CALLED UPON TO PAY MINIMUM ALTERNATE TAX ON EXPORT PROFITS ALSO WHICH BY THE VERY NATURE QUALIFY FOR 5 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 EXCLUSION/REDUCTION FOR MINIMUM ALTERNATE TAX PURPO SES IN VIEW OF THE EXPLICIT STATUTORY PROVISIONS EXEMPTING EXPORT PROFITS FROM THE LEVY OF MINIMUM ALTERNATE TAX SO THAT EXPORT COMPANIES DO NOT SUFFER UNDUE HARDSH IP BY THE REVENUE TAKING THE NEGATIVE APPROACH TO DENY THE EXEMPTION/DEDUCTION. IN AJANTA PHARMA LTD. VS. CIT (2010) 234 CTR (SC) 139 : (2010) 327 ITR 305 (SC) T HE APEX COURT AFFIRMED THE VIEW OF THE SPECIAL BENCH. 7.1. BY FINANCE ACT, , SECTION 1I5JB HAS BEEN AMEND ED BY OMITTING CLAUSES (IV), (V) AND (VI) OF EXPLANATION 1 WITH RETROSPECTIVE EFFECT FROM 1-4-2005 SO THAT PROFITS ELIGIBLE FOR DEDUCTIONS UNDER SECTION 80HHC, 80HHE AND 80HHF CANNOT BE REDUCED FROM THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT, IN COMPUTING BOOK PROFIT FOR THE PURPOSE OF LEVY OF MAT FOR ASSESSMENT YEARS BEGINNING ON OR AFTER 1-4-2005. IT CAN BE SEEN FROM THE ABOVE THAT THE CLAIM MADE I N THE RETURN OF INCOME WHICH WAS FILED ON 30.9.2011 WAS IN ACCORDANCE WITH LAW BUT F OR THE STATUTORY AMENDMENT TO THE PROVISIONS OF SEC.115JB OF THE ACT REFERRED TO ABOV E. IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME WHICH WAS NOT ALLOWED BECAUSE OF A LATER AMENDMENT TO THE LAW AMO UNTED TO FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF INCOME SO AS TO ATTRACT LEVY OF PENALTY U/S.271(1)( C) OF THE ACT. IN FACT ON IDEN TICAL FACTS THE DELHI BENCH OF ITAT IN THE CASE OF KANU EXPORTS VS. ITO ITA NO.5683/DEL/2 011 ORDER DATED 25.5.2012 AND ACIT VS. BHUSHAN STEELS LTD IN ITA NO.700 & 701/DEL /2012 DATED 23.5.2013 HELD THAT PENALTY U/S.271(1)( C) OF THE ACT COULD NOT BE LEVIED. IN THE CASE OF BHUSHAN STEELS LTD. (SUPRA), THE FACTS WERE ASSESSEE HAD CO MPUTED DEDUCTION U/S 80 HHC, FOR LIMITED PURPOSE OF COMPUTING BOOK PROFITS U/S 115 J B BY ADOPTING PROFITS COMPUTED IN ACCORDANCE WITH PROVISIONS OF PART I AND PART III O F SCHEDULE VI TO THE COMPANIES ACT, 1956. THE AO DISAGREED WITH SAME AND RECOMPUT ED BOOK PROFITS U/S 115JB BY RESTRICTING DEDUCTION U/S 80 HHC BY COMPUTING SAME WITH REFERENCE TO PROFITS COMPUTED UNDER INCOME TAX ACT, 1961. PENALTY WAS L EVIED BY AO ON QUANTUM OF ADJUSTMENT MADE DUE TO COMPUTATION OF RELIEF U/S 80 HHC VIS-A-VIS COMPUTED BOOK PROFITS U/S 115 JB. THE CIT(A) HAD DELETED PENALTY . ON FURTHER APPEAL THE TRIBUNAL 6 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 UPHELD THE ORDER OF THE CIT(A) HOLDING THAT AN HONE ST CLAIM WAS MADE BY ASSESSEE AND ALL FACTS RELATING TO CLAIM WERE ON RECORD AND THAT THE ASSESSEE HAD NEITHER FURNISHED INACCURATE PARTICULARS OF INCOME NOR CONC EALED HIS INCOME. THE TRIBUNAL HELD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) REPORTED IN 322 ITR 158 (SC) WHEREIN IT WAS HELD THAT MERE REJECTION OF THE CLAIM MADE IN THE RETURN OF I NCOME CANNOT TANTAMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, APPLIED TO THE FACTS OF THE CASE. WE ARE OF THE VIE W THAT THE CLAIM MADE BY THE ASSESSEE WAS A BONAFIDE CLAIM AND THE CLAIM BECAME INADMISSIBLE ONLY BECAUSE OF A LATER RETROSPECTIVE AMENDMENT TO THE LAW. THE FACT THAT IN A REVISED RETURN FILED WHICH WAS FILED AFTER THE RETROSPECTIVE AMENDMENT TO THE LAW, CANNOT LEAD TO A CONCLUSION THAT THE ASSESSEE ATTEMPTED TO CONCEAL PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. THE REVISED RETURN IS ONLY FOR THE PU RPOSE OF RECTIFYING ANY ERROR OR OMISSION IN THE ORIGINAL RETURN OF INCOME. THE COM PUTATION OF BOOK PROFITS U/S.115JB OF THE ACT BECAUSE OF THE RETROSPECTIVE AMENDMENT T O THE LAW CANNOT BE SAID TO BE EITHER ERROR OR OMISSION WHICH REQUIRES THE ASSESSE E TO RECTIFY ITS RETURN OF INCOME. CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS HAS TO BE JUDGED ON THE BASIS OF LAW AS IT EXISTED WHEN THE RETURN OF INCOM E IS FILED. WE ARE THEREFORE OF THE VIEW THAT LEVY OF PENALTY IN THE FACTS AND CIRCUMST ANCES OF THE PRESENT CASE CANNOT BE SUSTAINED. THE SAME IS DIRECTED TO BE CANCELLED. THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE COURT ON 02.03.2016. SD/- SD/- [WASEEM AHMED ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02/.03.2016. [RG PS] 7 ITA NO.1480/KOL/2015-TATA METALIKS LTD.-A.Y.2010-11 COPY OF THE ORDER FORWARDED TO: 1.TATA METALIKS LIMITED, TATA CENTRE, 10 TH FLOOR, 43 CHOWRINGHEE ROAD, KOLKATA- 700071. 2.I.T.O., WARD-3(2), KOLKATA 3. CIT(A)-I, KOLKATA 4. CIT-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES