Desraj Garg, V. ITO Ward-3,

ITA 1509/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1016 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-11-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 21-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 80HHC; 80IB; 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI R.C.SHARMA, AM ITA NO.1509/DEL/2008 ASSESSMENT YEAR : 2002-03 SHRI DES RAJ GARG, PROP. M/S SATYAM OVERSEAS, C/O CORPORATE PROFESSIONALS, D-28, SOUTH EXTENSION, PART-I, NEW DELHI 110 049. PAN NO.AAVPG7961M. VS. INCOME TAX OFFICER, WARD-3, PANIPAT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, CA. RESPONDENT BY : SHRI MANISH GUPTA, DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 5.2.2008 FOR THE AY 2002-03, IN THE MATTER OF ORDER PASSED U/S 143(3)/147 OF THE IT ACT. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED VALIDITY OF REOPENING WITHOUT COMPLYING WITH THE MANDATORY COND ITIONS OF SECTION 147 TO 151 OF THE ACT. 3. FACTS IN BRIEF ARE THAT THE RETURN FILED BY THE ASSESSEE WAS ORIGINALLY PROCESSED U/S 143(1) ON 27.1.2003. LATER ON, AFTER RECORDING REASONS IN WRITING, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 21.3.2 006 WHICH WAS DULY SERVED ON THE ASSESSEE ON 23.3.2006. THE ASSESSEE REQUESTED FOR SUPPLY OF REASONS RECORDED U/S 148 VIDE ITS LETTER DATED 7.4.2006, WHICH WERE SUPPLIED ON 11.8.2006 TO THE CA OF THE ASSESSEE SHRI VINOD GROVER. BEFORE THE FIRS T APPELLATE AUTHORITY, THE ASSESSEE HAS NOT RAISED ANY GROUND WITH REGARD TO L EGALITY OF REOPENING. IN VIEW OF ITA-1509/DEL/2008 2 THE OBSERVATION MADE BY THE AO AT PARA 1 AND KEEPIN G IN VIEW THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI - 291 ITR 500, WE DO NOT FIND ANY INFIRMITY IN THE REOPENING OF ASSESSMENT, WHEN THE ORIGINAL ORDER WAS PASSED U/S 143(1), WHICH CANNOT BE SAID TO BE AN AS SESSMENT ORDER, CONSEQUENTLY THERE IS NO CHANGE OF OPINION. CLAIMING OF DEDUCTI ON U/S 80HHC AND 80IB ON THE SAME AMOUNT OF PROFIT, GIVES SUFFICIENT REASON TO B ELIEVE THAT THERE WAS ESCAPEMENT OF INCOME, RESULTING IN REOPENING OF ASS ESSMENT. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LEARNED AR ALLEGING THE ACTION OF THE AO FOR REOPENING THE ASSESSMENT. 4. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO NOT AL LOWING DEDUCTION U/S 80HHC AND 80IB ON THE SAME AMOUNT OF PROFIT. THE ISSUE I S NO RES-INTEGRA IN VIEW OF THE DECISION OF LARGER BENCH IN THE CASE OF HINDUSTAN M INT & AGRO PRODUCTS IN ITA NOS.1537, 1538 & 1539/DEL/2007 WHEREIN VIDE ORDER D ATED 23.6.2009, THE DECISION OF SPECIAL BENCH IN THE CASE OF ROGINI GAR MENTS 108 ITD 495 WAS UPHELD AFTER DISCUSSING THE VARIOUS JUDGMENTS OF HI GH COURTS AND HON'BLE SUPREME COURT AND IT WAS FINALLY HELD THAT IN VIEW OF THE PROVISIONS OF SECTION 80IA(9) AND 80IA(13), THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80HHC ON THE ELIGIBLE PROFIT WHICH IS WORKED OUT AFTER RE DUCING THE AMOUNT OF DEDUCTION ALLOWED U/S 80IB. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION ON THE VERY SAME AMOUNT OF ELIGIBLE PROFIT U/S 80HHC AND 80IB. 5. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO NOT AL LOWING DEDUCTION U/S 80IB ON THE AMOUNT OF DUTY DRAWBACK AND DEPB RECEIPTS. LEARNED AR FAIRLY CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA, WHEREIN IT WAS HELD THAT DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED B Y THE CENTRAL GOVERNMENT OR FROM SECTION 75 OF CUSTOMS ACT, 1962, HENCE INCENTI VES PROFITS ARE NOT PROFITS DERIVED FROM THE ELIGIBLE BUSINESS U/S 80IB. IT WA S FURTHER HELD THAT THEY BELONG TO ITA-1509/DEL/2008 3 THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKI NGS. THEREFORE, DUTY DRAWBACK, DEPB BENEFITS, REBATES ETC. CANNOT BE CREDITED AGAI NST THE COST OF MANUFACTURE OF GOODS DEBITED IN THE PROFIT & LOSS ACCOUNT FOR PURP OSES OF SECTION 80-IA/80-IB AS SUCH REMISSIONS (CREDITS) WOULD CONSTITUTE INDEPEND ENT SOURCE OF INCOME BEYOND THE FIRST DEGREE NEXUS BETWEEN PROFITS AND THE INDU STRIAL UNDERTAKING. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. DECISION PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER, 2009. SD/- SD/- (R.P.TOLANI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :19.11.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-1509/DEL/2008 4