M/s. Kaushlya Export, Ahmedabad V. The Income Tax Officer,Ward-11(4), Ahmedabad

ITA 1563/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9154 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 03-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: M J SHAH
• Keywords: Rectification of order
• Section: 80HHC; 154

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NOS. 1563 & 1564/AHD/2015 ( ASSESSMENT YEARS : 2001-02 & 2002-03) M/S. KAUSHALYA EXPORT 185, NEW CLOTH MARKET, OUTSIDE RAIPUR GATE, AHMEDABAD-380002 / VS. INCOME TAX OFFICER WARD 11(4), AHMEDABAD ./ ./ PAN/GIR NO. : AADFK7439G ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M. J. SHAH, A.R. / RESPONDENT BY : SHRI S. K. DEV, SR.D.R. DATE OF HEARING 05/12/2018 !'# / DATE OF PRONOUNCEMENT 19/12/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED TWO APPEALS HAVE BEEN BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, AHMEDABAD (CIT(A) IN SHORT), DATED 23.03.2015 ARI SING IN RECTIFICATION ORDER PASSED UNDER S. 154 OF THE INCO ME TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMENT YEARS 2001-02 & 200 2-03. ITA NOS. 1563 & 1564/AHD/15 [M/S. KAUSHALYA EXPORT VS. ITO] AYS. 2001-02 &2002-03 - 2 - ITA NO. 1563/AHD/2015 A.Y. 2001-02 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THE LEARNED C.I.T.(APPEALS) HAS ERRED IN LAW I N DISMISSING THE APPEAL THEREBY CONFIRMING THE ACTION OF A.O. OF DENYING RE CTIFICATION OF THE MISTAKE WHICH IS APPARENT ON THE RECORD U/S.154 OF I.T. ACT , 1961 . 2. THE LEARNED C.I. T. (APPEALS) HAS ERRED IN LAW A ND ON FACTS IN DISMISSING THE APPEAL OF ASSESSEE BY CONSIDERING IT BARRED BY LIMITATION OF TIME DESPITE THE CONTENTION OF ASSESSEE THAT APPLICATION U/S.154 WAS FIRST TIME FILED ON 21.08.2012, WHICH WELL WITHIN THE TIME AS STIPULATE D BY SEC. 154 OF THE I.T. ACT, 1961. 2.1 THE LEARNED C. I.T. (APPEALS) OUGHT TO HAVE EXE RCISED HIS WIDE POWER GIVEN BY STATUTE U/S.251 AND OUGHT TO HAVE CONDUCTED THE DETAILED INQUIRY ABOUT THE CONTENTIONS OF ASSESSEE IN THE INTEREST OF NATU RAL JUSTICE. 3. THE LEARNED C.I.T.(APPEALS) HAS FURTHER ERRED IN LAW BY NOT APPRECIATING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF AVANI EXPORTS AND OTHER VS. CIT REPORTED IN 348 ITR 391 (GUJ) IN PROPER PERSPECTIVE. 3.1 THE LEARNED C.I.T.(APPEALS) FAILED TO CONSIDER THE FINDING OF HON'BLE JURISDICTIONAL HIGH COURT THAT THE AMENDMENT TO SEC .80HHC BY TAXATION LAW (SECOND AMENDMENT ACT, 2005) IS DISCRIMINATING BEING A CASE OF 'PALPABLE ARBITRARINESS' AND FAILED TO SATISFY THE TEST OF ARTICLE 1 4 OF THE CONSTITUTION AND FURTHER HELD THAT THE SAID AMENDME NT IS PROSPECTIVE IN NATURE. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) IS IN ERROR IN D ENYING THE RELIEF SOUGHT. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE S UBSTANTIVE DISPUTE IS WITH REGARD TO ALLOWABILITY OF DEDUCTION UNDER S.80HHC OF THE ACT WITH REFERENCE TO EXPORT INCENTIVES IN THE FORM OF DEPB PROCEEDS. IN RE-ASSESSMENT PROCEEDINGS, THE AO DIS REGARDED THE ITA NOS. 1563 & 1564/AHD/15 [M/S. KAUSHALYA EXPORT VS. ITO] AYS. 2001-02 &2002-03 - 3 - DEPB CLAIM FOR THE PURPOSES OF 80HHC OF THE ACT. I T IS THE CASE ON BEHALF OF THE ASSESSEE THAT ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIG H COURT IN THE CASE OF AVANI EXPORTS & ORS. VS. CIT REPORTED IN 348 ITR 391 (GUJ) WHEREBY THE AMENDMENT TO SECTION 80HHC OF THE ACT B Y TAXATION LAW (2 ND AMENDMENT ACT, 2005) WAS HELD TO BE PROSPECTIVE IN ITS APPLICATION. HOWEVER, IN THE SAME VAIN, WE NOTICE FROM THE OBSERVATION OF THE CIT(A) THAT WHERE THERE IS NO QU ALIFIED POSITIVE INCOME IN COMPUTATION OF INCOME UNDER S.80HHC OF TH E ACT AS IN THE INSTANT CASE, THE ASSESSEE IS NOT ENTITLED FOR DEDU CTION UNDER S.80HHC OF THE ACT IN VIEW OF THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF IPCA LABORATORIES LTD. V. DEPUTY CIT REPORT ED IN [2004] 266 ITR 521 (SC). WE NOTICE FROM THE ASSESSMENT ORDER THAT IF THE PROFIT ON TRANSFER OF EXPORT INCENTIVES (DEPB) WAS DEDUCTE D FROM THE PROFITS OF THE ASSESSEE, THE FIGURE WOULD BE LOSS AND THERE WILL BE NO POSITIVE INCOME OF THE ASSESSEE FROM ITS EXPORT AND HENCE, T HE ASSESSEE WILL NOT BE ENTITLED TO ANY DEDUCTION UNDER S.80HHC OF THE A CT IN THE LIGHT OF THE DECISION OF HONBLE SUPREME COURT IN IPCA LABOR ATORIES (SUPRA). IN SUCH CIRCUMSTANCES, THE ACTION OF THE CIT(A) APP EALED AGAINST CANNOT BE ASSAILED IN THE PROCEEDINGS UNDER S.154 O F THE ACT. CONSEQUENTLY, APPEAL OF THE ASSESSEE IS DISMISSED. 5. THE FACTS IN ITA NO.1564/AHD/2015 CONCERNING AY 2002-03 BEING SIMILAR, THE OBSERVATIONS IN ITA NO.1563/AHD/ 2015 SHALL APPLY ITA NOS. 1563 & 1564/AHD/15 [M/S. KAUSHALYA EXPORT VS. ITO] AYS. 2001-02 &2002-03 - 4 - MUTATIS MUTANDIS. ACCORDINGLY, APPEAL IN ITA NO. 1564/AHD/2015 FILED BY THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 19/12/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 19/12/201 8