Flora Exports, Panipat V. ITO Ward-4,

ITA 1575/DEL/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87017 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 25-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Retrospective amendment; Reassessment proceedings
• Section: 80HHC; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. GEORGE GEORGE K. , JM ITA NO. 1574/DEL/2008 : ASSTT. YEAR : 200 1 - 02 ITA NO. 1575 /DEL/2008 : ASSTT. YEAR : 200 4 - 05 & ITA NO. 3229 /DEL/2008 : ASSTT. YEAR : 200 2 - 03 M/S FLORA EXPORT, SECTOR - 29, HUDA, PANIPAT VS ITO, WARD - 4, PANIPAT (APPELLANT) (RESPONDENT) PAN NO. AA AFF5546L ASS ESSEE BY : MS. RANO JAIN, CA REVENUE BY : SMT. PARWINDER KAUR , SR. DR DATE OF HEARING : 09.03. 2015 DATE OF PRONOUNCEMENT : 09.03 .2015 ORDER PER BENCH : T HESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARA TE ORDERS DATED 25.03.2008, 24.03.2008 & 25.08.2008 FOR THE ASSESSMENT YEARS 2001 - 02, 2004 - 05 & 2002 - 03 RESPECTIVELY. 2. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE SIMILAR , SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CO NVENIENCE AND BREVITY. 3. FIRST WE WI LL DEAL WITH THE APPEAL IN ITA NO. 574/DEL/2008. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED CIT(A) IS BAD, BOTH IN THE EYE OF L AW AND ON FACTS. 2 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN REJECTING THE CONTENTION OF THE APPELLANT THAT THE INITIATING OF PROCEEDINGS UNDER SECTION 147, READ WITH SECTION 148 WAS BAD IN T HE EYE OF LAW AS THE CONDITION AND PROCEDURE PRESCRIBED UNDER THE STATUTE HAVE NOT BEEN SATISFIED. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF THE ASSESSEE THAT THE REASSESSMENT PROCEEDINGS I NITIATED BY THE AO ARE BAD IN THE EYE OF LAW AS THE REASONS RECORDED FOR THE ISSUE OF NOTICE UNDER SECTION 148 ARE BAD IN THE EYE OF LAW AND ARE CONTRARY TO THE FACTS. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN UPHOLDING THE ACTION OF AO IN REDUCING THE DEDUCTION U/S 80HHC TO RS. 3,30,73,168/ - AND ENHANCED THE ASSESSMENT BY RS. 1,00,70,390/ - . (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN REJECTING THE CONTENTION OF THE ASSESSEE THAT ONLY THE PROFIT ARISING ON TRANSFER OF DEPB HAS TO BE EXCLUDED FROM COMPUTING DEDUCTION U/S ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 3 80HHC AND NOT THE TOTAL AMOUNT OF SALES OF DEPB LICENSES. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 4 . GROUND NO. 4 IS GENERAL IN NATURE WHILE GROUND NOS. 1, 2(I) & (II) WERE NOT PRESSED AS SUCH THESE GROUNDS DO NOT REQUIRE ANY ADJUDICATION ON OUR PART. AS REGARDS TO THE REMAINING ISSUE RAISED IN GROUND NOS. 3(I) & (II) RELATING TO THE DEDUCTION U/S 80HHC OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON TRANSFER OF DEPB IS CONCERNED, T HE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ISSUE IS COVERED VIDE ORDER DATED 11.10.2013 IN ITA NOS. 3527 & 3608/DEL/2008 FOR THE ASSESSMENT YEARS 2000 - 01 & 2004 - 05 RESPECTIVELY IN THE CASE OF M/S GROZ NET INDUSTRIES, NEW DELHI VS ACIT, CIRCLE - 22(1), NEW DELHI (COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD). 5 . IN HER RIVAL SUB MISSIONS THE LD. SR. DR ALTHOUGH SUPPORTED THE ORDER OF THE LD. CIT(A) BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 4 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT AN IDENTICAL ISSUE HAVING SIMILAR FACT WAS A SUBJECT MATTER OF THE APPEAL BEFORE THE ITAT DELHI BENCH C , NEW DELHI IN THE CASE OF M/S GROZ NET INDUSTRIES, NEW DELHI VS ACIT, CIRCL E - 22(1), NEW DELHI WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 4 TO 6 OF THE ORDER DATED 11.10.2013 WHICH READ AS UNDER: 4. THUS THE COMMON ISSUE IN BOTH THE YEARS IS, WHETHER DEDUCTION U/S. 80HHC DESERVES TO BE RECOMPUTED IN VIEW OF THE SECON D TAXATION LAW(AMENDMENT) ACT, 2005. FOR THE FACILITY OF REFERENCE, WE ARE TAKING UP THE FACTS FROM ASSESSMENT YEAR 2000 - 01. THE BRIEF FACTS ARE THAT ASSESSEE HAS FILED ITS RETURN OF INCOME ON 31 ST OCTOBER 2010 DECLARING TAXABLE INCOME OF RS.17,440 WHICH H AS BEEN ARRIVED AT AFTER C LAIMING DEDUCTION UNDER SEC. 80 HHC AT RS.446,04,969. THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SEC. 143(1) OF THE INCOME - TAX ACT, 1961. ACCORDING TO THE ASSESSING OFFICER, SEC. 80 - HHC HAS BEEN AMENDED BY TAXATION LAWS(AMENDME NT) ACT, 2005. AS PER THIS AMENDMENT, THE DEDUCTION UNDER SEC. 80 - HHC IN THE CASE OF EXPORTERS WHOSE EXPORTS TURNOVER EXCEEDS RS. 10 CRORES DURING THE PREVIOUS YEAR, THE PROFITS COMPUTED UNDER SUB - CLAUSE (A), (B) OR (C) OF SUB - SECTION (3) OF SEC. 80 - HHC OF THE ACT WOULD BE RESTRICTED TO THE PROFIT COMPUTED UNDER SUB - SEC. (3) AND NO FURTHER INCREASE AS PER THE PROVISO TO THE SAID SECTION ON ACCOUNT OF DEPB INCOME IS ALLOWED. LEARNED A.O. HAS RECORDED REASONS FOR REOPENING OF THE ASSESSMENT. HE ISSUED A NOTIC E UNDER SEC. 148 UPON THE ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 5 ASSESSEE AND PASSED THE REASSESSMENT ORDER ON 20.12.2007 WHEREBY HE HAS RESTRICTED THE DEDUCTION UNDER SEC. 80 - HHC AT RS.370,41,649 AS AGAINST RS.446,04,969 COMPUTED BY THE ASSESSEE. THIS COMPUTATION OF THE ASSESSING OFFICER HAS B EEN UPHELD IN THE APPEAL AS WELL AS BY THE ITAT. THE ASSESSEE FILED MISCELLANEOUS APPLICATION AND CONTENDED THAT WHILE DECIDING ITS APPEAL, THE ITAT HAS RELIED UPON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLORS & CHE MICALS REPORTED IN 328 ITR 451. BY WAY OF THIS JUDGMENT, HON'BLE HIGH COURT HAS REVERSED THE ORDER OF THE ITAT S SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS REPORTED IN 318 ITR(AT) 87. THE ASSESSEE POINTED OUT THAT HON'BLE SUPREME COURT IN THE CASE OF TOPM AN EXPORTS (SUPRA) HAS REVERSED THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLORS & CHEMICALS AND RESTORED THAT OF THE ITAT. ON ACCOUNT OF THIS DEVELOPMENT, ITAT HAS RECALLED ITS EARLIER ORDER AND LISTED THESE APPEALS FOR FRESH HEA RING ON THIS ISSUE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT TAXATION LAW (AMENDMENT) ACT 2005 WAS CHALLENGED IN A NUMBER OF WRIT PETITIONS BEFORE DIFFERENT HON'BLE HIGH COURTS. HON'BLE SUPREME COURT HAS TRANSFERRED ALL SUCH WRIT PETITIO NS TO HON'BLE GUJARAT HIGH COURT. HON'BLE GUJARAT HIGH COURT HAS DECIDED THIS ISSUE VIDE ITS JUDGMENT DATED 2 ND JULY 2012 IN THE CASE OF AVANI EXPORTS REPORTED IN 348 ITR 391. HON'BLE HIGH COURT HAS HELD THAT THE AMENDMENT CARRIED OUT BY WAY OF TAXATION L AW (AMENDMENT) ACT, 2005 WOULD NOT BE APPLIED RETROSPECTIVELY. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF THE HON'BLE GUJARAT HIGH COURT S DECISION. HE ALSO PLACED ON RECORD JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PRIKUIT EXPORTS VS. ACIT IN WRIT PETITION NO. 1335 OF 2008. ON THE STRENGTH OF THESE DECISIONS, HE CONTENDED THAT PROVISION IS NOT APPLICABLE ON THE CASES OF THE ASSESSEE AND ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 6 COMPUTATION MADE BY THE ASSESSEE IS TO BE ACCEPTED. ON THE OTHER HAND, LEARN ED DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. 5 . WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. AFTER LOOKING TO THE FACTS AND CIRCUMSTANCES, WE DEEM IT APPROPRIATE TO TAKE NOTE THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT ON THIS ISSUE: A.K. SIKRI, C.J. (ORAL): IN ALL THESE PETITIONS, INSERTION OF CONDITIONS IN THE THIRD AND FORTH PROVISO TO SECTION 80 HHC(3) OF THE ACT BY AMENDMENT OF TAXATION LAWS (SECOND AM ENDMENT) ACT, 2005 WITH RETROSPECTIVE EFFECT HAVE BEEN CHALLENGED. IT IS A MATTER OF RECORD THAT SIMILAR WRIT PETITIONS WERE FILED IN VARIOUS HIGH COURTS. TRANSFER PETITION WAS FILED IN THE SUPREME COURT AND THE SUPREME COURT HAD DIRECTED TRANSFE R OF ALL T HOSE WRIT PETITIONS TO THE HIGH COURT OF GUJARAT. THE HIGH COURT OF GUJARAT VIDE JUDGMENT DATED JULY 02, 2012 DECIDED THE SAID BUNCH OF WRIT PETITIONS AND QUASHED THE IMPUGNED AMENDMENT ONLY TO THE EXTENT THAT THE OPERATION OF THE SAID SECTION COULD BE GIV EN EFFECT FROM THE DATE OF THE AMENDMENT AND NOT IN RESPECT OF EARLIER ASSESSMENT YEARS. THE BOMBAY HIGH COURT FOLLOWING THE AFORESAID JUDGMENT OF THE GUJARAT HIGH COURT, DISPOSED OF ALL THE WRIT PETITIONS BEFORE IT IN THE FOLLOWING MANNER: IT IS ADMITTE D THAT THE PRESENT WRIT PETITIONS ARE IDENTICAL TO THE WRIT PETITIONS WHICH WERE THE SUBJECT MATTER OF THE TRANSFER PETITIONS BEFORE THE SUPREME ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 7 COURT AND THE JUDGMENT OF THE GUJARAT HIGH COURT; ONLY THE FIRST FOUR WRIT PETITIONS LISTED ABOVE WERE THE SUB JECT MATTER OF THE TRANSFER PETITIONS. IN OTHER WORDS, THE FIRST FOUR MATTERS STOOD TRANSFERRED TO THE GUJARAT HIGH COURT PURSUANT TO THE ABOVE ORDERS OF THE SUPREME COURT. THE OTHER PETITIONS, THEREFORE, DID NOT STAND TRANSFERRED TO THE GUJARAT HIGH COURT . KEEPING MIND THAT THE SUPREME COURT HAD TRANSFERRED ALL THE MATTERS TO THE GUJARAT HIGH COURT IN ORDER TO AVOID CONFUSION AND DIFFICULTIES IN ENFORCEMENT OF CONFLICTING JUDGMENTS OF DIFFERENT HIGH COURTS, WE ARE OF THE VIEW THAT IT WOULD BE APPROPRIATE IN THESE WRIT PETITIONS TO FOLLOW THE JUDGMENT OF THE GUJARAT HIGH COURT. IN THE CIRCUMSTANCES, FOR THE ABOVE REASON, THE WRIT PETITIONS, OTHER THAN THE FIRST FOUR WRIT PETITIONS, ARE DISPOSED OF IN THE TERMS OF THE ORDER AND JUDGMENT OF THE GUJARAT HIGH COURT. THE FIRST FOUR WRIT PETITIONS, IN ANY EVENT, STAND DISPOSED OF BY THE ORDER AND JUDGMENT OF THE GUJARAT HIGH COURT. NO ORDER AS TO COSTS. ALL THE WRIT PETITIONS ARE DISPOSED OF IN A SIMILAR MANNER, IN SAME TERMS . 6 . HON'BLE HIGH COURT HAS CONSI DERED THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF AVANI EXPORTS ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 8 & ORS. VS. CIT REPORTED IN 348 ITR 391 DATED 2 ND JULY 2012 AND OBSERVED THAT TAXATION LAW S (AMENDMENT) ACT, 2005 WOULD NOT BE APPLICABLE RETROSPECTIVELY. LEARNED ASSESSING OFFICER HAS RECOMPUTED THE DEDUCTION ADMISSIBLE TO THE ASSESSEE AFTER APPLYING THE AMENDED PROVISIONS OF SEC. 80 - HHC OF THE ACT. THEREFORE, WE ALLOW THE APPEALS OF ASSESSEE ON THIS ISSUE AND REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECOMPUTI NG THE DEDUCTION ADMISSIBLE UNDER SEC. 80 - HHC BY KEEPING IN VIEW THE JUDGMENTS OF HON'BLE GUJARAT HIGH COURT AS WELL AS HON'BLE PUNJAB & HARYANA HIGH COURT. 7 . IN THE PRESENT CASE ALSO , THE APPEALS OF THE ASSESSEE WERE EARLIER DISPOSED OFF BY THIS BENCH OF THE ITAT VIDE ORDER DATED 18.09.2009. LATER ON, THOSE APPEALS WERE RECALLED IN MA NOS. 128 TO 130/DEL/2013 VIDE ORDER DATED 20.10.2014 ON THE GROUND THAT THE DECISION DATED 22.02.2013 OF THE HON BLE JURISDICTIONAL PUNJAB & HARYANA HIG H COURT IN THE CASE OF M/S PRIKN IT EXPORTS VS ACIT WAS NOT AVAILABLE BEFORE THE ITAT AND THAT THE AO HAD NOT GIVEN APPEAL EFFECT TO THE ORDER OF THE ITAT TILL THE DATE OF HEARING OF THOSE MISCELLANEOUS APPLICATION I.E. 22.08.2014 AND THE DECISION TAKEN BY THE ITAT IN THE ORD ER DATED 18.09.2009 WAS CONTRARY TO THE DECISION OF THE HON BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S PRIKN IT EXPORTS VS ACIT (SUPRA) AND THAT OF THE HON BLE SUPREME COURT IN THE CASE OF TOPMAN ITA NO S . 1574, 1575 & 3229/DEL/2008 FLORA EXPORT 9 EXPORTS VS CIT ORDER DATED 08.02.2012 . WE, THEREFORE, BY KEEPING IN VIEW THE SIMILARITY OF THE FACTS IN ASSESSEE S CASE VIS - - VIS THE CASE OF M/S GROZ NET INDUSTRIES, NEW DELHI VS ACIT, CIRCLE - 22(1), NEW DELHI (SUPRA) ALL OW THE APPEALS OF THE ASSESSEE O N THIS ISSUE AND REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR RE - COMPUTING THE DEDUCTION ADMISSIBLE U/S 80HHC BY KEEPING IN VIEW THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S PRIK N IT EXPORTS VS ACIT (SUPRA). 8 . IN THE RESULT, APPEAL S OF THE ASSESSEE ARE PARTLY ALL OWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE OPEN COURT ON 09/03 / 201 5 ) . SD/ - SD/ - ( GEORGE GEORGE K. ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09/03 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR