The ITO, Ward-4(2), Ahmedabad V. Kiri Dyes & Chemicals (P) Ltd., Ahmedabad

ITA 163/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50789 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 16-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHYAM PRASAD
• Assessee Lawyers: S N SOPARKAR
• Keywords: Principle of natural justice; Retrospective amendment
• Section: 28

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , . ! !,'# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NO.163/AHD/2009 ( ! & ! & ! & ! & / / / / ASSESSMENT YEAR : 2001-02) THE INCOME TAX OFFICER WARD-4(2) AHMEDABAD ! ! ! ! / VS. KIRI DYES AND CHEMICALS PVT.LTD. 53, MANEKBAUG SOCIETY SM ROAD AMBAWADI, AHMEDABAD ' '# ./() ./ PAN/GIR NO. : AAACK 9025 L ( '* / // / APPELLANT ) .. ( +,'*/ RESPONDENT ) '* - '/ APPELLANT BY : DR.K.SHYAM PRASAD, SR.D.R. +,'* . - ' / RESPONDENT BY : SHRI S.N.SOPARKAR, A.R. !/ . 0#/ // / DATE OF HEARING : 12/10/2011 1 & . 0# / DATE OF PRONOUNCEMENT : 21/10/2011 '2/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VIII, AHMEDA BAD DATED 30/10/2008 AND THE SUBSTANTIAL GROUNDS RAISED ARE AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN DIRECTED THE ASSESS ING OFFICER TO CONSIDER ONLY THE PROFIT ON SALE OF DEPB F OR CALCULATION OF DEDUCTION U/S.80HHC OF RS.19,91,667/- INSTEAD OF TH E ASSESSING OFFICER HAS CONSIDERED THE INCOME FROM DEPB AT RS.2,51,08,225/- WHILE FINALIZING THE ASSESSMENT. ITA NO .163/AHD/2009 ITO VS. KIRI DYES & CHEMICALS P.LTD. ASST.YEAR - 2001-02 - 2 - 2. THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER P ASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S. 254 OF THE ACT DATED 28-12- 2007. 3. THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORD ER AS PER THE LATEST PROVISIONS OF THE ACT AFTER AMENDMENT BROUGH T INTO THE ACT BY TAXATION LAWS (AMENDMENT), 2005. 2. WHILE PASSING AN ASSESSMENT ORDER PASSED U/S.143 (3) R.W.S.254 OF THE I.T.ACT ON 28/12/2007, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURING AND EXPORT OF DYES AND CHEMICALS. THE SAID PROCEEDINGS WERE IN CONSEQUENCE OF AN ORDER OF THE TRIBUNAL THROUGH WHICH THE ASSESSIN G OFFICER WAS DIRECTED TO RECOMPUTED THE CLAIM OF DEDUCTION U/S.8 0HHC IN THE LIGHT OF RETROSPECTIVE AMENDMENT IN SECTION 28 FROM 1.4.2001 . AS PER ASSESSING OFFICER, VIDE SECTION 28(IIID) ANY PROFIT ON THE TR ANSFER OF THE DUTY ENTITLEMENT PASS B OOK SCHEME BEING THE DUTY REMISSION SCHEME UNDER THE EXPORT AND IMPORT POLICY FORMULATED AND ANNOUNC ED UNDER SECTION 5 OF THE FOREIGN TRADE, THE INCOME IS CHARGEABLE TO I NCOME TAX. IT WAS AFFIRMED THAT THERE WAS AN OPTION EITHER TO CHOOSE DUTY DRAW BACK OR DEPB SCHEME, HOWEVER, THE ASSESSEE HAS OBTAINED FOR DEPB BENEFITS. ACCORDINGLY, THE DEPB INCOME SHOWN BY THE ASSESSEE OF RS.2,60,16,401/- WAS TAKEN INTO ACCOUNT IN TERMS O F EXPLANATION (BAA) FOR THE PURPOSE OF ELIGIBLE DEDUCTION U/S.80HHC OF THE I.T.ACT. WHEN IT WAS CHALLENGED BEFORE THE LEARNED CIT(APPEALS) AFTE R DETAILED DISCUSSION, IT WAS HELD AS UNDER:- 7.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE A.R. CAREFULLY. THE HONBLE ITAT, AHMEDABAD I N THE AFORE- REFERRED CASE HAS DECIDED THAT ONLY THE PROFIT ON TRANSFER OF ITA NO .163/AHD/2009 ITO VS. KIRI DYES & CHEMICALS P.LTD. ASST.YEAR - 2001-02 - 3 - DEPB SCHEME IS CHARGEABLE TO TAX UNDER THE HEAD IN COME FROM BUSINESS OR PROFESSION. FURTHER, WHILE COMPUTING THE PROFIT OF BUSINESS UNDER EXPLANATION (BAA) OF SEC.80HHC, 90% OF THE PROFITS ON TRANSFER OF DEPB SHOULD BE EXCLUDED AND NOT THE TOTAL AMOUNT RECEIVED BY THE APPELLANT ON TRANSFER OF DEP B CREDIT. THEREFORE, THE A.O. IS DIRECTED TO WORK OUT THE PRO FIT OF THE APPELLANT ON SALE OF DEPB CREDIT AFTER CONSIDERING ALL THE FACTS IN THIS REGARD AND COMPUTE THE PROFIT OF THE BUSINESS OF THE APPELLANT UNDER EXPLANATION (BAA) OF SEC.80HHC ACCORDINGLY. 4. NOW THE REVENUE HAS CHALLENGED THE SAID DIRECTIO N OF THE LEARNED CIT(APPEALS). 5. AS FAR AS THE LEGAL ASPECT IS CONCERNED, THE SAM E STOOD COVERED IN FAVOUR OF THE REVENUE VIDE AN ORDER OF HONBLE BOM BAY HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. KALPATARU COLOURS AND CHEMICALS REPORTED AT [2010]328 ITR 451(BOM) WHEREIN IT WAS HELD THAT WHAT CONSTITUTES PROFIT U/S.28(IIID) IS T HE AMOUNT RECEIVED ON TRANSFER OF THE DEPB CREDIT AND NOT THE AMOUNT O F CREDIT WHICH THE ASSESSEE WAS ENTITLED TO UNDER THE DEBP SCHEME. THERE IS ANOTHER IMPORTANT OBSERVATION THAT THE THIRD PROVIS O PROVIDED THAT IN THE CASE OF AN ASSESSEE HAVING AN EXPORT TURNOVER E XCEEDING RS.10 CRORES, THE PROFITS COMPUTED U/S.80HHC(3) IS TO BE INCREASED BY 90% OF THE SUM REFERRED TO IN SECTION 28(IIID) OF T HE ACT SUBJECT TO THE TWO CONDITION SET OUT THEREIN. FROM THE ORDER OF THE AUTHORITIES BELOW, IT IS EVIDENT THAT THE AFOREMENTIONED CONDIT IONS HAVE NOT BEEN EXAMINED. NATURALLY, AT THE TIME WHEN THE DE CISION WAS TAKEN BY THE REVENUE AUTHORITY THEY DID NOT HAVE THE BENE FIT OF THIS LAND- MARK DECISION OF THE HONBLE BOMBAY HIGH COURT. IN THE INTEREST OF ITA NO .163/AHD/2009 ITO VS. KIRI DYES & CHEMICALS P.LTD. ASST.YEAR - 2001-02 - 4 - NATURAL JUSTICE, WE THEREFORE RESTORE THIS ISSUE BA CK TO THE STAGE OF THE A.O. TO RE-COMPUTE THE DEDUCTION IN THE LIGHT O F THE AFORE CITED DECISION AND THE AMENDED LAWS. SIMULTANEOUSLY, ASSE SSEE IS DIRECTED TO FURNISH ALL THE REQUISITE DETAILS. GROU ND IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. SD/- SD/- (A. MOHAN ALANKAMONY) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 21/ 10 /2011 30..!, .!../ T.C. NAIR, SR. PS '2 . +4 5'4& '2 . +4 5'4& '2 . +4 5'4& '2 . +4 5'4&/ COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 6 / CONCERNED CIT 4. 6() / THE CIT(A)-VIII, AHMEDABAD 5. 49: +! , , / DR, ITAT, AHMEDABAD 6. :;