MONA DEWAN, Jaipur V. ACIT, Jaipur

ITA 170/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5555 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH JCIT DHK
• Keywords: Business income
• Section: 80HHC; 80IB

Judgement Text

ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 170/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 MONA DEWAN G-1-51,SITAPURA INDUSTRIAL AREA,EPIP ZONE, TONK ROAD, JAIPUR CUKE VS. THE ACIT, CIRCLE-7, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ADOPD 5083B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI AKHILESH KUMAR JAIN JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14.12.2015 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21 /01/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)- III, JAIPUR DATED 08.11.2012 WHEREIN THE ASSESSEE H AS TAKEN THE FOLLOWING GROUND OF APPEAL: THE LD. CIT(A)-III, JAIPUR HAS ERRED IN LAW AND ON THE FACTS IN SUSTAINING THE DISALLOWANCE OF CLAIM U/S 80IB OF TH E I.T. ACT, 1961. ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 2 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING AND TRADING OF GARMENTS. DURING THE YEAR UNDER CONSIDE RATION, THE ASSESSEE HAS COMPUTED PROFITS OF THE ELIGIBLE UNDERTAKING AT RS. 1,00,65,529/- AND CLAIMED DEDUCTION OF RS. 25,16,382/- U/S 80IB OF TH E ACT. AS PER THE COMPUTATION OF DEDUCTION FILED BY THE ASSESSEE, SHE HAD CONSIDERED THE DUTY DRAW BACK RECEIPTS AMOUNTING TO RS.2,70,03,443 /- AS PROFIT AND GAINS DERIVED FROM ELIGIBLE UNDERTAKING AND CLAIMED DEDUCTION U/S 80IB THEREON. AS PER THE AO, THE DUTY DRAW BACK RECEIPT IS NOT PROFIT DERIVED FROM THE ELIGIBLE UNDERTAKING AND RELYING ON THE HO NBLE SUPREME COURTS DECISION IN CASE OF LIBERTY INDIA (317 ITR 218) DISALLOWED THE DEDUCTION U/S 80IB OF THE ACT IN RESPECT OF DUTY DR AW BACK RECEIPTS. 2.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF AO HOLDING THAT T HE ISSUE UNDER CONSIDERATION IS GOVERNED BY THE DECISION OF HONBL E SUPREME COURT IN CASE OF LIBERTY INDIA AND SUBSEQUENT DECISION OF HO NBLE SUPREME COURT IN CASE OF TOPMAN EXPORTS CIVIL APPEAL NO. 1699 OF 2012 DATED 08.02.2012 RELIED UPON BY THE ASSESSEE IS NOT APPLI CABLE. ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 3 2.2 DURING THE COURSE OF SUBJECT HEARING, THE ASSES SEE SUBMITTED THAT THE MATTER IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF JAIPUR BENCH OF THE ITAT IN CASE OF M/S SARAF EXPORTS AND OTHERS (ITA NO. 964/JP/2011, 739/JP/2012 & 819/JP/2012) DATED 17.12 .2013. FURTHER THE LD AR RELIED HEAVILY ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S TOPMAN EXPORTS VS. CIT (SUPRA), DEC ISION OF DELHI HIGH COURT IN CASE OF DHARAMPAL PREMCHAND (317 ITR 353) AND DECISION OF RAJASTHAN HIGH COURT IN CASE OF SARAF SEASONING UDH YOG (317 ITR 202). 2.2 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN CASE OF LIBERTY INDIA HAS CLEARLY LAID DOWN THE LEGAL PROPO SITION THAT RECEIPTS ON ACCOUNT OF DUTY DRAWBACK BENEFITS ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. ITS REASONING FOLLOWS THE EARLIER DECISION OF SUPREME COURT IN CASE OF STERLING FOODS HOLDING THAT SUCH R ECEIPTS ARE NOT INCOME DERIVED FROM THE ACTIVITY SORT TO BE ENCOURAGED BY THIS PROVISION. THE EXPRESSION DERIVED FROM AND NOT ATTRIBUTABLE TO IN REFERRING TO THE ELIGIBLE PROFITS AND THE BENEFIT OF THESE INCENTIVE S IS DRIVED FROM THE ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 4 SCHEME FRAMED BY THE GOVERNMENT SO THAT SUCH SCHEME IS IMMEDIATE SOURCE WAS CONSIDERED TO BE A DECISIVE FACTOR BY TH E HONBLE SUPREME COURT. THE RELEVANT FINDINGS (HEAD NOTES) ARE REPR ODUCED AS UNDER: SECTIONS 80-I, 80-IA AND 80-IB PROVIDES FOR INCENT IVES IN THE FORM OF DEDUCTIONS WHICH ARE LINKED TO PROFITS AND NOT INVE STMENT. ON ANALYSIS OF SECTIONS 80-IA & 80-IB IT BECOMES CLEAR THAT ANY INDUSTRIAL UNDERTAKING WHICH BECOMES ELIGIBLE ON SATISFYING SU B-SECTION (2) WOULD BE ENTITLED TO DEDUCTION UNDER SUB-SECTION (1) ONLY TO THE EXTENT OF PROFITS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING AFTER THE SPECIFIED DATE. APART FROM ELIGIBILITY SUB-SECTION (1) PURPORTS TO RESTRI CT THE QUANTUM OF DEDUCTION TO A SPECIFIED PERCENTAGE OF THE PROFITS. THIS IS THE IMPORTANCE OF THE WORDS DERIVED FROM THE INDUSTRIAL UNDERTAKI NG AS AGAINST PROFITS ATTRIBUTABLE TO AN INDUSTRIAL UNDERTAKING. DEPB/DUTY DRAW BACK ARE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY THE CENTRAL GOVERNMENT OR FROM SECTION 75 OF THE CUSTOMS ACT, 1962. INCENTIVE PROFIT ARE NOT PROFITS DERIVE D FROM ELIGIBLE BUSINESS UNDER SECTION 80-IB, THEY BELONGS TO THE CATEGORY O F ANCILLARY PROFITS OF SUCH UNDERTAKING. PROFITS DERIVED BY WAY OF INCENT IVES SUCH AS DEPB/DUTY DRAW BACK CANNOT BE CREDITED AGAINST THE COST OF MANUFACTURER OF GOODS DEBITED IN THE PROFIT AND LOS S ACCOUNT AND THEY DO NOT FALL WITHIN THE EXPRESSION PROFITS DERIVED FRO M INDUSTRIAL UNDERTAKING UNDER SECTION 80-IB. 2.3 AS FAR AS THE SUBSEQUENT DECISION OF THE HONBL E SUPREME COURT IN CASE OF M/S TOPMAN EXPORTS WHICH THE LD AR HAS HEAV ILY RELIED UPON, THE LD. CIT(A) HAS RIGHTLY HELD THAT THE SAID DECIS ION WAS ON DIFFERENCE ISSUES AND FACTS AND HENCE NOT APPLICABLE IN THE IN STANT CASE AS CAN BE ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 5 SEEN FROM THE SUBSTANTIAL QUESTIONS OF LAW RAISED B EFORE THE SUPREME COURT REPRODUCED AS UNDER: (A) WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT T HE ENTIRE AMOUNT RECEIVED ON THE SALE OF THE DUTY ENTITLEMENT PASSBO OK DOES NOT REPRESENT PROFITS CHARGEABLE UNDER SECTION 28(IIID) OF THE I.T. ACT, 1961 AND THAT THE FACE VALUE OF THE DUTY ENTITLEMEN T PASSBOOK SHALL BE DEDUCTED FROM THE SALE PROCEEDS. (B) WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT T HE FACE VALUE OF THE DUTY ENTITLEMENT PASSBOOK IS CHARGEABLE TO TAX UNDER SECTION 28(IIID) AT THE TIME OF ACCRUAL OF INCOME I.E. WHEN THE APPLICATION FOR DUTY ENTITLEMENT PASSBOOK IS FILED WITH THE COM PETENT AUTHORITY PURSUANT TO THE EXPORTS MADE AND THAT THE PROFITS ON THE SALE OF DUTY ENTITLEMENT PASSBOOK REPRESENTING THE EXCESS O F THE SALE PROCEEDS OVER THE FACE VALUE IS LIABLE TO BE CONSID ERED UNDER SECTION 28(IIID) AT THE TIME OF SALE. 2.4 REGARDING THE DECISION OF HONBLE RAJASTHAN HIG H COURT IN CASE OF SARAF SEASONING UDHYOG, IT IS NOTED THAT THE SAID D ECISION RELATES TO RECEIPTS ON ACCOUNT OF SALE OF DEPB LICENCES AND IN VIEW OF SPECIFIC AMENDMENT TO SECTION 28(IIID), WHERE SUCH RECEIPTS HAVE BEEN BROUGHT TO TAX AS BUSINESS RECEIPTS, WHETHER THE SAME WILL QUA LIFY FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. IT IS NOTED THAT TH E SAID DECISION WAS RENDERED BY HONBLE RAJASTHAN HIGH COURT ON 21 AUGU ST 2008 MUCH BEFORE THE DECISION OF HONBLE SUPREME COURT IN CAS E OF LIBERTY INDIA ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 6 WHICH WAS RENDERED ON 31 AUGUST 2009. SECONDLY, TH E SAID DECISION WAS RENDERED FOLLOWING THE DECISION OF HONBLE SUPR EME COURT IN CASE OF B. DESRAJ 310 ITR 439 WITHOUT NOTICING THE DISTI NCTION BETWEEN THE RELIEF U/S 80HHC (WHERE DUTY DRAWBACK RECEIPTS TO B E CONSIDERED SUBJECT TO CERTAIN CONDITIONS) AND RELIEF UNDER SEC TION 80IB OF THE ACT. 2.5 IN LIGHT OF ABOVE, WE DO NOT FEEL PERSUADED TO ACCEPT THE SUBMISSION MADE BY THE LD. COUNSEL IN VIEW OF THE S ETTLED LEGAL POSITION AS HELD BY THE HONBLE SUPREME COURT IN CASE OF LIB ERTY INDIA. THE ARGUMENTS RAISED BY THE LD. COUNSEL DO NOT REQUIRE DETAILED EXAMINATION IN VIEW OF THE SAID SETTLED POSITION. THEREFORE, W E DO NOT SEE ANY REASON TO DEVIATE FROM THE VIEW TAKEN BY THE LD. CIT(A) HE NCE THE GROUND TAKEN BY THE ASSESSEE IS DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 /01/ 2016 SD/- SD/- VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 7 JAIPUR DATED:- 21 / 01 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- MONA DEWAN, JAIPUR 2. THE RESPONDENT- THE ACIT, CIRCLE-7, JAIPUR 3. THE CIT(A)-III, JAIPUR 4. THE CIT-III, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 170/JP/13 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO. 170/JP/13 MONA DEWAN VS. ACIT, CIRCLE-7, JAIPUR 8 L. NO. DATE INITIAL 1 DATE OF DICTATION 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER 3 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DISPATCH OF THE ORDER