M/s Kurian Abraham Pvt. Ltd, Kottayam V. Assistant Commissioner of Income Tax, Kottayam

ITA 173/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52305 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 02-04-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: K I JOHNFCAAR
• Keywords: Business income
• Section: 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 173/COCH/2009 ASSESSMENT YEAR: 2004-05 KURIAN ABRAHAM PVT. LTD., OOPPOOTTIL BUILDING, K.K.ROAD, KOTTAYAM. [PAN: AAACK 8720C] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI K.I.JOHN, FCA-AR REVENUE BY MS. S. VIJAYAPRABHA, JR.DR DATE OF HEARING 23/09/2011 DATE OF PRONOUNCEMENT 16/12/2011 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE, DIRECTED AGAINS T THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOCHI (CI T(A) FOR SHORT) DATED 19-12-2008 AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2 004-05. 2. THE APPEAL RAISES THREE ISSUES IN PRINCIPLE, WHI CH WE SHALL TAKE UP IN SERIATIM. DEDUCTION U/S. 80HHC 3. THE ASSESSEE CLAIMED DEDUCTION U/S. 80HHC AT ` 6,31,203/-, I.E., SEPARATELY FOR THE LATEX MANUFACTURING UNIT ( ` 2,04,863/-) AND THE GLOVES UNIT ( ` 4,26,340/-). THE SAME STOOD RESTRICTED BY THE ASSESSING OFFICER (AO) TO ` 5,57,826/-, BY CONSIDERING THE ENTIRE BUSINESS AS ONE (THE RELEVANT COMPUTATION APPEARING AT ANNEXURE-II TO THE ASSESSMENT ORDER). THE DEDUCTION U/S. 80 HHC IN HER VIEW IS IN RELATION TO THE EXPORT PROFITS, AND I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 2 DOES NOT CONTEMPLATE A UNIT-WISE SEGREGATION OF PRO FITS, EVEN IF SUPPORTED BY MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS, RELYING ON THE DECIS IONS BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE REPORTED IN INDIAN SPICES COMPANY VS. CIT , 267 ITR 445 (KER.); CIT VS. PARRY AGRO INDUSTRIES 257 ITR 41 (KER.); AND CIT VS. JOSE THOMAS, 253 ITR 553 (KER.). THE SAME STOOD CONFIRMED BY THE LD. CIT(A) IN APPEA L VIDE PARA 3.1 OF HER ORDER. THE ASSESSEE HAS NOW PREFERRED AN APPEAL RELYING ON THE DECISIONS IN THE CASE OF CIT VS. M.GANI & CO . (2008) 301 ITR 381 (MAD.) AND CIT VS. MCMILLAN INDIA LTD. (2007) 295 ITR 67 (MAD.). THE ASSESSEE ALSO DISPUTES THE ADOPT ION OF TOTAL TURNOVER BY THE AO AT ` 72,92,12,736/-. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. 4.1 BOTH THE AUTHORITIES BELOW HAVE IN DECIDING THE SAID QUESTION RELIED ON THE BINDING JUDGMENTS CITED (SUPRA) BY THE HONBLE JURISDICTION AL HIGH COURT. WE ARE, THEREFORE, UNABLE TO APPRECIATE THE ASSESSEES CASE IN THE ABS ENCE OF IT DISTINGUISHING THE SAME BEFORE US IN ANY MANNER. THAT IS, NOTWITHSTANDING A ND DE HORS THE MERITS OF THE ISSUE INVOLVED, WE FIND NO SCOPE FOR TAKING A DIFFERENT V IEW IN THE MATTER. IN FACT, THE PROVISION IS CLEAR AND ENVISAGES THE COMPUTATION OF DEDUCTION QUA EXPORT PROFIT U/S. 80HHC WITH REFERENCE TO THE TOTALITY OF THE PROFITS ASSESSABLE AS BUSINESS PROFITS UNDER CHAPTER IV-D OF THE ACT. IN THE CASE OF CIT VS. PARRY AGRO INDUSTRIES (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HAS ABUNDANTLY CLARIFIED THAT NO DICHOTO MY COULD BE MADE WITH REGARD TO THE ITEMS COVERED BY THE LOCAL SALES, WHICH WERE STATED TO BE DIFFERENT FROM THOSE WHICH WERE EXPORTED. IN THE CASE OF INDIAN SPICES COMPANY VS. CIT (SUPRA), CLEARLY THE HONBLE COURT NOTED ITS EARLIER DECISIONS, I.E., IN THE CASE OF CIT VS. PARRY AGRO INDUSTRIES (SUPRA) AND CIT VS. JOSE THOMAS (SUPRA), AND CONSCIOUSLY CHOSE TO DISAGREE WITH THE CONTRARY DECISIONS BY THE HONBLE MADRAS HIGH COURT BROUGHT TO ITS NOTICE, AS IN THE CASE OF CIT VS. MADRAS MOTORS LTD. , 257 ITR 60, CLARIFYING THAT WHERE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LOCAL SALES OF GOODS, IN ADDITION TO TH E EXPORT SALES, CLAUSE (B) OF SUB SECTION (3) OF S. 80HHC IS ATTRACTED. THERE IS NO QUESTION OF FURTHER EXCLUSION OF THE LOCAL SALES, WHICH COULD WELL BE DIFFERENT FROM THOSE BEING EXPO RTED. THE MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS WAS AGAIN NOT RELEVANT. IN THIS VIEW OF THE MATTER, WE ARE UNABLE TO I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 3 ACCEPT THE ASSESSEES CONTENTION. IT RATHER ITSELF RELIES ON THE DECISIONS AS IN THE CASE OF JOREHAUT GROUP LTD. VS. ACIT , 289 ITR 422 (GAU.); CIT V. G.M. MITTAL STAINLESS STEEL LTD ., 271 ITR 219 (MP); AND NATIONAL TEXTILE CORP. LTD. V. CIT , 216 CTR 153 (MP), HOLDING THAT THE DECISIONS BY THE HONBLE JURISDICT IONAL HIGH COURT ARE BINDING. IN FACT, IN THE FACTS OF THE CASE, THE ITEMS BEING EXPORTED AND SOLD DOMESTICALLY ARE THE SAME, I.E., PROCESSED LATEX NATURAL RUBBER (NR). 4.2 THE DECISIONS REFERRED TO BY THE ASSESSEE HAVE BEEN RENDERED IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, AS IN THE CASE OF CIT VS. RATHORE BROTHERS , 254 ITR 656 (MAD.), WHERE THE ASSESSEE IS ENGAGED IN COMPLETELY DISPARATE BUSINESSES, HAVING NO CORRELATION WITH EACH OTHER, SO THAT ON FACTS, COMB INING THE TWO INDEPENDENT, UNRELATED BUSINESSES AS ONE, SINGLE BUSINESS, WAS IN ITS VIEW NOT PROPER. THE STATUTORY REQUIREMENT OF COMPUTING THE PROFIT OF THE `BUSINESS WAS THERE FORE INTERPRETED BY IT TO MEAN AS FOR EACH SEPARATE OR INDEPENDENT `BUSINESS. THE TWO `B USINESSES IN THE INSTANT CASE ARE IN FACT RELATED, BEING THE PRODUCTS ARISING OUT THE SA ME COMMON BASIC RAW MATERIAL, LATEX. FURTHER, THE ASSESSEES CASE IS NOT TENABLE EVEN ON THE BASIS OF THE CASE LAW CITED BY IT. THIS IS AS IT EXPORTS BOTH THE PRODUCTS PRODUCED BY IT, I.E., `PROCESSED LATEX AND `GLOVES, OR THE PRODUCTS OF BOTH ITS BUSINESSES, EVEN IF CON SIDERED AS FORMING TWO SEPARATE BUSINESSES, LIABLE FOR CONSIDERATION OF THEIR PROFI TS SEPARATELY FOR DEDUCTION U/S. 80HHC. AS SUCH, IT WOULD NOT STAND TO GAIN IN ANY MANNER B Y BIFURCATING THE COMPUTATION OF THE DEDUCTION THEREUNDER INTO TWO, WORKING IT OUT SEPAR ATELY FOR `PROCESSED LATEX AND `GLOVES, INASMUCH AS THE TOTAL `PROFIT OF THE BUSI NESS; THE TOTAL `EXPORT TURNOVER AND THE AGGREGATE `TOTAL TURNOVER WOULD REMAIN THE SAME/CO NSTANT. WHAT THE ASSESSEE IN FACT SEEKS TO DO IS TO SEGREGATE THE COMPUTATION NOT ALO NG THE SAID TWO LINES OF BUSINESS, BUT UNIT-WISE, WHICH WOULD YIELD A HIGHER FIGURE OF DED UCTION, AS WHERE THE PRODUCTION OF SOME UNITS (FALLING UNDER EITHER BUSINESS) IS NOT E XPORTED, SO THAT BOTH THE PROFIT AS WELL AS THE TURNOVER OF SUCH UNIT STANDS TO BE EXCLUDED IN COMPUTING THE DEDUCTION. THE CLAIM AS PREFERRED BY THE ASSESSEE IS, THUS, NEITHER IN TERM S OF THE PROVISION AS EXPLAINED BY THE HONBLE JURISIDICTIONAL HIGH COURT NOR IN AGREEMENT WITH THE CASE LAW CITED BY IT IN SUPPORT THEREOF, SANCTIONING THE ALLOWANCE OF SEC. 80HHC DE DUCTION BY CONSTRUING DIFFERENT I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 4 PRODUCTS AS CONSTITUTING DIFFERENT OR DISTINCT BUSI NESSES, SO THAT THE PROFIT OF EACH WOULD SEPARATELY QUALIFY FOR DEDUCTION U/S. 80HHC, BUT ON THE BASIS OF PRODUCTION UNITS, I.E., A THIRD, NEW BASIS. THAT APART, THE BASIS FOR CONSIDE RING `GLOVES, A LATEX PRODUCT, AS CONSTITUTING A DISTINCT, STAND-ALONE BUSINESS, IS I TSELF HIGHLY SUSPECT. ITS CLAIM, ACCORDINGLY, ONLY MERITS DISMISSAL. 4.3 WITH REGARD TO THE SECOND, TURNOVER ASPECT, WE OBSERVE THAT THIS ISSUE HAS NOT BEEN RAISED BY THE ASSESSEE BEFORE EITHER OF THE AUTHORI TIES, SO THAT THE SAME DOES NOT ARISE OUT OF THEIR ORDERS, NOR HAS BEEN SPECIFICALLY AGITATED BY THE ASSESSEE PER ITS GROUNDS OF APPEAL, AND ONLY MENTIONED IN ONE OF ITS SEVERAL AR GUMENT NOTES (THE ASSESSEE FILING IN ALL FIVE SUCH NOTES). AS SUCH, THE SAME IS NOT MAINTAIN ABLE BEFORE US. WITHOUT PREJUDICE, WE ALSO FIND THE ASSESSEES CLAIM TO BE MIS-CONCEIVED IN-AS-MUCH AS THE STATED FIGURE OF TOTAL TURNOVER AGREES WITH THE FIGURE OF THE TOTAL TURNOV ER AS ADOPTED BY THE ASSESSEE PER ITS SEPARATE COMPUTATIONS FOR CLAIM U/S. 80HHC, I.E., F OR THE GLOVES DIVISION (AT ` 11,33,34,698/-) AND LATEX EXPORT (AT ` 61,58,78,038/-) . ACCORDINGLY, THE ASSESSEES OBJECTION RAISED IN ITS RESPECT, WITH REFERENCE TO THE DECISION IN THE CASE OF CIT V. LAKSHMI MACHINERY WORKS (2007) 290 ITR 667 (SC), WHICH STANDS EXAMINED BY THE LD. CIT(A) FOR ITS INAPPLICABILITY, AND TOWARD WHICH THE ASSES SEE HAS NOT ADVANCED ANY SPECIFIC ARGUMENT, WOULD BE IN ANY CASE TO NO AVAIL. THERE I S, AS SUCH, NO CASE OF GRIEVANCE ON THIS SCORE. WE DECIDE ACCORDINGLY. 5. THE THIRD ISSUE IN RESPECT OF DEDUCTION U/S. 80H HC IS QUA THE SAME BEING RESTRICTED (BY THE AO) TO NIL IN COMPUTING THE ASSE SSEES BUSINESS INCOME, AS THE ASSESSEE HAD BEEN ALLOWED DEDUCTION U/S. 80IB AT ` 8,87,603/-. THIS IS IN VIEW OF S. 80IB(13) R.W.S. 80IA(9) OF THE ACT, FOR WHICH WE FIND THE ASSESSEE TO HAVE RAISED ADDITIONAL GROUND/S AS WELL. WHILE THE AO PLACED THE SAID RESTRICTION IN V IEW OF THE CLEAR MANDATE OF S. 80IB(13) R.W.S. 80IA(9), THE LD. CIT(A) ENDORSED THE SAME ON THE BASIS OF THE DECISION BY THE TRIBUNAL IN THE CASE OF NODI EXPORTS VS. ACIT (2008) 12 DTR 1 (DEL.), RENDERED AFTER CONSIDERING THE DECISION BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF S.C.M. CREATIONS VS. ACIT , 304 ITR 319 (MAD.), RELIED UPON BY THE ASSESSEE BEFORE HER. IN I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 5 APPEAL, THE ASSESSEE, APART FROM THE DECISION IN TH E CASE OF S.C.M. CREATIONS VS. ACIT (SUPRA), ALSO RELIED ON THE DECISION IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT (2011) 237 CTR (BOM.) 408. IN THE VIEW OF THE HONB LE BOMBAY HIGH COURT, S. 80IA(9), WHICH IS APPLICABLE TO DEDUCTION U/S. 80IB(1) AS WE LL, NOWHERE IMPACTS THE COMPUTATION OF DEDUCTION UNDER ANY PROVISION FALLING UNDER PART C OF CHAPTER VIA OF THE ACT. ALL IT SAYS IS THAT DEDUCTION UNDER THE SAID PROVISION, AS FOR E.G., U/S. 80HHC, WHICH IS TO BE COMPUTED INDEPENDENTLY, WOULD BE ALLOWED ON THE REL EVANT PROFITS ONLY IN EXCESS OF THE DEDUCTION ALREADY ALLOWED/EXIGIBLE U/S. 80IA/80IB, SO THAT THE TOTAL DEDUCTION THERE THE SAID SET OF SECTIONS DOES NOT EXCEED THE PROFITS AN D GAINS OF THE ELIGIBLE UNDERTAKING OR ENTERPRISE. TO ILLUSTRATE, IF ` 100 IS THE PROFIT OF THE ELIGIBLE UNDERTAKING AND ` 30 IS ALLOWED AS DEDUCTION U/S. 80IA(1), AND THAT COMPUTE D U/S. 80HHC WORKS TO ` 80, THEN, IN VIEW OF S. 80IA(9) (OR S. 80IB(13)), DEDUCTION U/S. 80HHC IS TO BE RESTRICTED TO ` 70, I.E., ` 100 - ` 30. THE AO AS WELL AS THE LD. CIT(A), HOWEVER, HAD TAKEN THE VIEW THAT THE DEDUCTION U/S. 80HHC COULD BE ALLOWED ONLY WHERE IN EXCESS OF THE AMOUNT ALLOWED U/S. 80IA/80IB. IN THE CONTEXT OF THE AFORESAID EXAMPLE , THE DEDUCTION U/S. 80HHC STANDS RESTRICTED TO ` 50, I.E., ` 80 AS WORKED OUT INDEPENDENTLY MINUS ` 30 AS ALLOWED U/S. 80IB(1). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF OLAM EXPORTS INDIA LTD. VS. CIT ( 2010) 229 CTR (KER.) 206 HAS CLARIFIED THAT BY VIRTUE OF THE SPEC IFIC EXCLUSION U/S. 80IB(13) R.W.S. 80IB(9), THE ASSESSEE IS NOT ENTITLED TO SIMULTANE OUS DEDUCTIONS U/SS. 80IB AND 80HHC, SO THAT WHILE COMPUTING DEDUCTION U/S. 80HHC, THE D EDUCTION EXIGIBLE U/S. 80IB IS TO BE EXCLUDED. THE CLAIM OF THE ASSESSEE, THEREFORE, THA T THE DECISION IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT (SUPRA) IS NOT IN CONFLICT WITH THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF OLAM EXPORTS INDIA LTD. VS. CIT (SUPRA); THE LATTER NOT HOLDING AGAINST THE COMPUTABILITY OF DEDUCTION U/S. 80HHC, IS WHOLLY MIS-PLACED, WITH THE HONBLE BOMBAY HIGH COURT CLEARLY EXPRESSI NG THAT IT WAS DISSENTING FROM THE DECISION IN THE CASE OF OLAM EXPORTS INDIA LTD. VS. CIT (SUPRA), AS WELL AS IN THE CASE OF GREAT EASTERN EXPORTS VS. CIT (2011) 237 CTR (DEL.) 264. THE HONBLE HIGH COURT IN THE I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 6 CASE OF GREAT EASTERN EXPORTS VS. CIT (SUPRA) HAS CLARIFIED THAT THE WORD AND IN S. 80IA(9) AFTER THE WORDS THOUGH DEDUCTION IN RESPEC T OF CERTAIN INCOMES, IS DISTINCTIVE AND NOT CONJUNCTIVE, I.E., THAT THE SECOND LIMB OF THE PROVISION IS INDEPENDENT OF THE FIRST, AND ONLY IMPLIES THAT THE TOTAL DEDUCTION SHOULD NO T EXCEED THE PROFITS AND GAINS AS DERIVED FROM THE ELIGIBLE UNDERTAKING IN A PARTICUL AR YEAR. THE TWO LIMBS OF THE PROVISION ARE AIMED AT ACHIEVING TWO INDEPENDENT OBJECTIVES, THE FIRST PART BEING AIMED AT PROSCRIBING DEDUCTION UNDER CHAPTER VI-A OF THE ACT IN RESPECT OF THE PROFITS AND GAINS (OF THE ELIGIBLE UNDERTAKING) TO THE EXTENT TO WHIC H THE SAME HAD BEEN ALLOWED AS DEDUCTION U/S. 80IA/80IB. IN OTHER WORDS, THE DEDU CTION U/S. 80IA/80IB HAS TO BE DEDUCTED FROM THE `PROFITS OF THE BUSINESS IN COMP UTING DEDUCTION U/S. 80HHC. THE SAME, IT MAY BE NOTED, IS IN CONFORMITY WITH THE VI EW TAKEN BY THE TRIBUNAL IN THE CASE OF ACIT VS. HINDUSTAN MINT AND AGRO PRODUCTS PVT. LTD. (2009) 119 ITD 107 (DEL.) (SB), WHICH IT APPROVES, AS WELL AS THE DECISION IN THE C ASE OF ACIT VS. ROGINI GARMENTS AND OTHERS (2007) 108 ITD 49 (CHENNAI) (SB) [ALSO AT 294 ITR (AT) 15]. THE COCHIN BENCH OF THE TRIBUNAL HAS ALSO TAKEN A SIMILAR VIEW IN TH E CASE OF KANAM LATEX INDUSTRIES (P.) LTD. V. ACIT, KOTTAYAM (IN I.T.A. NOS. 11, 12/COCH/2007 & OTHRS. DATED MA Y 13, 2010). IN VIEW OF THE BINDING DECISION BY THE HONBLE JURI SDICTIONAL HIGH COURT, WHICH HAS BEEN THE CONSISTENT VIEW OF THE TRIBUNAL IN THE MATTER, WE HAVE NO HESITATION IN DIRECTING THE FOLLOWING OF THE SAME. IT MAY BE FURTHER NOTED THAT THE SAME DOES NOT OPERATE TO ELIMINATE THE DEDUCTION U/S. 80HHC, WHERE THE SAME DOES NOT E XCEED THE DEDUCTION ALLOWED U/S. 80IA/80IB, AS DONE BY THE AUTHORITIES BELOW, BUT ON LY IN REDUCING THE DEDUCTION OTHERWISE COMPUTED THERE-UNDER (S. 80HHC) IN-AS-MUC H AS THE SAME IS NOT ELIGIBLE ON PROFITS AND GAINS TO THE EXTENT ALLOWED AS DEDUCTIO N U/S. 80IB. TO SPEAK IN PRECISE TERMS, THE `PROFITS OF THE BUSINESS, WORKED AT ` 87.15 LAKHS BY THE AO, WOULD STAND TO BE REDUCED TO ` 8.88 LAKHS, I.E., THE DEDUCTION EXIGIBLE U/S. 80IB, AND THE DEDUCTION U/S. 80HHC WORKED OUT ON THE BALANCE. THE ASSESSEE WOULD THUS BE ENTITLED TO A PARTIAL RELIEF. 7. THE ASSESSEES NEXT GRIEVANCE IN THE MATTER IS T HAT THE DEDUCTION U/S. 80IB STANDS CLAIMED ONLY IN RESPECT OF PROFITS OF THE MUPPANDAL LATEX FACTORY (MLF) [AND NOT QUA ITS THUCKLAY UNIT, ESTABLISHED IN THE YEAR 1955], AND T HE PRODUCTION OF MLF, I.E., PROCESSED I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 7 LATEX, IS NOT EXPORTED AT ALL. THAT IS, THE PROFITS OF THE OTHER (THUCKLAY) UNIT, ON WHICH DEDUCTION U/S. 80HHC STANDS CLAIMED, HAS NOT BEEN S UBJECT TO DEDUCTION U/S. 80IB. AS SUCH, THE BAR OF S. 80IB(13) WOULD NOT BE APPLICABL E TO IT. FOR THIS, THE ASSESSEE DRAWS OUR ATTENTION TO THE WORKING STATEMENT FOR DEDUCTION U/ S. 80IB, FORMING PART OF ITS RETURN OF INCOME, WHICH IS ONLY IN RESPECT OF THE PROFIT OF T HE MLF. IN THIS REGARD, THE REVENUE, ACTING THROUGH THE LD. DR, STRONGLY CONTESTS THIS C LAIM DURING HEARING, STATING THAT THE DEDUCTION U/S. 80IB IS IN RESPECT OF MANUFACTURING ACTIVITY PERTAINING TO BOTH THE MUPPANDAL AND THUCKALAY FACTORIES, AS WOULD BE APPA RENT FROM ANNEXURE I TO THE ASSESSMENT ORDER, WHICH SPECIFICALLY STATES SO. TH IS ISSUE, IN ANY CASE, DOES NOT ARISE OUT OF THE ORDERS BY THE AUTHORITIES BELOW, HAVING NOT BEEN RAISED BY THE ASSESSEE BEFORE THEM, SO THAT IT IS NOT ADMISSIBLE BEFORE THE TRIBU NAL IN-AS-MUCH AS IT RAISES A QUESTION OF FACT. THE ASSESSEES ADDITIONAL GROUND/S, PER WHIC H IT SEEKS TO RAISE THIS ISSUE BEFORE THE TRIBUNAL, IS, THUS, NOT LIABLE TO BE ADMITTED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, AND PERU SED THE MATERIAL ON RECORD. 8.1 WE OBSERVE AN APPARENT DICHOTOMY IN ANNEXURE I TO THE ASSESSMENT ORDER IN-AS- MUCH AS WHILE IT CONSIDERS THE PROFITS PERTAINING T O THE MANUFACTURING ACTIVITY IN RESPECT OF MUPPANDAL AND THUCKALAY FACTORIES AS BEING ELIGI BLE PROFITS U/S. 80IB (AT ` 87.15 LAKHS), THE LOWER PART OF THE SAME STATEMENT/WORKIN G STATES OF THE PROFITS AS BEING OF MLF, BASED ON ACTUAL PRODUCTION OF PROCESSED LATEX. IF, AS CONTENDED BY THE ASSESSEE, MLF DENOTES ONLY MUPPANDAL FACTORY, THE ASSESSEE MA Y WELL BE CORRECT. AT THE SAME TIME, WE ALSO OBSERVE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB (AT ` 15,15,896/-) ON THE PROFIT IN RESPECT OF THE PRODUCTION OF PROCE SSED LATEX (FROM MLF UNIT), WHICH ADMITTEDLY INCLUDES `HANDLING CHARGES, I.E., EXPOR T SUBSIDY. THE SAME (EXPORT SUBSIDY) ARISING OR INURING ONLY AGAINST EXPORTS, IT ONLY IM PLIES EXPORT OF PRODUCTION OF THE MLF UNIT, APPARENTLY CONTRADICTING AND NEGATING THE ASS ESSEES CLAIM. IF SO, AS IT APPEARS, THE SAME IS MOST UNFORTUNATE. OF COURSE, THE AO HAS EXC LUDED THE EXPORT SUBSIDY IN ARRIVING AT THE PROFIT OF THE MLF UNIT FOR COMPUTING S. 80IB DEDUCTION, BUT THEN THE SAME ONLY SHOWS THAT THE SAID PROFIT IS INCLUSIVE OF THE PROF ITS OF THE EXPORT BUSINESS, AGAINST WHICH (EXPORT) ONLY THE SUBSIDY STANDS ALLOWED. BE THAT A S IT MAY, IN ANY VIEW OF THE MATTER, NO I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 8 CONCLUSIVE FINDING CAN BE GIVEN ON THE BASIS OF THE SAME, AND WE CAN ONLY SAY THAT THE ASSESSEE COULD PROCEED IN THE MATTER U/S. 154, IF I T COULD DEMONSTRATE AN APPARENT MISTAKE IN THAT THE DEDUCTION U/S. 80IB HAS ACTUALLY BEEN A LLOWED ONLY IN RESPECT OF MLF UNIT, AND THE ENTIRE EXPORT OF THE PROCESSED LATEX IS THAT PR ODUCED BY THE THUCKLAY UNIT, SO THAT THE PROFITS SUBJECT TO THE TWO DEDUCTIONS, AS CLAIMED, ARE MUTUALLY EXCLUSIVE. 8.2 CONTINUING FURTHER, THE ISSUE BEING RAISED , I.E., OF DEDUCTION U/S. 80IB HAVING BEEN CLAIMED AND ALLOWED ONLY ON PROFITS, NO PART OF WHI CH INCLUDES EXPORT PROFITS, ON WHICH DEDUCTION U/S. 80HHC STANDS CLAIMED, AS THE PRODUCT ION OF MLF UNIT HAS NOT BEEN EXPORTED, IS A PURE QUESTION OF FACT. THE SAME CANN OT BE RAISED BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO THAT THE ASSESSEES RELEVANT GROUND/ S IS NOT LIABLE FOR ADMISSION. THE ASSESSEE HAS IN THIS RESPECT RELIED ON THREE DECISI ONS. THE FIRST, ESTER INDUSTRIES LTD. V. CIT , REPORTED AT 226 CTR (DEL) 112, CLARIFIES THAT A D ISALLOWANCE COULD NOT BE BASED ON ADMISSION, BUT SHOULD BE AS PER LAW. THIS IS IN FAC T IN CONSONANCE WITH TRITE LAW THAT THERE IS NO ESTOPPEL AGAINST LAW, SO THAT THERE COULD BE NO SUCH BY CONDUCT, AND TOWARD WHICH WE MAY FURTHER REFER THE DECISION IN THE CASE OF MAYNAK PODDAR (HUF) V. WTO , REPORTED AT 262 ITR 633 (MP). HOWEVER, THERE IS NEITHER ANY ADMISSION IN THE PRESENT CASE NOR IN FACT ANY DISALLOWANCE, MUCH LESS ONE BASED ON ADMIS SION. THE AO PROCEEDED TO APPLY THE LAW ON THE BASIS OF UNDISPUTED FACTS ON RECORD. THE SAID DECISION WOULD THUS BE OF NO ASSISTANCE TO THE ASSESSEE. THE SECOND DECISION REL IED UPON IS IN THE CASE OF CIT V. KERALA STATE COOP. MKTG. FED. LTD ., 193 ITR 624 (KER). THE ISSUE IN OUR VIEW STANDS SETTLED BY THE DECISION BY THE APEX COURT PER ITS DECISION IN THE CASE OF NATIONAL THERMAL POWER CO. LTD . V. CIT (1998) 229 ITR 383 (SC), ABUNDANTLY CLARIFYING THA T ONLY QUESTIONS OF LAW COULD BE RAISED BEFORE THE TRIBUNAL FOR THE FIRST T IME IF THE FACTS IN RELATION THERETO ARE NOT IN DISPUTE OR OTHERWISE BORNE OUT BY THE RECORD. AS WE HAVE SEEN THE ISSUE RAISED INVOLVES A QUESTION OF FACT, WHICH IS NOT ONLY DISPUTED BUT THE MATERIAL ON RECORD LEADS TO CONTRARY CLAIMS. OUR VIEW IS FURTHER SUPPORTED BY THE DECISI ON IN THE CASE OF P.R. NARAHARI RAO V. CIT , 299 ITR 400 (KER.); THE DECISION IN THE CASE OF KERALA STATE COOP. MKTG. FED. LTD . (SUPRA) BEING, EVEN OTHERWISE, AND IN CONTRADISTINC TION, COMPLETELY DISTINGUISHABLE ON FACTS. THE SAME CONSEQUENTLY IS NOT LIABLE TO BE AD MITTED. I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 9 8.3 COMING TO THE LEGAL ISSUE RAISED; THAT IS, ASSUMING THAT THE ASSESSEE IS ABLE TO DEMONSTRATE AN APPARENT MISTAKE IN THE ASSESSMENT O RDER AS AFORE-STATED, WE MAY CONSIDER THIS LEGAL ISSUE. IT, IN FACT, CLAIMS THAT THE DEDUCTION UNDER SECTION 80IB HAVING BEEN CLAIMED AND ALLOWED IN RESPECT OF A UNIT, PROD UCTION OF WHICH HAS NOT BEEN EXPORTED, THE PRESCRIPTION OF S. 80IB(13) R.W.S. 80IA(9) WILL NOT APPLY TO IT. WE FIND THE ASSESSEES CLAIM AS VALID IN LAW. THIS FLOWS FROM A BARE READI NG OF S. 80IA(9), WHICH IS APPLICABLE TO DEDUCTION U/S. 80IB BY VIRTUE OF S. 80IB(13). THIS IS AS, CLEARLY, THE RESTRICTION UNDER SECTION 80IA(9) IS ONLY IN RESPECT OF THE PROFITS O F AN ELIGIBLE UNDERTAKING OR ENTERPRISE WHICH ARE SUBJECT TO DEDUCTION UNDER ANY OTHER PROV ISION OF CHAPTER VIA (PART C). IF, AS CLAIMED, THE DEDUCTION U/S. 80HHC STANDS CLAIMED IN RESPECT OF THUCKLAY UNIT ONLY, THERE IS NO QUESTION OF APPLICATION OF SECTION 80IB(13) R .W.S. 80IA(9) IN THE ASSESSEES CASE. THE CIRCULAR NO. 772 DATED 23.12.1998 BY THE BOARD [REPORTED AT (1999) 235 ITR (STATUTE) 35] WOULD ALSO SUPPORT THE ASSESSEES CAS E IN-AS- MUCH AS IT STANDS CLARIFIED THAT THE AMENDMENT HAS BEEN BROUGHT TO PREVENT THE TAX P AYERS FROM TAKING UNDUE ADVANTAGE OF THE EXISTING PROVISIONS OF THE ACT BY CLAIMING R EPEATED DEDUCTIONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBLE INCOME. FURTHER, NO DOUBT, THE DEDUCTION U/S. 80HHC IS COMPUTED BY DETERMINING EXPORT PROFIT AS INCLUDED I N THE GROSS TOTAL INCOME (GTI), AND WHICH WOULD INCLUDE THE PROFITS FROM THE DOMESTIC B USINESS AS WELL, SO THAT THE COMPUTATION MAY WELL INCLUDE THE TURNOVER AS WELL A S THE PROFITS IN RESPECT OF MUPPANDAL UNIT (MLF). SO, HOWEVER, THAT IS ONLY PER THE MACHI NERY PROVISION OF THE SECTION. THE DEDUCTION, WITHOUT DOUBT, IS BASED ON AND IN RESPEC T OF THE PROFIT OF THE EXPORT BUSINESS, SO THAT THE MANNER IN WHICH THE SAME IS ARRIVED AT IS IRRELEVANT. THAT IS, THE INCLUSION OF DOMESTIC PROFITS IS ONLY FOR/TOWARD DETERMINING THE QUALIFYING PROFITS OF THE EXPORT BUSINESS AND, THUS, BY ITSELF OF NO CONSEQUENCE. 8.4 TO SUM UP, IT CANNOT BE DENIED, I.E., ASSUMI NG THAT THE PRODUCTION QUA LATEX PROCESSED AT THE THUCKALAY FACTORY IS NOT SUBJECT T O DEDUCTION U/S. 80IB, WHICH FURTHER IS ONLY SOLD IN THE EXPORT MARKET, THAT THE PROFITS CL AIMED AND ALLOWED UNDER THE TWO SECTIONS ARE MUTUALLY EXCLUSIVE. WE, THEREFORE, SUB JECT TO THE ADMISSION OF THE ASSESSEES I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 10 CLAIM/S IN THE MATTER, FOR WHICH IT MAY MOVE AN APP LICATION U/S. 154 (TO BE DECIDED BY THE AO ON MERITS AS PER LAW), DECIDE THE ISSUE, I.E., I N PRINCIPLE, IN ITS FAVOUR. FOR THIS, WE DRAW SUPPORT AND PLACE RELIANCE ON THE DECISION BY THE APEX COURT IN THE CASE OF CIT VS. BABY MARINE EXPORTS (2009) 290 ITR 323 (SC) (PAGE 334), HOLDING THAT T HE LEGISLATIVE INTENTION MUST BE THE FOUNDATION OF THE COURTS INT ERPRETATION, AS WELL AS IN THE CASE OF BAJAJ TEMPO LTD. VS. CIT (1992) 196 ITR 188 (SC), HOLDING THAT THE BENEFICI AL PROVISION HAS TO BE LIBERALLY CONSTRUED, AS ALSO ON CIT V. SUN ENGINEERING WORKS (P.) LTD . (1992) 198 ITR 297 (SC) AND LACHMAN DASS BHATIA HINGWALA (P) LTD. VS. ACIT (2011) 237 CTR 117 (DEL.) (FB), RELIED UPON BY THE ASSESSEE. W E DECIDE ACCORDINGLY. 9. THE FOURTH ISSUE IN RESPECT OF S. 80 HHC DEDUCTI ON, AS RAISED BY THE ASSESSEE, IS THE EXCLUSION OF THE INDEPENDENT INCOMES CREDITED T O ITS P&L ACCOUNT, UNDER EXPLANATION (BAA) BELOW SEC. 80HHC, I.E., ` 144.27 LAKHS, IN COMPUTING THE `PROFITS OF THE BUSI NESS IN TERMS OF THE SAID SECTION. THE DETAILS OF THE SAID INCOMES APPEAR AT PARA 5 (PG. 2) OF THE ASSESSMENT ORDER, AND COMPUTATION UNDER SECTION 80H HC AT ANNEXURE II THEREOF. THE ASSESSEE HAS, THOUGH RAISED THE SAID OBJECTION, NOT POINTED OUT ANY REASON TOWARD THE SAME. IN FACT, WE FIND IT TO HAVE ITSELF REDUCED T HE PROFITS OF THE `WINDMILL UNIT ( ` 97.20 LAKHS) AND MISCELLANEOUS INCOME ( ` 6.61 LAKHS), BOTH FORMING PART OF THE IMPUGNED SUM OF ` 144.27 LAKHS, WHILE COMPUTING THE `PROFITS OF THE B USINESS UNDER SECTION 80HHC. IN OUR VIEW, THE MATTER HAS ATTAINED FINALITY BY THE D ECISION BY THE APEX COURT IN THE CASE OF CIT VS. K. RAVINDRANATHAN NAIR (2007) 295 ITR 228 (SC), CLARIFYING ABUNDANTLY THE CONCEPT OF `INDEPENDENT INCOMES, I.E., WHICH HAVE NO NEXUS WITH THE EXPORT TURNOVER OR NO ELEMENT OF TURNOVER, SO THAT THE SAME HAVE TO BE EXCLUDED UNDER EXPLANATION (BAA) TO THE SECTION. IN OTHER WORDS, ONLY THOSE PROFITS WHI CH HAVE RELATION WITH THE EXPORT BUSINESS OR ARISE FROM THE TOTAL TURNOVER, COULD BE RETAINED IN THE `PROFITS OF THE BUSINESS. THE ASSESSEE HAS BEEN UNABLE TO, ON FACTS, STATE IT S CASE ON THESE PARAMETERS IN RESPECT OF ANY OF THE ITEMS CONSTITUTING THE IMPUGNED SUM OF ` 1,44,26,775/-, ITSELF EXCLUDING TWO OF THEM AGGREGATING TO ` 103.81 LACS. THE ASSESSEES SAID CONTENTION IS ACCO RDINGLY ONLY TO BE REJECTED. WE DECIDE ACCORDINGLY. I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 11 DEDUCTION UNDER SECTION 80IB 10. THE SAME STANDS CLAIMED BY THE ASSESSEE AT ` 15,15,896/-, WHILE RESTRICTED IN ASSESSMENT TO ` 8,87,603/-. THE ONLY ADJUSTMENT MADE BY THE AO IS BY REDUCING FROM THE ELIGIBLE PROFITS `HANDLING CHARGES, WHICH IS, IN F ACT, A SUBSIDY OR REBATE AGAINST EXPORT, RECEIVED/CREDITED IN THE SUM OF ` 61,68,827/-. THE ASSESSEE, ON THE BASIS OF A SCHEM E TITLED `EXPORT PROMOTION OF NATURAL RUBBER (NR), B EING IMPLEMENTED BY THE RUBBER BOARD, CLAIMS THAT THE RECEIPT IS BUT AN INTEGRAL P ART OF ITS EXPORT REALIZATION AND, THUS, QUALIFIES FOR DEDUCTION UNDER SECTION 80IB. RELIANC E STANDS PLACED ON THE DECISION IN THE CASE OF CIT VS. BABY MARINE EXPORTS (SUPRA) QUA THE IMPUGNED SUM OF SUBSIDY FOR ` 61.69 LAKHS. OUR FIRST OBSERVATION IN THE MATTER IS THE CONTRADICTION THAT MARKS THE ASSESSEES CLAIM THAT THE PROFITS ON WHICH DEDUCTIO N UNDER SECTION 80IB HAS BEEN CLAIMED AND ALLOWED TO IT DO NOT INCLUDE ANY PROFIT OF THE EXPORT BUSINESS. THE BASIS OF THE ASSESSEES CLAIM IS THAT THE EXPORT SUBSIDY ONLY SU PPLEMENTS THE PROFIT OF ITS EXPORT BUSINESS, FORMING PART OF THE PROFIT OF THE ELIGIBL E UNIT, SO THAT IT IS ENTITLED TO DEDUCTION U/S. 80IB THEREON (ALSO REFER PARA 8 OF THIS ORDER) . 11.1 COMING TO THE MERITS OF THE CASE, I.E., OF THE IMPUGNED DISALLOWANCE, WE HAVE GONE THROUGH THE SCHEME WHICH APPEARS AT ANNEXURE T O THE ASSESSEES FOURTH (4 TH ) ARGUMENT NOTE. THE DISTINCTIVE FEATURES THEREOF, I. E., WITH RESPECT TO DUTY DRAWBACK (DDB) AND DEPB SCHEMES, RECEIPT WHEREUNDER STOOD CO NFIRMED FOR EXCLUSION BY THE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (2009) 317 ITR 218 (SC), STANDS TABULATED BY WAY OF AN `ADDITIONAL NOTE. THE SCHEME IS IN TH E FORM OF A FINANCIAL INCENTIVE GIVEN TO EXPORTERS OF NATURAL RUBBER BY THE RUBBER BOARD TO IMPROVE THEIR EXPORT CAPABILITY UNDER THE WTO REGIME. THE EXPORT CAPABILITY IS CONSIDERED IN TERMS OF `QUALITY IMPROVEMENT, `CERTIFICATION AND `PACKAGING AT INTERNATIONAL STA NDARDS. IT IS GIVEN FOR CENTRIFUGED LATEX (CENEX) AT THE RATE OF ` 4.5 PER KG., WITHIN THE SANCTIONED OUTLAY ON THE BA SIS OF `FIRST COME FIRST SERVE BASIS. A CERTIFICATE OKAYING ITS QUALI TY, AS PRODUCTION NOT CONFORMING TO THE REQUIRED STANDARD IS NOT ELIGIBLE FOR THE FINANCIAL INCENTIVE, IS NECESSARY. THERE IS NO SUCH CORRESPONDING CONDITION IN THE CASE OF DDB/DEPB, WH ICH IS IN FACT NOT CONNECTED WITH THE MANUFACTURING, MUCH LESS THE QUALITY OF PRODUCT ION, EVEN AS CLARIFIED AT PARA 16 OF THE I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 12 JUDGMENT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA). TOWARD THIS, AS A MEASURE OF CONTROL, THE RUBBER BOARD IS AUTHORIZED TO INSPECT THE UNIT AS WELL AS THE DOCUMENTS/RECORDS RELATED TO EXPORT OF NR BY AN OFF ICER OF THE BOARD OR A PERSON AUTHORIZED BY THE CHAIRMAN OF THE BOARD. 11.2 WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE MATTER. AND FIND OURSELVES TO BE WHOLLY UNABLE TO AGREE WITH THE ASSESSEES CASE. D UTY DRAWBACK (DDB) AS WELL AS DEPB SCHEMES SEEKS TO NEUTRALIZE THE COST INCURRED (OR D EEMED TO BE SO) IN TERMS OF EXCISE DUTY ON RAW MATERIAL AND/OR THE CUSTOMS DUTY ON THEIR IM PORT, BOTH OF WHICH (I.E., MANUFACTURE AND IMPORT ARE THOUGH NOT REQUIRED TO BE EXHIBITED AS SUCH), SO THAT THE SAME WOULD GO TO REDUCE THE COST OF THE INPUTS TOWARD THE GOODS ACTU ALLY EXPORTED, EVEN AS THE EXPORT BY LAW IS LIABLE TO DOMESTIC TAX. THE ASSESSEES CLAIM THAT THE SAID SCHEMES HAVE THUS NOTHING TO DO WITH THE MANUFACTURING OR THE QUALITY OF THE OUTPUT IS MISCONCEIVED. THIS IS AS THE DEDUCTION UNDER SECTION 80IB IS ONLY IN RESP ECT OF THE MANUFACTURING ACTIVITY, SO THAT THE ARGUMENT WOULD HAVE NO APPLICATION IN CASE OF A TRADER EXPORTER. A TRADER- EXPORTER, THOUGH ENTITLED TO DDB/DEPB ON HIS EXPORT S, IS NOT ENTITLED TO CLAIM THE RELIEF U/S. 80IB. WITH REGARD TO THE QUALITY OF PRODUCTION , THE SAME IS AGAIN IRRELEVANT IN-AS- MUCH AS THE DEDUCTION OR THE EXIGIBILITY THERETO OF THE PROFITS ARISING FROM THE PRODUCTION BY THE ELIGIBLE UNIT, IS WITHOUT ANY REFERENCE TO T HE `QUALITY OF THE PRODUCTION ON WHICH THE SAME ARISE. THE PROFIT ARISING ON A LOWER QUALI TY PRODUCTION IS AS QUALIFIED OR ELIGIBLE FOR DEDUCTION U/S. 80IA/80IB AS THAT ON A HIGHER QU ALITY PRODUCTION BY THE SAME OR ANOTHER ELIGIBLE UNIT, SO THAT THE SAME BECOMES AN IRRELEVANT CONSIDERATION. IN FACT, THE SAME (QUALITY FACTOR) IS TAKEN CARE OF BY THE MARKE T FORCES, AS IN THE LONG RUN ONLY A UNIT PRODUCING BETTER QUALITY GOODS WOULD BE ABLE TO SUS TAIN ITSELF ECONOMICALLY, EVEN IN THE DOMESTIC MARKET NOT TO SPEAK OF THE EXPORT MARKET. THAT THE RUBBER BOARD IS ACTING AS A FACILITATOR OR A PROMOTER IN THE SAID PROCESS, BY G IVING A FINANCIAL INCENTIVE TO THE EXPORTERS FOR BETTER QUALITY PRODUCTION, IS AN ENTI RELY DIFFERENT MATTER AND, RATHER, ONLY GOES TO DEFEAT THE ASSESSEES CASE IN-AS-MUCH AS, E VIDENTLY, THE PROFITS TO THAT EXTENT CANNOT BE SAID TO HAVE BEEN `DERIVED FROM THE ELIG IBLE UNDERTAKING, WHICH IS INTENDED TO COVER ONLY THE SOURCE NOT BEYOND THE FIRST DEGREE. RATHER, ON FACTS THE ASSESSEES CASE IS I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 13 EVEN WEAKER THAN THAT IN RESPECT OF ELIGIBLE UNITS BEING ALLOWED INCENTIVES BY WAY OF DDB/DEPB. THIS IS AS IT IS PERMISSIBLE FOR THEM TO CONTEND THAT THE SAME ARE ONLY TOWARD COMPENSATING THEIR COST OF INPUTS BY `REIMBURSEMENT ALBEIT AT PRE-DEFINED RATES - OF DUTIES LEVIED OR BORNE BY THE INPUTS, WHETHER SECUR ED LOCALLY OR BY IMPORT FROM OUTSIDE INDIA, SO THAT IT IS ESSENTIALLY A COST REDUCTION E XERCISE, WITH A VIEW TO MAKE THE EXPORTS COST COMPETITIVE, AND THUS AN INTEGRAL PART THE BUS INESS RECEIPTS OF THE ELIGIBLE INDUSTRIAL UNDERTAKING. HOWEVER, EVEN SO, THE CLAIM WAS NEGATI VED ON THE GROUND THAT THE REBATE WOULD NOT ARISE BUT FOR THE RELEVANT SCHEME, ISSUED IN PURSUANCE TO THE GOVERNMENT POLICY AND, THUS, CANNOT BE SAID TO BE DERIVED FROM THE IN DUSTRIAL UNDERTAKING OR ITS BUSINESS, BUT ONLY A PART OF ITS ANCILLARY PROFITS. THE REBATE/SU BSIDY IN THE INSTANT CASE, ON THE OTHER HAND, IS PURELY A FINANCIAL INCENTIVE TO PROMOTE TH E QUALITY OF GOODS BEING EXPORTED, SO THAT IT DOES NOT BY ITSELF CONSTITUTE A PART OF THE BUSINESS OR PRODUCTION PROCESS OF THE RECIPIENT UNITS. A PARTICULAR UNIT MAY WELL CHOOSE TO UTILIZE THE BENEFIT GIVEN BY WAY OF EXPORT SUBSIDY BY INCREASING ONLY ITS CAPACITY, I.E ., QUANTITATIVELY, OR ONLY QUALITATIVELY, AS IN TECHNOLOGICALLY MORE ADVANCED PROCESSES, BETTER PACKAGING METHODS, ETC., OR EVEN BOTH. ANOTHER MAY FIND NO NEED TO DO SO, HAVING ALR EADY UPGRADED ITSELF OVER THE YEARS IN RESPONSE TO DEMANDS OF THE MARKET, WHETHER OUT OF O WN FUNDS OR SIMILAR INCENTIVES RECEIVED IN THE PAST. THIS, IT MAY BE APPRECIATED, IS SOMETHING THAT THE BUSINESSES ARE CONSTANTLY ENGAGED IN, IN RESPONSE TO THE CHANGING BUSINESS ENVIRONMENT AND ECONOMIC IMPULSES. THE DECISION IN THE CASE OF CIT V. GOVINDA CHOUDHARY & SONS (1993) 203 ITR 881 (SC), RELIED UPON BY THE ASSESSEE, IS IN RESPEC T OF ASSESSABILITY OF INTEREST AS BUSINESS INCOME, TO WHICH CLEARLY THERE IS NO BAR IN LAW. TH E INTEREST INCOME IN THE CASE OF CIT V. EASTERN TAR (P.) LTD . (2008) 218 CTR (SC) 506 AND CIT V. ARVIND CONSTRUCTION CO. LTD ., 215 CTR (DEL.) 363, WAS ON FACTS FOUND AS FORMING A N INTEGRAL PART OF THE BUSINESS RECEIPT OF THE ELIGIBLE UNDERTAKING, WHILE, AS DISC USSED A IT IS NOT SO IN THE INSTANT CASE, FOR THE SAID DECISIONS TO BE APPLICABLE. IN FACT, THE A PEX COURT IN THE CASE OF KARNAL COOPERATIVE SUGAR MILLS LTD. (2000) 243 ITR 2 (SC) WENT AS FAR AS TO SAY THAT I NTEREST UNDER SUCH-LIKE CIRCUMSTANCES COULD BE REDUCED FROM THE COST OF THE RAW MATERIALS. THE LAW IN THE MATTER IS TRITE, AND FOR WHICH WE MAY AL SO REFER TO THE DECISIONS BY THE APEX COURT IN THE CASES CIT VS. STERLING PRODUCTS (1999) 237 ITR579 (SC); PANDIAN CHEMICALS I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 14 LTD. VS. CIT (2007) 262 ITR 278; AND CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT (1978) 113 ITR 84 (SC), THE FORMER TWO REFERRED TO IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA). THE ASSESSEES CASE IS, THUS, NOT ACCEPTAB LE ON THE FACTS AND IN LAW IN THE MATTER. WE DECIDE ACCORDINGLY. 12.1 THE ASSESSEE HAS FURTHER `RELIED ON, APART FROM THOSE REFERRED TO IN THIS ORDER, OTHER CASE LAW AS WELL, THOUGH NOT SPECIFICALLY ADV ERTED TO DURING HEARING, ARE NOT REFERRED TO HEREIN VIEW OF THEIR INAPPLICABILITY; WE HAVING PERUSED AND CONSIDERED EACH OF THEM FOR THEIR APPLICABILITY FOR THE PURPOSE OF DECIDIN G THE PRESENT APPEAL. BROAD REFERENCE THERETO HOWEVER MAY BE MADE. IN GANGA SUGAR CORPORATION LT. VS. STATE OF U.P. AIR 1980 SC 286, THE APEX COURT HOLDS THAT THE JUDGMENT OF THE SUPREME COURT IS DECLARATORY IN NATURE, AND FOR THE NATION. LIKEWISE IS THE DECI SION BY THE CONSTITUTIONAL BENCH OF THE SUPREME COURT IN THE CASE OF RATAN WELDING AND WIRE INDUSTRIES (2008) 220 CTR 98 (SC) HOLDING THAT THE DECISION BY THE APEX COURT HA S A BINDING EFFECT IN TERMS OF ART. 141 OF THE CONSTITUTION. THE THIRD DECISION, WE MAY REF ER TO IS BY THE FULL BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DY. COMMISSIONER (LAW), COMMERCIAL TAX VS. K.N.S. MOHAMMED IYOOB LABBAI SAHIB & SONS (2006) 144 STC 189 (KER.) (FB) TO THE EFFECT THAT ORDINARILY THE WORD AND IS CONJUNCTIV E AND THE WORD OR IS DISJUNCTIVE. THE HONBLE COURT DELIVERED THE JUDGMENT WHILE INTERPRE TING AN PROVISION IN RESPECT OF VILLAGE PRODUCES WHICH AS PER THE GOVERNMENT NOTIFI CATION EXTENDED TO GOODS MANUFACTURED AT/OR SOLD BY THE INSTITUTIONS OR PERS ONS RECOGNISED BY THE KHADI AND VILLAGE INDUSTRIES COMMISSION. WE ARE UNABLE TO UND ERSTAND THE IMPORT OF THESE DECISIONS IN RESPECT OF THE ISSUES ARISING FOR OUR ADJUDICATION, EACH OF WHICH, AS WOULD BE OBSERVED, HAVE BEEN FOUND TO BE CLEARLY COVERED BY THE BINDING DECISIONS BY THE HONBLE JURISDICTIONAL HIGH COURT AND /OR BY THE APEX COURT , AND TOWARD WHICH THE ASSESSEE ITSELF HAS CITED SOME DECISIONS. THERE IS, ACCORDINGLY, NO SCOPE FOR THE ARGUMENT THAT WHERE TWO VIEWS ARE POSSIBLE, ONE IN FAVOUR OF THE TAX PAYER SHOULD BE ADOPTED, WHICH IS AGAIN TRITE LAW, AND TOWARD WHICH THE ASSESSEE HAS CITED THE DE CISIONS IN THE CASE OF CIT V. MADHO PD. JATIA (1976) 105 ITR 179 (SC); CIT V. NAGA HILLS TEA CO. LTD . (1973) 89 ITR 236 (SC); CIT V. KULLU VALLEY TRANSPORT CO. (P.) LTD . (1970) 77 ITR 518 (SC); AND CIT V. I.T.A. NO. 173/COCH/2009 KURIAN ABRAHAM (P.) LTD. VS. ACIT 15 DHARMA CHAND , 204 ITR 787 (RAJ.). IN FACT, THE SCOPE OF THE WO RD `AND OCCURS IN THE CONTEXT OF THE INTERPRETATION OF SECTION 80IA(9), A ND IN RESPECT OF WHICH WE HAVE FOLLOWED THE BINDING DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF OLAM EXPORTS INDIA LTD. VS. CIT (SUPRA). 12.2 BEFORE PARTING WITH THE ORDER, WE MAY CLARI FY THAT NO ARGUMENT WITH REFERENCE TO ASSESSEES GROUND NO. 2, WHICH REFERS TO THE LD. CI T(A) HAVING DECIDED ITS APPEAL WITHOUT REFERENCE TO THE ARGUMENTS ADVANCED PER ITS ARGUMENT NOTES, WAS MADE DURING HEARING. FURTHER, THE SAME, THEREFORE, WOULD PRESUM ABLY FORM A PART OF ITS ARGUMENTS AS ADVANCED BEFORE US, WHICH HAVE BEEN DULY CONSIDERED . 13. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 16TH DECEMBER, 2011 GJ COPY TO: 1. M/S. KURIAN ABRAHAM PVT. LTD., OOPPOOTTIL BUILDI NG, K.K.ROAD, KOTTAYAM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOTTAYAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .