Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 5014 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-05-2011
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
31-05-2011
Assessment Year
2004-2005
Appeal Filed On
01-11-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 701/MDS/2010 ASSESSMENT YEAR : 2005-06 VIJAYESWARI TEXTILES LTD., 10/400, PALGHAT ROAD, KUNIAMUTHUR, COIMBATORE 641 008. PAN AAACV 6388 F VS. ASSISTANT COMMISSIONER, OF INCOME-TAX, SALARY CIRCLE-I, INCOME-TAX OFFICE, COIMBATORE 641 018 (APPELLANT) (RESPONDENT) I.T.A. NO. 1856/MDS/2010 ASSESSMENT YEAR : 2004-05 ASSISTANT COMMISSIONER OF INCOME-TAX, COIMBATORE. (APPELLANT) VS. VIJAYESWARI TEXTILES LTD. COIMBATORE. (RESPONDENT) C.O.NO.170/MDS/2010 (IN I.T.A. NO. 1856/MDS/2010 ASSESSMENT YEAR : 2004-05 VIJAYESWARI TEXTILES LTD., COIMBATORE 641 008. (CROSS-OBJECTOR) VS. ASSISTANT COMMISSIONER, OF INCOME-TAX, COIMBATORE 641 018 (APPELLANT IN APPEAL) ITA 701, 1856 & CO 170/10 :- 2 -: CROSS-OBJECTOR BY : SHRI T.S.V.RAJAGOPAL DEPARTMENT BY : SHRI SHAJI P. JACOB O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THERE ARE TWO APPEALS AND ONE CROSS OBJECTION. TH E APPEAL IN I.T.A.NO.1856/MDS/2010 IS FILED BY THE REVENUE F OR THE ASSESSMENT YEAR 2004-05. THE CROSS OBJECTION IN 17 0/MDS/2010 IS FILED BY THE ASSESSEE FOR THE SAME ASSESSMENT YE AR. THE APPEAL IN I.T.A.NO.701/MDS/2010 IS FILED BY THE ASS ESSEE FOR THE SUCCEEDING ASSESSMENT YEAR 2005-06. 2. FIRST WE WILL CONSIDER THE APPEAL FILED BY THE R EVENUE FOR THE ASSESSMENT YEAR 2004-05. THIS APPEAL IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I I, AT COIMBATORE DATED 6.8.2010. THE APPEAL ARISES OUT O F THE ORDER OF THE ASSESSING AUTHORITY IN GIVING EFFECT TO THE I.T .A.T. ORDER. 3. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO REWORK THE COMPUTATION OF 80HHC ITA 701, 1856 & CO 170/10 :- 3 -: DEDUCTION WITHOUT SETTING OFF THE CARRY FORWARD LOS S OF THE ASSESSMENT YEAR 2003-04, WHILE ARRIVING AT BOOK PRO FIT UNDER SEC.115JB OF THE INCOME-TAX ACT, 1961. 4. THIS ISSUE HAS BEEN CONSIDERED BY THE HON'BLE SU PREME COURT IN THE CASE OF AJANTA PHARMA LTD. V. COMMISSI ONER OF INCOME-TAX (327 ITR 305) WHEREIN THE HON'BLE APEX C OURT HAS UPHELD THE DECISION OF THE TRIBUNAL IN HOLDING THAT 100% OF THE EXPORT PROFITS EARNED BY THE ASSESSEE AS COMPUTED U NDER SEC.80HHC(3) WAS ELIGIBLE FOR DEDUCTION UNDER THE P ROVISIONS OF LAW CONTAINED IN SEC.115JB. 5. IN THESE CIRCUMSTANCES, THERE IS NO REASON TO IN TERFERE WITH THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. 6. AS FAR AS THE CROSS OBJECTION FILED BY THE ASSES SEE IS CONCERNED, THE GROUND IS THAT THE COMMISSIONER OF I NCOME-TAX (APPEALS) HAS ERRED IN RESTRICTING THE PROFITS ELIG IBLE FOR DEDUCTION UNDER SEC.80HHC TO 30% OF SUCH PROFITS INSTEAD OF 1 00% FOR THE PURPOSE OF SEC.115JB. ITA 701, 1856 & CO 170/10 :- 4 -: 7. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS IN FACT, FOLLOWED THE SPECIAL BENCH ORDER OF THE MUMBAI TRIB UNAL IN THE CASE OF SYNCOME FORMULATIONS (I) LTD. [292 ITR (AT) 144]. THIS POSITION HAS BEEN FURTHER CLARIFIED BY THE HON'BLE S UPREME COURT IN THE CASE OF AJANTA PHARMA LTD. V. COMMISSIONER O F INCOME-TAX (327 ITR 305) WHEREIN THE APEX COURT HAS HELD THAT 100% OF THE EXPORT PROFITS IS TO BE DEDUCTED UNDER CLAUSE (IV) OF EXPLANATION TO SEC.115JB WITHOUT APPLYING THE SUNSET PROVISIONS OF SEC.80HHC(1B). 8. THEREFORE, THE GROUND RAISED BY THE ASSESSEE HAS TO BE ALLOWED. ACCORDINGLY, WE DIRECT THE ASSESSING AUTH ORITY TO COMPUTE THE DEDUCTION AVAILABLE UNDER SEC.80HHC AT THE RATE OF 100% OF THE EXPORT PROFITS. 9. THE ASSESSEE IS SUCCESSFUL IN ITS CROSS OBJECTIO N. 10. NEXT WE WILL CONSIDER THE APPEAL FILED BY THE A SSESSEE FOR THE ASSESSMENT YEAR 2005-06. 11. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS E RRED IN CONFIRMING THE COST OF REPLACEMENT OF RING FRAMES A S CAPITAL ITA 701, 1856 & CO 170/10 :- 5 -: EXPENDITURE AND NOT REVENUE EXPENDITURE. THE VERY SAME ISSUE WAS CONSIDERED BY THE I.T.A.T., CHENNAI B BENCH I N I.T.A.NO.288/MDS/2010 IN THE CASE OF LAMBODHARA TEX TILES LTD. THROUGH THEIR ORDER DATED 2 ND APRIL, 2010. THE ISSUE HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE ASSESSING OFFICER IN V IEW OF THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. RAMARAJU SURGICAL CO TTON MILLS (294 ITR 328) ; COMMISSIONER OF INCOME-TAX V. SARA VANA SPINNING MILLS P. LTD. (293 ITR 201) ETC. THE HON' BLE JURISDICTIONAL COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. INDIRA COTTON MILLS LTD. (TCA 559 OF 2004 DATED 15. 12.2009) ALSO HELD THAT THE ISSUE HAS TO BE CONSIDERED IN THE LIG HT OF THE ABOVE DECISIONS OF THE HON'BLE APEX COURT AS HELD BY THEIR LORD-SHIPS. 12. IN VIEW OF THE ABOVE POSITION, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS POINT AND REMIT BACK THE ISSUE TO THE FILE OF THE ASSESSING AUTHORITY FOR RECONSIDERING THE SA ME IN THE LIGHT OF THE HON'BLE SUPREME COURT JUDGMENTS MENTIONED ABO VE. 13. IN RESULT, THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 IS DISMISSED. THE CROSS-OB JECTION FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED AND ITA 701, 1856 & CO 170/10 :- 6 -: THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 IS ALLOWED FOR STATISTICAL PURPOSES. ORDERS PRONOUNCED IN THE OPEN COURT ON TUESDAY, T HE 31 ST DAY OF MAY, 2011 AT CHENNAI. SD/- SD/- (DR. O.K.NARAYANAN) VICE-PRESIDENT (GEORGE MATHAN) JUDICIAL MEMBER CHENNAI, DATED : 31 ST MAY, 2011 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR
