M/S. SAMSONITE SOUTH ASIA PVT. LTD ( FORMERLY SAMSONITE INDIA PVT. LTD), MUMBAI V. THE ACIT RG 8(3), MUMBAI

ITA 1858/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7936 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 08-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: DINESH B SHAH
• Keywords: Set aside
• Section: 80HHC; 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, E, MUMBAI BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 1858/MUM/2009 (ASSESSMENT YEARS: 2004-05) SAMSONITE SOUTH ASIA PVT LTD., (FORMERLY SAMSONITE, INDIA PRIVATE LIMITED 401,1B-MIDC-CROSS-ROAD, ELEGANT BUSINESS PARK, BEHIND CENTRE, POINT BLDG, OFF ANDHERI-KURLA ROAD, ANDHERI (E), MUMBAI-400059 PAN: AAACS8598L . APPELLANT VS ACIT RG 8(3), MUMBAI. RESPONDENT APPELLANT BY : SHRI DINESH B SHAH RESPONDENT BY : SHRI D SONGATE . O R D E R PER VIJAY PAL RAO THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.11.2008 OF CIT(A) FOR THE ASSESSME NT YEAR 2003-04. 2. THE ASSESSEE HAS RAISED TWO GROUNDS IN THIS APPE AL. THE FIRST GROUNDS OF APPEAL IS REGARDING MENTIONING OF THE WRONG ASSESSMENT YEAR I.E. 2003-04 INSTEAD OF 2004- 05 AND THE SECOND GROUND IS REGARDING UPHOLDING THE DECIS ION OF THE AO TO DISALLOW DEDUCTION FOR THE AMOUNT OF PROFIT ELIGIBLE FOR ITA NO. 1858/MUM/2009 (ASSESSMENT YEARS: 2004-05) 2 DEDUCTION U/S 80HHC OF THE ACT, WHILE COMPUTING BOO K PROFIT U/S 115JB OF THE ACT. 3. AT THE OUTSET, THE LEARNED AR OF THE ASSESSEE HA S SUBMITTED THAT THE CIT(A) HAS RECTIFIED THE MISTAKE ABOUT THE ASSESSMENT YEAR BEING 2003-04 INSTEAD OF 2004-05. THEREFORE, THE LEARNED AR HAS SUBMITTED THAT THE GR OUNDS OF APPEAL ABOUT RECTIFICATION OF ASSESSMENT YEAR HAS BECOME INFRUCTUOUS AND HE DOES NOT WANT TO RAISE THIS ISSU E BEFORE THIS TRIBUNAL. 4. IN VIEW OF THIS CHANGED SITUATION, WE DISMISS GR OUNDS OF APPEAL NO.1 BEING INFRUCTUOUS. 5. GROUNDS OF APPEAL NO.2 IS REGARDING DISALLOWANCE OF DEDUCTION FOR THE AMOUNT OF PROFIT ELIGIBLE U/S 8 0HHC WHILE COMPUTING THE BOOK PROFIT U/S 115JB. 6. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED T HE RELEVANT RECORD. AT THE OUTSET, THE LEARNED AR HAS SUBMITTED THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD. VS. COMMISSIONER OF INCOME TAX-9 REPORTED IN (2010) 327 ITR 305(SC). HE HAS ALSO RELIED UPON THE DECI SION OF TRHE KERALA HIGH COURT IN THE CASE OF CIT V/S PACK WORTH ITA NO. 1858/MUM/2009 (ASSESSMENT YEARS: 2004-05) 3 UDYOG LTD IN ITA NO.930,1525,1638,1668 AND 1681 OF 2009 DATED 30.11.2010 AND SUBMITTED THAT THE HON.KERAL A HIGH COURT FOLLOWED THE DECISION OF HON. SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD. VS. COMMISSIONER OF INCO ME (SUPRA) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE. 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON T HE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE IS C OVERED BY THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD. VS. COMMISSIONER OF INCOME (SUPRA), WHE REIN THE HON. SUPREME COURT HAS DECIDED THIS ISSUE IN PARAGR APHS 10 AND 11 AS UNDER: 10. ONE OF THE CONTENTIONS RAISED ON BEHALF OF THE DEPARTMENT WAS THAT IF CLAUSE (IV) OF EXPLANATION T O SECTION 115JB IS READ IN ENTIRETY INCLUDING THE LAS T LINE THEREOF (WHICH READS AS 'SUBJECT TO THE CONDIT IONS SPECIFIED IN THAT SECTION'), IT BECOMES CLEAR THAT THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECT ION 80HHC, COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF SUB-SECTION (3) OR SUB-SECTION (3A), AS THE CASE MAY BE, IS SUBJECT TO THE CONDITIONS SPECI FIED IN THAT SECTION. ACCORDING TO THE DEPARTMENT, THE ASSESSEE HEREIN IS TRYING TO READ THE VARIOUS PROVISIONS OF SECTION 80HHC IN ISOLATION WHEREAS AS PER CLAUSE (IV) OF EXPLANATION TO SECTION 115JB, IT IS CLEAR THAT BOOK PROFIT SHALL BE REDUCED BY THE AMOU NT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80H HC AS COMPUTED UNDER CLAUSE(A) OR CLAUSE(B) OR CLAUSE( C) OF SUB- SECTION (3) OR SUB-SECTION (3A), AS THE CAS E MAY BE, OF THAT SECTION AND SUBJECT TO THE CONDITIO NS SPECIFIED IN THAT SECTION, THEREBY MEANING THAT THE DEDUCTION ALLOWABLE WOULD BE ONLY TO THE EXTENT OF DEDUCTION COMPUTED IN ACCORDANCE WITH THE PROVISION S ITA NO. 1858/MUM/2009 (ASSESSMENT YEARS: 2004-05) 4 OF SECTION 80HHC. THUS, ACCORDING TO THE DEPARTMENT, BOTH 'ELIGIBILITY' AS WELL AS 'DEDUCTIB ILITY' OF THE PROFIT HAVE GOT TO BE CONSIDERED TOGETHER FO R WORKING OUT THE DEDUCTION AS MENTIONED IN CLAUSE (I V) OF EXPLANATION TO SECTION 115JB. WE FIND NO MERIT I N THIS ARGUMENT. IF THE DICHOTOMY BETWEEN 'ELIGIBILIT Y' OF PROFIT AND 'DEDUCTIBILITY' OF PROFIT IS NOT KEPT IN MIND THEN SECTION 115JB WILL CEASE TO BE A SELF-CONTAINE D CODE. IN SECTION 115JB, AS IN SECTION 115JA, IT HAS BEEN CLEARLY STATED THAT THE RELIEF WILL BE COMPUTE D UNDER SECTION 80HHC(3)/(3A), SUBJECT TO THE CONDITIONS UNDER SUB-CLAUSES (4) AND (4A) OF THAT SECTION. THE CONDITIONS ARE ONLY THAT THE RELIEF SH OULD BE CERTIFIED BY THE CHARTERED ACCOUNTANT. SUCH CONDITION IS NOT A QUALIFYING CONDITION BUT IT IS A COMPLIANCE CONDITION. THEREFORE, ONE CANNOT RELY UPON THE LAST SENTENCE IN CLAUSE (IV) OF EXPLANATIO N TO SECTION 115JB (SUBJECT TO THE CONDITIONS SPECIFIED IN SUB-CLAUSES (4) AND (4A) OF THAT SECTION) TO OBLITE RATE THE DIFFERENCE BETWEEN 'ELIGIBILITY' AND 'DEDUCTIBI LITY' OF PROFITS AS CONTENDED ON BEHALF OF THE DEPARTMENT . 11. FOR THE ABOVE REASONS, WE SET ASIDE THE IMPUGNE D JUDGMENT OF THE HIGH COURT AND RESTORE THE JUDGMENT OF THE TRIBUNAL. ACCORDINGLY, THE CIVIL APPEAL OF T HE ASSESSEE IS ALLOWED WITH NO ORDER AS TO COSTS. 9. RESPECTFULLY FOLLOWING THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD (SUPRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 TH, MARCH 20 11 SD SD (R.S.SYAL) (VIJ AY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 25 TH DAY OF MARCH, 2011 SRL:21311 ITA NO. 1858/MUM/2009 (ASSESSMENT YEARS: 2004-05) 5 COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI