M/S. BHAIRAV EXPORTS, MUMBAI V. THE ACIT 14(1), MUMBAI

ITA 1869/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 14-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: PRITI V SHUKLA
• Keywords: Opportunity of being heard; Competent authority; Set aside
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: MUMBAI BEFORE SHRI D K AGARWAL, JUDICIAL MEMBER AND SHRI R K PANDA ACCOUNTANT MEMBER ITA NO 1869/MUM/2008 (ASSESSMENT YEAR: 1998-99) M/S BHAIRAV EXPORTS, 94/96, BHULESHWAR ROAD, BHAGWANKALA BUILDING, 1 FLOOR, MUMBAI -400 002 PAN: AAEFB 8425 A VS ACIT -14(1), IIND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI -400 021 APPELLANT RESPONDENT APPELLANT BY: SMT PRITI V SHUKLA RESPONDENT BY: SHRI S S RANA ORDER PER D K AGARWAL, JUDICIAL MEMBER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 7.02.2008 PASSED BY THE LEARNED CIT (A) FOR THE ASS ESSMENT YEAR 1998-99. 2. THE ISSUE INVOLVED IN THIS APPEAL IS AGAINST DEN IAL OF DEDUCTION U/S 80HHC IN RESPECT OF DEPB PROFIT. 3 AT THE TIME OF HEARING BOTH THE SIDES ARE IN AGRE EMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND OF APPEAL ARE SIMILAR TO THOSE DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS IN ITA. 5769/M/06. THE SPECIAL BENCH VIDE ITS ORDER DATED 11.08.2009 HAS RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS VIDE FIND ING RECORDED IN CONCLUDING PARA-89 APPEARING AT PAGE 86-87 OF THE ORDER WHICH READS AS UNDER : 89. THE QUESTION RAISED BEFORE THE SPECIAL BE NCH HAS TWO PARTS. IN SO FAR AS THE FIRST PART :`WHETHER THE ENTIRE AM OUNT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PROFIT CHARGEA BLE UNDER SECTION 28(IIID) OF THE INCOME TAX ACT, IS CONCERNED, WE A NSWER IT IN NEGATIVE AND THE SECOND PART OF THE QUESTION :`OR THE PROFIT REFERRED TO THEREIN M/S BHAIRAV EXPORTS 2 REQUIRES ANY ARTIFICIAL COST TO BE INTERPOLATED? IS REPLIED IN AFFIRMATIVE TO THE EXTENT THAT THE FACE VALUE OF DEPB SHALL BE DEDUCTED FROM THE SALE PROCEEDS. AS REGARDS THE GROUNDS RAISED IN TH ESE APPEALS AGAINST THE DENIAL OF DEDUCTION U/S 80HHC, IN FULL OR PART, WE FIND THAT THE COMPUTATION OF PROFITS DERIVED FROM EXPORTS AND THE RESULTANT AMOUNT OF DEDUCTION UNDER THIS SECTION CAN BE MADE ONLY WH EN THE DECISION IS TAKEN ON THE AMOUNT AND THE TIMING OF TAXABILITY OF THE FACE VALUE OF DEPB AND THE PROFIT ON ITS SALE. ON THIS ISSUE WE H OLD THAT THE FACE VALUE OF DEPB IS CHARGEABLE TO TAX U/S 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DEPB IS F ILED WITH THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFI T ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OV ER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28(IIID) AT THE TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB, SHALL ALSO HOLD GOOD FOR DFRC, ON BOTH ITS COMPONENTS, VIZ, THE FACE VALUE OF DFRC AND PROFIT ON ITS TRANSFER, EXCEPT FOR THE FACT THAT THE PROFIT ON SALE OF DFRC SHALL BE CHARGED TO TAX U/S 28(IIIE). THERE IS NO DISPUTE ABOUT THE DU TY DRAWBACK, WHICH SHALL BE CHARGEABLE TO TAX AT THE TIME OF ACCRUAL O F INCOME U/S 28(IIIC) WHEN APPLICATION IS FILED WITH THE COMPETENT AUTHOR ITY AFTER MAKING EXPORTS. SINCE THE NECESSARY FACTS FOR THE DETERMIN ATION OF THE QUANTUM OF DEDUCTION U/S 80HHC, AS DISCUSSED ABOVE, ARE NOT AVAILABLE ON RECORD, WE, THEREFORE, SET ASIDE THE I MPUGNED ORDERS AND DIRECT THE AO TO COMPUTE THE AMOUNT OF RELIEF IN AC CORDANCE WITH THE VIEW EXPRESSED BY US HERE IN ABOVE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE PARTIES WE RESPECTFULLY FOLLOWING THE ABOVE SET ASIDE THE IMPU GNED ORDER ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE DEDUCTION U /S.80HHC IN ACCORDANCE WITH THE VIEW TAKEN BY THE SPECIAL BENCH IN AFORE-NOTED CASE AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GR OUNDS TAKEN BY THE ASSESSEE ARE THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED TODAY ON THE 1ST DAY OF OCTOBER 2 009. SD/- (R K PANDA) ACCOUNTANT MEMBER SD/- (D K AGARWAL) JUDICIAL MEMBER MUMBAI, DATE: 1ST OCTOBER 2009 M/S BHAIRAV EXPORTS 3 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) XIV, MUMBAI. 4) THE CIT - 14, MUMBAI. 5) THE DR B BENCH, ITAT, MUMBAI BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI M/S BHAIRAV EXPORTS 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.9.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 25.9.09 30.9.09 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER