ACIT, CHENNAI V. M/s. Leather Crafts India P Ltd., CHENNAI

ITA 1889/CHNY/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4528 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-07-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 15-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: F C JAIN
• Section: 80HHC; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C BEFORE SHRI PRADEEP PARIKH, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO.1889/MDS/2009 ASSESSMENT YEAR : 2002-03 THE ASSST. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE-II(4) CHENNAI 34. VS. M/S. LEATHER CRAFTS INDIA PVT. LTD. NO.11, KONDI CHETTY STREET CHENNAI 600 001. PAN AAACL 0493 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.SRINIVAS RESPONDENT BY : SHRI F.C.JAIN O R D E R PER PRADEEP PARIKH, V.P. THE DEPARTMENT IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. CIT(A), DATED 30.9.2009 FOR ASSESS MENT YEAR 2002-03. THE MAIN GRIEVANCE OF THE DEPARTMENT IS AG AINST THE RECTIFICATION ALLOWED BY THE CIT(A) UNDER SEC.1 54 OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF LEATHER GOODS AND HAD RET URNED A TOTAL INCOME OF RS. 67,34,050/- FOR THE YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS COMPLETED UNDER SEC.143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS.83,93,936/- AFTER CLAIMING DEDUCTION UNDER SEC.8 0HHC OF THE ACT. SUBSEQUENT TO THE REGULAR ASSESSMENT, THE ASSESSEE FILED AN APPLICATION UNDER SEC.154 OF THE ACT SEEKI NG RECTIFICATION OF THE ABOVE ORDER, INTER ALIA, IN RE SPECT OF 2 ITA 1889/09 DEDUCTION UNDER SEC.80HHC OF THE ACT. THE CONTENTIO N OF THE ASSESSEE WAS THAT FOR THE PURPOSE OF COMPUTING THE SAID DEDUCTION, TOTAL TURNOVER SHOULD NOT INCLUDE FREIGH T OR INSURANCE. HOWEVER, WHILE COMPUTING THE DEDUCTION, THE ASSESSING OFFICER HAD CONSIDERED THE CIF VALUE OF T HE TURNOVER. THE ASSESSING OFFICER REJECTED THE APPLIC ATION OF THE ASSESSEE BY STATING THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND AND HENCE, IT NEEDED NO RECTIFICAT ION. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. 3. THE CONTENTION OF THE LD. D.R. AS PER THE GROUND S OF APPEAL WAS THAT BESIDES THE FREIGHT EXPENDITURE BEI NG HEAVY, LOSS IN TRADING GOODS EXPORT WAS ALSO ADDED AND THE RE WAS NO PROPER ALLOCATION OF THE INDIRECT COSTS. THE LD. COUNSEL RELIED ON THE ORDER OF THE CIT(A). 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D THE MATERIAL ON RECORD. IT IS NOT DISPUTED THAT THE ASS ESSING OFFICER HAD CONSIDERED CIF VALUE OF TOTAL TURNOVER INSTEAD OF THE FOB VALUE. IT IS A CLEAR PROVISION OF LAW THAT ONLY FOB VALUE CAN BE CONSIDERED AND THAT WAS WHAT WAS SOUGH T TO BE RECTIFIED BY THE ASSESSEE. IT WAS CLEARLY A MISTAKE APPARENT ON RECORD WHICH THE CIT(A) RIGHTLY ALLOWED. THE REM AINING ISSUES RAISED BY THE DEPARTMENT IN THE GROUNDS OF A PPEAL RELATING TO THE COMPUTATION OF DEDUCTION UNDER SEC. 80HHC DO NOT ARISE FROM THE ORDER OF THE CIT(A) AND HENCE, CANNOT BE NOW RAISED AT THIS STAGE, PARTICULARLY IN THE PROCE EDINGS UNDER SEC.154 OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE DEPARTMENT ARE REJECTED. 5. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. 3 ITA 1889/09 THE ORDER WAS PRONOUNCED IN THE COURT ON 1.7.2010. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (PRADEEP PARIKH) VICE-PRESIDENT CHENNAI, DATED THE 1 ST JULY, 2010 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR