Handfab India, V. ITO Ward-3,

ITA 1988/DEL/2008

• Counselvise Citation: 198820114 RSA 2008
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: GURJEET SINGH
• Keywords: Business income
• Section: 80HHC; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `C : NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NOS.1987, 1988 & 1989/DEL./2008 (ASSESSMENT YEARS : 1999-2000, 2001-02 & 2004- 05) HANDFAB INDIA, VS. ITO, WARD 3, MAHAVIR COLONY, PANIPAT. PANIPAT (PAN/GIR NO.AAAFH7577B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GURJEET SINGH, CA REVENUE BY : SHRI SALIL MISHRA, DR ORDER PER C.L. SETHI: JM THESE THREE APPEALS, FILED BY THE ASSESSE E, ARE DIRECTED AGAINST THREE SEPARATE ORDERS ALL DATED 17.03.2008, PASSED BY THE CIT(A), FOR THE ASSESSMENT YEARS 1999-2000, 2001-02 & 2004-05. 2. IN ALL THESE APPEALS, A COMMON ISSUE REGARDING ASSESSEES CLAIM OF DEDUCTION U/S 80HHC OF THE I.T. ACT, 1961,ON SALE OF DEPB LICENCE IS INVOLVED 3. THESE THREE APPEALS WERE INITIALLY CAME TO BE DI SPOSED OF BY THIS TRIBUNAL VIDE ORDER DATED 29.9.2009, WHEREBY THE TRIBUNAL DIRECTE D THE ASSESSING OFFICER TO RE- DETERMINE THE ISSUE INVOLVED IN THE LIGHT OF THE DE CISION OF SPECIAL BENCH OF ITAT, IN THE CASE OF M/S TOPMAN EXPORTS, MUMBAI VS. ITO, (I.T.A. NOS.5769/MUM./2006 AND 5651/MUM./2006, DATED 11.8.2009) PERTAINING TO THE ASSESSMENT YEARS 2002-03 & 03-04. 4. BEING AGGRIEVED WITH THE AFORESAID TRIBUNALS OR DER DATED 29.9.2009 PASSED IN THESE THREE APPEALS, THE REVENUE PREFERRED AN APPEA L U/S 260A OF THE I.T. ACT, 1961 BEFORE THE HONBLE HIGH COURT OF JUDICATURE FOR THE STATES OF PUNJAB & HARYANA. THESE APPEALS FILED BY THE REVENUE BEFORE THE HONBLE HIG H COURT WERE NUMBERED AS I.T.A. NOS.712 OF 2010, 713 OF 2010 AND 714 OF 2010. ALL THESE THREE APPEALS FILED BEFORE THE HONBLE HIGH COURT HAS BEEN DISPOSED OF BY THE HON BLE HIGH COURT VIDE ORDER DATED AUGUST, 16,2010. IN THESE APPEALS, IT HAS BEEN HEL D BY THE HONBLE HIGH COURT THAT THE I.T.A. NOS.1987, 1988 & 1989/D/08 (A.YS : 1999-2000, 2000-01 & 04-05) 2 IDENTICAL ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY ORDER OF THE SAME COURT DATED 16.8.2010 IN I.T.A. NO.299 OF 2010 IN THE CASE OF C IT VS. M/S F.C. SONDHI & CO. PVT. LTD. IN THE CASE OF CIT VS. F.C. SONDHI & CO. PVT. LTD., THE HONBLE HIGH COURT OF P&H HAS OBSERVED THAT THE VIEW TAKEN BY THE SPECIAL BEN CH OF ITAT, MUMBAI HAS BEEN REVERSED BY THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. KALPATARU COLOURS & CHEMICALS (2010) 42 DTR (BOM.) 193. THE HONBLE HI GH COURT THEN OBSERVED THAT THEIR LORDSHIPS ARE IN AGREEMENT WITH THE VIEW TAKEN BY T HE BOMBAY HIGH COURT AND THEIR LORDSHIPS WAS OF THE VIEW THAT THE INCOME FROM DUTY DRAW BACK ((DBK), DUTY ENTITLEMENT PASS BOOK (DEPB) AND DUTY FREE REMISSIO N SCHEME (DFRC) HAS TO BE TREATED AS BUSINESS INCOME AND HAS TO BE TAKEN INTO ACCOUNT FOR DEDUCTION U/S 80HHC OF THE ACT. THE HONBLE HIGH COURT THEREAFTER REMANDE D THE MATTER TO THE ITAT FOR FRESH DECISION IN ACCORDANCE WITH LAW. 5. HENCE, ALL THESE APPEALS HAVE BEEN HEARD AGAIN B Y THIS TRIBUNAL. 6. THE FACTS IN THE ASSESSMENT YEAR 1999-2000 RELAT ING TO ASSESSEES CLAIM OF DEDUCTION IN RESPECT OF PROFIT ON SALE OF DEPB ARE THAT THE ASSESSEES EXPORT TURNOVER WAS RS.22,91,19,341/- AND THAT THE ASSESSEE RECEIVED EX PORT INCENTIVE OF RS.1,46,68,181/- ON ACCOUNT OF DEPB (RS.2,28,100/-) AND DUTY DRAW BACK (RS.1,44,40,081/-). THE ASSESSEE CLAIMED DEDUCTION U/S 80HHC ON THE ENTIRE AMOUNT OF EXPORT INCENTIVES BUT, THE ASSESSING OFFICER WAS OF THE VIEW THAT IN VIEW OF T HE TAXATION LAWS AMENDMENT (ACT, 2005), THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U /S 80HHC OF THE ACT ON DUTY DRAW BACK AND DEPB INASMUCH AS THE ASSESSEES TURNOVER E XCEEDED RS.10 CRORES AND THE RATE OF DUTY DRAW BACK CREDIT ATTRIBUTABLE TO THE CUSTOM S WAS NOT HIGHER THAN RATE OF CREDIT ALLOWABLE UNDER DEPB. THE ASSESSING OFFICER, THERE FORE, REDUCED 90% OF EXPORT INCENTIVE WORKED OUT AT RS.1,32,01,363/- FROM THE B USINESS PROFIT AND THEN COMPUTED THE AMOUNT OF DEDUCTION ALLOWABLE U/S 80HHC OF THE ACT. 7. SIMILARLY, IN ASSESSMENT YEAR 2001-02, THE ASSES SEES TURNOVER WAS IN EXCESS OF RS.10 CRORES AND RATE OF DUTY DRAW BACK CREDIT WAS NOT HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER THE DEPB. 8. IN THE ASSESSMENT YEAR 2004-05, THE FACTS ARE ID ENTICAL WHERE ASSESSEES TURNOVER IS IN EXCESS OF RS.10 CRORES AND THE RATE OF DUTY D RAW BACK CREDIT IS LOWER THAN THE RATE I.T.A. NOS.1987, 1988 & 1989/D/08 (A.YS : 1999-2000, 2000-01 & 04-05) 3 OF CREDIT ALLOWABLE UNDER THE DEPB SCHEME. THESE F ACTS HAVE NOT BEEN DISPUTED BY THE ASSESSEE AT ANY STATE OF PROCEEDINGS NOR BEFORE US. 9. WHILE REMITTING THIS MATTER BACK TO THIS TRIBUNA L FOR FRESH DECISION IN ACCORDANCE WITH LAW, THE HONBLE HIGH COURT OF P&H HAS OBSERVE D THAT THEIR LORDSHIPS ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS (SUPRA). IT IS ALSO NOT IN DISPUTE THAT THE JUDGMENT OF THE SPECIAL BENCH OF ITAT, BOMBAY IN THE CASE OF M/S TO PMAN EXPORTS VS. ITO HAS GOT REVERSED BY THE AFORESAID DECISION OF THE BOMBAY HI GH COURT. AT THE TIME OF HEARING OF THESE APPEALS, IT HAS BEEN ADMITTED BY BOTH THE PAR TIES THAT THE ISSUE INVOLVED IN THESE APPEALS HAS NOW TO BE DECIDED IN THE LIGHT OF THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICAL S (SUPRA). THE POSITION AS ON TODAY IS THAT THE ISSUE IS COVERED BY THE DECISION OF BOM BAY HIGH COURT IN THE AFORESAID CASE, AND THE OPERATION OF THE DECISION OF THE HONBLE HI GH COURT HAS NOT BEEN STAYED OR PUT IN ABEYANCE BY ANY ORDER OF THE HONBLE SUPREME COURT. IN THE LIGHT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CH EMICALS (SUPRA), THE INCOME FROM DUTY DRAW BACK AND DEPB ARE TO BE TREATED AS BUSINE SS INCOME AND HAS TO BE TAKEN INTO ACCOUNT FOR DEDUCTION U/S 80HHC OF THE ACT, AND THE COMPUTATION IS TO BE MADE IN ACCORDANCE WITH THE DECISION RENDERED BY THE HONBL E HIGH COURT IN THE LIGHT OF TAXATION LAWS (AMENDMENT) ACT, 2005. IN THE PRESENT CASE, T HE ASSESSING OFFICER INCLUDED THE AMOUNT OF DUTY DRAW BACK AND DEPB IN THE BUSINESS P ROFIT AND THEN HE REDUCED 90% THEREOF FROM THE BUSINESS PROFIT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC OF THE ACT AS HE FOUND THAT THE ASSESSEES TURNOVER HA D EXCEEDED RS.10 CRORES AND THE RATE OF DUTY DRAW BACK WAS NOT HIGHER THAN THE RATE OF CRED IT ALLOWABLE UNDER THE DEPB SCHEME. THIS APPROACH OF THE ASSESSING OFFICER IS UNDOUBTEDLY IN ACCORDANCE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF KALPATARU COLOURS AND CHEMICALS(SUPRA). THEREFORE, NO PURPOSE WILL BE SE RVED TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE IN ACCORDANCE WITH THE DECISION OF HONBLE BOMBAY HIGH COURT SINCE BECAUSE THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER IS IN ACCORDANCE WITH THE DECISION OF HONBLE BOMBAY HIGH COURT. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE APPEALS FILED BY THE ASSESSEE. WE ACCORDINGLY DISMISS THIS GROUND RAISED I.T.A. NOS.1987, 1988 & 1989/D/08 (A.YS : 1999-2000, 2000-01 & 04-05) 4 BY THE ASSESSEE IN ALL THESE THREE APPEALS PERTAIN ING TO THREE DIFFERENT ASSESSMENT YEARS MENTIONED ABOVE. 10. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 25.10.2011. SD/- SD/- (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, OCT. 25, 2011. SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), KARNAL NEW DELHI 5.CIT(ITAT), NEW DELHI. AR/ITAT