Dishman Pharmaceuticals & Chemicals Ltd., Ahmedabad V. The ACIT.,(OSD)Range-1, Ahmedabad

ITA 1993/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9809 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Retrospective amendment
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV , JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 1993/AHD/2012 ASSESSMENT YEAR :2004-05 M/S. DISHMAN PHARMACEUTICALS & CHEMICALS LTD., 2, BHADRARAJ CHAMBERS, NR. SWASTIK CROSS ROADS, NAVRANGPURA, AHMEDABAD-380009 V/S . THE ACIT(OSD), RANGE-1, AHMEDABAD PAN NO. AAACD4164D (APPELLANT) .. (RESPONDENT) ' /BY ASSESSEE SHRI TUSHAR HEMANI, A.R. $ ' / BY REVENUE SMT. SMITI SAMANT, SR. D.R. % ' /DATE OF HEARING 23.12.2015 &'() ' /DATE OF PRONOUNCEMENT 08.01.2016 O R D E R PER : SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-6, AHMEDABAD, DATED 09.07.2012 FOR THE ASSESSMENT YEAR 2004-05. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS A COMPANY STATED TO BE ENGAGED I N THE BUSINESS OF MANUFACTURING OF BULK DRUGS AND CHEMICALS. IN THIS CASE, ORIGINALLY, ASSESSMENT WAS FRAMED U/S.143(3) ON 29.12.2006 AND THE TOTAL INCOME WAS DETERMINED AT RS.8,38,88,973/-. AGGRIEVED BY THE O RDER OF ASSESSING OFFICER, ITA NO. 1993/AHD/2012 A.Y. 04-05 [DISHMAN PHARMACEUTICALS & CHEMICALS LTD. VS. ACIT(OSD)] PAGE 2 ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) W HO GRANTED PARTIAL RELIEF TO THE ASSESSEE. THEREAFTER, MATTER WAS CARRIED BEFOR E THE HONBLE TRIBUNAL WHEREIN VIDE ORDER DATED 18 TH FEBRUARY, 2011 IN ITA NO.3213/AHD/2007 THE HONBLE ITAT SET ASIDE THE ISSUE OF DEDUCTION U/S.8 0HHC TO THE FILE OF ASSESSING OFFICER. PURSUANT TO THE DIRECTION OF TR IBUNAL, ASSESSING OFFICER VIDE ORDER DATED 30.12.2011 PASSED ORDER U/S.143(3) R.W.S. 147 AND 254 OF THE ACT DETERMINED THE TOTAL INCOME AT RS.5,52,34,499/- . AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE THE CIT(A) WHO VIDE ORDER DATED 09.07.2012 GRANTED PARTIAL RELIEF TO TH E ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS: 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF ID. AO IN NOT GRANTING DEDUCTION U/S 80HHC OF THE ACT ON RS.3 ,69,430/-BEING THE SALE PROCEEDS OF DEPB LICENSES. 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NO T APPRECIATING THAT RETROSPECTIVE AMENDMENTS MADE BY THE TAXATION LAWS (SECOND AMENDM ENT) ACT, 2005 W.R.E.F 01/04/1998 HAVE BEEN DECLARED AS ULTRA VIRE S PROVISIONS AND THEREFORE DISALLOWANCE OF DEDUCTION ON SALE PROCEEDS OF DEPB U/S 80HHC OF THE ACT MADE BY ID. AO BY INVOKING SUCH RETROSPECTIVE PROVI SIONS IS WITHOUT ANY LEGAL BASIS AND THEREFORE THE SAME MAY KINDLY BE DELETED. 3. ALTERNATIVELY AND WITHOUT PREJUDICE, FACE VALUE OF THE DEPB OUGHT TO HAVE BEEN TREATED AS COST OF DEPB LICENSE AND TAXED U/S 28(IIIB) OF THE ACT AND ONLY PROFITS, IF ANY, ON SALE OF DEPB LICENSES OUGH T TO HAVE BEEN TAXED U/S 28(IIID) OF THE ACT. 4. ALTERNATIVELY AND WITHOUT PREJUDICE, ONLY 90% OF THE PROFITS AND NOT THE ENTIRE SALE PROCEEDS OF DEPB LICENSE CAN BE REDUCED FROM T HE PROFITS OF THE BUSINESS. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMI TTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERE D BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITI ES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DES ERVES TO BE QUASHED. 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN CHARGING INTEREST U/S.234B/C/D OF THE ACT. ITA NO. 1993/AHD/2012 A.Y. 04-05 [DISHMAN PHARMACEUTICALS & CHEMICALS LTD. VS. ACIT(OSD)] PAGE 3 7. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN INITIATING PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. 4. BEFORE US, LD. A.R. AT THE OUTSET SUBMITTED THAT THOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE ONLY ISSUE IS WITH R ESPECT TO DISALLOWANCE OF DEDUCTION ON SALE PROFIT OF DEPB U/S.80HHC. HE FUR THER SUBMITTED THAT THE ISSUE IN THE YEAR UNDER CONSIDERATION IS DIRECTLY C OVERED IN ASSESSEES FAVOUR BY THE DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 IN ITA NO.1565/AHD/2012 ORDER DATED 11 .09.2015. HE ALSO PLACED ON RECORD A COPY OF AFORESAID ORDER. HE, TH EREFORE, SUBMITTED THAT SINCE THE FACTS IN THE CASE IN THE YEAR UNDER APPEA L ARE IDENTICAL TO THAT OF EARLIER YEAR, THE MATTER MAY BE REMITTED BACK TO TH E FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS AS GIVEN IN A.Y. 2003-04. LD. D.R. DID NOT OBJECT TO THE SUBMISSIONS MADE BY THE LD. A.R. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RES PECT TO CLAIM OF THE DEDUCTION U/S.80HHC. WE FIND THAT THE CLAIM OF DED UCTION U/S.80HHC ON THE PROFIT OF SALE OF DEPB LICENSE WAS DENIED TO THE AS SESSEE IN VIEW OF THE FACT THAT THE EXPORT TURNOVER OF THE ASSESSEE WAS ABOVE RS.10CRORE. WE FIND THAT IN IDENTICAL SITUATION, THE CO-ORDINATE BENCH OF TH E TRIBUNAL IN ASSESSEES OWN CASE WHILE DECIDING THE APPEAL FOR A.Y.2003-04 (ITA NO.1565/AHD/2012 ORDER DATED 11/09/2015) REMITTED THE ISSUE BACK TO THE FI LE OF ASSESSING OFFICER BY HOLDING AS UNDER: 4. WE FIND THAT BOTH THE AUTHORITIES HAVE NOT EXTE NDED THE BENEFIT OF AMENDMENT CARRIED OUT IN SECTION 80-HHC VIDE AMENDMENT ACT, 2 005 ON THE GROUND THAT THE ASSESSEE DID NOT FULFILL THE CONDITIONS NARRATED IN 3RD AND 4 TH PROVISO APPENDED TO THE SECTION 80HHC(3). THE CONSTITUTIONAL VALIDITY OF TH ESE PROVISIONS WERE UNDER CHALLENGE BEFORE THE HON'BLE HIGH COURT WHEN CIT (A ) HAS ADJUDICATED THIS ISSUE. THE FIRST LD. APPELLATE AUTHORITY ALSO TOOK NOTICE OF THIS FACT IN THE FINDING EXTRACTED ITA NO. 1993/AHD/2012 A.Y. 04-05 [DISHMAN PHARMACEUTICALS & CHEMICALS LTD. VS. ACIT(OSD)] PAGE 4 (SUPRA). THIS CONTROVERSY HAS BEEN SILENCED BY THE HON'BLE SUPREME COURT. THEREFORE, WE DEEM IT FIT THAT THIS ISSUE BE EXAMIN ED AT THE LEVEL OF A.O. WE SET ASIDE BOTH THE ORDERS AND RESTORE THIS ISSUE TO THE FILE OF A.O. FOR RE-ADJUDICATION. THE LD. A.O. SHALL GRANT DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND ALSO ADJUDICATE THE ISSUE IN THE LIGHT OF HON'BLE S.C'S DECISION RENDER ED IN THE CASE OF CIT VS. AVANI EXPORTS & OTHERS. THE ASSESSEE WILL PLACE ON RECORD COPY OF THE HON'BLE S.C. DECISION BEFORE THE A.O. SINCE, BEFORE US, BOTH THE PARTIES HAVE ADMITTED TH AT THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 2003-04, WE, THEREFORE, FOLLOWING THE SAME REASONING AS GIVEN BY THE CO-ORD INATE BENCH WHILE DECIDING THE ASSESSEES APPEAL IN A.Y. 2003-04, REM IT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR RE-ADJUDICATION AND T O DECIDE THE ISSUE IN THE LIGHT OF DECISION OF HONBLE APEX COURT IN THE CASE OF CI T VS. AVANI EXPORTS & OTHERS AND IN ACCORDANCE WITH LAW AFTER GIVING A RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 08.01.2016 SD/- SD/- ( SHAILENDRA KUMAR YADAV ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBE R TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- *+ , -. / APPELLANT /+ 01-. / RESPONDENT 2+ 345 6 / CONCERNED CIT 4+ 6- , / CIT (A) 9+ :; < 045 , 45) = 3 / DR, ITAT, AHMEDABAD >+ < ?@ A B / GUARD FILE. BY ORDER/ ,/= ,$