Atlas Metal Processors P Ltd., CHENNAI V. ACIT Corporate Circle 1(1), CHENNAI

ITA 1994/CHNY/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 6826 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 21-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P MUTHUSHANKAR
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Retrospective amendment; Difference of opinion
• Section: 80HHC; 80IA; 64; 43

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL B(SMC) BENCH, CHENNAI . . . , , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NOS. 1994 & 1995/CHNY/2018 / ASSESSMENT YEARS : 2001-02 & 2004-05 M/S. ATLAS METAL PROCESSORS P. LTD., 29/69, ELDAMS ROAD, TEYNAMPET, CHENNAI 600 018. [PAN: AAACA 7401Q] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI. ( / APPELLANT) ( #$& /RESPONDENT ) & ' / APPELLANT BY : SHRI. M. KARUNAK ARAN , ADVOCATE #$& ' / RESPONDENT BY : SHRI. P. MUTHUSHANKAR , JCIT ' /DATE OF HEARING : 03.10.2019 ' /DATE OF PRONOUNCEMENT : 23.12.2019 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THESE APPEALS AGAINST THE CONS OLIDATED ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)- 1, CHENNAI IN ITA NOS. 21,20,23&22/CIT(A)-1/2007-08 DATED 27.03.2018 FOR THE ASSESSMENT YEARS 2001-02 & 2004-05, RESPECTIVELY. :-2-: ITA NO.1994 & 1995/CHNY/2018 2. THE ASSESSEE FILED THE ABOVE APPEALS WITH A DELA Y OF 18 DAYS. IN THE CONDONATION PETITIONS, IT WAS SUBMITTED THAT T HE DIRECTOR OF THE ASSESSEE COMPANY WAS OUT OF STATION AND HE RETURNED TO CHENNAI ON 21.6.2018. THEREFORE, THESE APPEALS COULD NOT BE FI LED IN TIME AND HENCE IT WAS PLEADED THAT THE DELAY IN FILING THE SE APPEALS BE CONDONED AND JUSTICE BE RENDERED. 2.1 WE HEARD THE RIVAL SUBMISSIONS AND CONDONE THE DELAY IN FILING THE ABOVE APPEALS. 3. M/S. ATLAS METAL PROCESSORS LTD., THE ASSESSEE , IS A 100% MANUFACTURER-EXPORTER OF STAINLESS STEEL ARTICLES. WHILE MAKING THE ASSESSMENT FOR ASSESSMENT YEAR 2001-02, THE AO RES TRICTED THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80HHC BY INVOK ING THE PROVISIONS OF SECTION 80IA(9). IN THE ASSESSMENT MADE FOR THE AS SESSMENT YEAR 2004-05, THE AO DENIED THE DEDUCTION U/S. 80IA IN RESPECT OF PROFIT ON SALE OF DEPB LICENSES, EXCLUDING THE DEDUCTION CLAIMED U/S. 80IA FROM THE PROFITS FOR THE COMPUTATION OF DEDUCTION U/S. 80HHC AND DENIED THE DEDUCTION U/S. 80HHC IN RESPECT OF PRO FIT ON SALE OF DEPB LICENSES. AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THOSE APPEALS. :-3-: ITA NO.1994 & 1995/CHNY/2018 4. AGGRIEVED AGAINST THOSE ORDERS, THE ASSESSEE FIL ED THESE APPEALS WITH FOLLOWING GROUNDS : FOR THE ASSESSMENT YEAR 2001-02 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING THE APPELLANT'S CLAIM OF DEDUCTION UNDER SECTION 80HHC AFTER DEDUCTION U/S 801A. 2. THE APPELLANT SUBMITS THAT IN COMPUTATION OF DED UCTION U/S 80HHC HAS REDUCED DEDUCTION U/S 80LA OF RS 2,84,670/- WHI CH WAS NOT CORRECT AS INDEPENDENT CALCULATION HAS TO BE MADE F OR EACH OF THE DEDUCTIONS AS PER APEX COURT ORDER IN ACIT VS MICRO LAB LTD APPEAL NO 7427 OF 2012 CONFIRMING BOMBAY HIGH COURT JUDGEM ENT IN ASSOCIATED CAPSULES P LTD VS DCIT CENTRAL CIRCLE 43 , MUMBAI IN APPEAL NO 3036 OF 2010 (332 ITR 42). THE HONBLE SUPREME C OURT HAS NOTED THE DIFFERENCE OF OPINION OF THE VARIOUS COURTS ON THIS ISSUE AND REFERRED THE MATTER TO A LARGER BENCH AND THE REFER ENCE IS PENDING AS ON DATE. 3. THE APPELLANT SUBMITS THAT THE COMMISSIONER OF I NCOME- TAX(APPEALS) DISMISSED THE APPEAL ON THIS GROUNDS I N HASTE WAS NOT JUSTIFIED AND COULD HAVE KEPT THE MATTER IN ABEYANC E AND PASS FAVOURABLE ORDERS. 4. THE APPELLANT THEREFORE PRAYS THAT THE HON'BLE I NCOME-TAX APPELLATE TRIBUNAL MAY BE PLEASED TO PERMIT THE CLAIM OF DEDU CTION U/S 80 HHC INDEPENDENTLY WITHOUT DEDUCTING AMOUNT OF DEDUCTION U/S 80LA AND RENDER JUSTICE. FOR THE ASSESSMENT YEAR 2004-05. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING THE APPELLANT'S CLAIM OF DEDUCTION UNDER SECTION 80HHC AFTER DEDUCTION U/S 80LA AND NOT ALLOWING THE CLAIM OF DUTY DRAW BA K AND DEPB LICENSE SALE IN CALCULATION OF DEDUCTION U/S 80HHC RELYING ON RETROSPECTIVE AMENDMENT TO SECTION. 2. THE APPELLANT SUBMITS THAT IN COMPUTATION OF DED UCTION U/S 80HHC HAS REDUCED DEDUCTION U/S 80LA OF RS4,25,540/- WHIC H WAS NOT CORRECT AS INDEPENDENT CALCULATION HAS TO BE MADE FOR EACH OF THE DEDUCTIONS AS PER APEX COURT ORDER IN ACIT VS MICRO LAB LTD AP PEAL NO 7427 OF 2012 CONFIRMING BOMBAY HIGH COURT JUDGEMENT IN ASSO CIATED CAPSULES P LTD VS DCIT CENTRAL CIRCLE 43, MUMBAI IN APPEAL NO 3036 :-4-: ITA NO.1994 & 1995/CHNY/2018 OF 2010 (332 ITR 42). THE HONBLE SUPREME COURT HAS NOTED THE DIFFERENCE OF OPINION OF THE VARIOUS COURTS ON THIS ISSUE AND REFERRED THE MATTER TO A LARGER BENCH AND THE REFERENCE IS P ENDING AS ON DATE. 3. THE APPELLANT SUBMITS THAT THE RETROSPECTIVE AME NDMENT TO SEC 80 HHC REGARDING NON ALLOWANCE OF DEDUCTION FOR SALE O F LICENSE AND DUTY DRAW BACK WAS QUASHED AS IT WAS A RETROSPECTIV E AMENDMENTS BY THE HON'BLE SUPREME COURT IN THE CASE OF PRITVI COTTON MILLS LTD WHICH STATED THAT THE LEGISLATURE DOES NOT POSSESS OR EXERCISE POWER TO REVERSE THE DECISION IN EXERCISE OF JUDICIAL POWER WITH REGARDS TO THE RETROSPECTIVE AMENDMENT AND HENCE THE APPELLANT'S C LAIM OF DEDUCTION U/S 80HHC WAS CORRECT AS PER RETURN OF INCOME. THE SAME JUDGEMENT WAS FOLLOWED IN AVANI EXPORT & OTHERS VS CIT RAJKOT IN GUJARAT HIGH COURT SLP NO 7926 OF 2006 4. THE APPELLANT SUBMITS THAT THE COMMISSIONER OF I NCOME- TAX(APPEALS) DISMISSED THE APPEAL ON THIS GROUNDS I N HASTE WAS NOT JUSTIFIED AND COULD HAVE KEPT THE MATTER IN ABEYANC E AND PASS FAVOURABLE ORDERS. 5. THE APPELLANT THEREFORE PRAYS THAT THE HON'BLE I NCOME-TAX APPELLATE TRIBUNAL MAY BE PLEASED TO PERMIT THE CLAIM OF DEDU CTION U/S 80 HHC INDEPENDENTLY WITHOUT DEDUCTING AMOUNT OF DEDUCTION U/S 80LA AND RENDER JUSTICE. 4. THE LD AR ARGUED ON THE ABOVE LINES AND SUBMITTE D THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT-1, CHE NNAI VS MRF LTD IN TC(A) NO 1020 OF 2009 DT 27.10.2009 FOLLOWING THE D ECISION OF THE DIVISION BENCH IN THE CASE OF SCM CREATION VS ACIT REPORTED IN 304 ITR 319 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE I E THE RELIEF UNDER SECTION 80 IA SHOULD BE DEDUCTED FROM PROFITS AND G AINS OF BUSINESS BEFORE COMPUTING RELIEF UNDER SECTION 80 HHC. THUS, THE LD CIT(A) :-5-: ITA NO.1994 & 1995/CHNY/2018 ERRED IN NOT FOLLOWING THE DECISION OF THE JURISDIC TIONAL HIGH COURT AND HENCE PLEADED TO ALLOW THE ABOVE APPEALS. WITH RE GARD TO THE CLAIM FOR DEDUCTION U/S. 80IA IN RESPECT OF PROFIT ON SALE OF DEPB LICENSES AMOUNTING TO RS.14,99,196/- AND THE DUTY DRAWBACK OF RS.89,374/- FOR THE ASSESSMENT YEAR 2004-05, THE LD AR INVITED OUR ATTENTION TO THE DECISION OF LD CIT(A) IN THE ASSESSSEES OWN CASE RENDERED FOR THE ASSESSMENT YEAR 2003-04, IN THE SAME CONSOLIDATED O RDER, WHEREIN THE LD CIT(A) APPLYING THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS AVANI EXPORTS (2015) 58 TAXMANN.COM 100 (SC) THAT, THE PROVISION OF TAXATION LAW AMENDMENT ACT 2005 CAN ONLY HAVE PROSP ECTIVE EFFECT AND THE EXPORTERS HAVING A TURNOVER OF BELOW RS. 10 CRO RES AND THE EXPORTERS HAVING A TURNOVER OF ABOVE RS. 10 CRORES SHOULD BE TREATED SIMILARLY, ALLOWED THE ASSESSSEES APPEAL. HOWEV ER, FOR THIS ASSESSMENT YEAR IE AY 2004-05 , A SUBSEQUENT ONE, THE LD CIT(A) WRONGLY FAILED TO ALLOW THE APPEAL AND HENCE PLEADE D TO ALLOW THE APPEAL ON THIS ISSUE. 5. PER CONTRA, THE LD DR INVITED OUR ATTENTION TO T HE RELEVANT PORTION OF THE LD CSIT (A) OBSERVATION THAT IT IS FOUND T HAT THE SAID ISSUE CAME BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF ACI T VS. MICRO LABS LID (2015) 64 TAXMAN.COM 199 (SC). THE HON'BLE SUPREME COURT HAS NOTED THE DIFFERENCE OF OPINION OF THE VARIOUS HIGH COURT S ON THIS ISSUE AND :-6-: ITA NO.1994 & 1995/CHNY/2018 REFERRED THE MATTER TO A LARGER BENCH AND THE REFER ENCE IS PENDING AS ON DATE. IT IS OBSERVED THAT ON THE SAME ISSUE, THE D ELHI HIGH COURT IN THE CASE OF GREAT EASTERN EXPORTS VS CIT (2011) 332 ITR 14 AND THE KERALA HIGH COURT IN THE CASE OF OLAM EXPORTS INDIA LTD VS CIT [2011] 332 ITR 40 AND THE GUJARAT HIGH COURT IN THE CASE OF CIT VS ATUL INTERMEDIATES [2014] 45 TAXMAN.COM 275 (GUJARAT) HAVE HELD IN FAV OUR OF REVENUE. THE ITAT SPECIAL BENCH CHENNAI IN THE CASE OF CIT V S ROGINI GARMENTS (2007) 108 ITD 49 HAD ALSO HELD A SIMILAR VIEW. RE SPECTFULLY FOLLOWING THE SAME, THIS GROUND OF APPEAL US DISMISSED. AND THEN SUPPORTED THE ORDERS OF THE LD CIT(A). 6. WE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED TH EM CAREFULLY. IT IS CLEAR FROM THE ABOVE THAT THE ISSUE, WHETHER T HE RELIEF U/S. 80IA SHOULD BE DEDUCTED FROM PROFITS AND GAINS OF BUSINE SS BEFORE COMPUTING THE RELIEF UNDER SECTION 80HHC OR NOT, IS BEFORE THE LARGER BENCH OF THE HON'BLE SUPREME COURT. HOWEVER, WHEN SUCH DECISION IS PENDING, SINCE THE JURISDICTIONAL HIGH COURT DECIS ION IS IN FAVOUR OF THE ASSESSEE, AS PLEADED BY THE LD AR SUPRA, FOLLOWING IT WE ALLOW THE ASSESSEES APPEAL. WITH REGARD TO THE ASSESSEE S CLAIM FOR THE DEDUCTION U/S. 80IA IN RESPECT OF PROFIT ON SALE OF DEPB LICENSES AMOUNTING TO RS.14,99,196/- AND THE DUTY DRAWBACK O F RS.89,374/- FOR THE ASSESSMENT YEAR 2004-05, IT IS CLEAR FROM THE A BOVE THAT THE LD CIT(A) IN THE ASSESSSEES OWN CASE FOR THE ASSES SMENT YEAR 2003-04, :-7-: ITA NO.1994 & 1995/CHNY/2018 IN THE SAME CONSOLIDATED ORDER, APPLYING THE HONBL E APEX COURT DECISION IN THE CASE OF CIT VS AVANI EXPORTS (2015 ) 58 TAXMANN.COM 100 (SC) THAT, THE PROVISION OF TAXATION LAW AMEND MENT ACT 2005 CAN ONLY HAVE PROSPECTIVE EFFECT AND THE EXPORTERS HAVI NG A TURNOVER OF BELOW RS. 10 CRORES AND THE EXPORTERS HAVING A T URNOVER OF ABOVE RS. 10 CRORES SHOULD BE TREATED SIMILARLY, ALLOWE D THE ASSESSSEES APPEAL. HOWEVER, FOR THIS ASSESSMENT YEAR IE AY 20 04-05, IT APPEARS BY A MISTAKE , THE LD. CIT(A) FAILED TO ALLOW THE APPE AL. THEREFORE, WE FIND MERIT IN THE ASSESSEES CORRESPONDING GROUNDS AND HENCE ALLOW THE APPEAL ON THIS ISSUE. 7. IN THE RESULT, THE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 2001-02 AND 2004-05 ARE ALLOWED. ORDER PRONOUNCED ON 23 RD DECEMBER, 2019 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 23 RD DECEMBER, 2019 JPV '#1232 /COPY TO: 1. &/ APPELLANT 2. #$& /RESPONDENT 3. 4 ) (/CIT(A) 4. 4 /CIT 5. 2# /DR 6. 7 /GF