ACIT, CHENNAI V. Shri R.Ashokan, CHENNAI

ITA 2063/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51816 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 06-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: K M MOHANDASS
• Keywords: Business income; Retrospective amendment
• Section: 143(3); 80HHC; 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO.2063/MDS/2010 (ASSESSMENT YEAR : 2000-01) THE ACIT COMPANY CIRCLE VI(1) CHENNAI VS SHRI R.ASHOKAN AURO, D-37, ANNA NAGAR EAST CHENNAI 600 012 [PAN AADPR6951J] (APPELLANT) (RESPONDENT) APPELLANT BY : DR.I.VIJAYAKUMAR, CIT/DR RESPONDENT BY : SHRI K.M.MOHANDASS, CA DATE OF HEARING : 18-08-2011 DATE OF PRONOUNCEMENT : 05-09-2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE, FOR ASSESSMENT YE AR 2000-01, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), CHEN NAI, DATED 6.9.2010. 2. IN BRIEF, THE FACTS OF THE CASE ARE THAT THE ASSESS EE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 2,76,000/- CLAIMING DEDUCTION U/S 80HHC TO THE EXTENT OF ` 93,29,306/- ON 28.6.2001, FOR ASSESSMENT YEAR 2000-01. THIS RETURN WAS PROCESSED U/S 143(1) ON ITA 2063/10 :- 2 -: 28.3.2002 IN WHICH RETURNED INCOME WAS ACCEPTED. S UBSEQUENTLY, ACTION U/S 147 R.W.S 148 WAS INITIATED BY FOLLOWING DUE PROCESS OF LAW, AS THE ASSESSING OFFICER WAS OF THE OPINION THAT EX CESS DEDUCTION HAS BEEN CLAIMED U/S 80HHC OF THE ACT, BY THE ASSESSEE, WHO IS 100% EXPORTER AND ASSESSMENT WAS COMPLETED U/S 143(3) R. W.S 147 ON 22.12.2006, AT A TOTAL INCOME OF ` 48,11,140/-. THEREAFTER, A NOTICE U/S 154 R.W.S 155 DATED 23.3.2009, WAS SERVED ON TH E ASSESSEE WHEN HE NOTICED THAT INADVERTENTLY EXCESS DEDUCTION HAS BEEN ALLOWED IN THE INTEREST ON KDR DEPOSITS. IN COMPLIANCE, THE ASSES SEE REPLIED VIDE LETTER DATED 30.3.2009 OBJECTING TO HIS ASSUMPTION OF JURISDICTION FOR PROPOSED ACTION BEING TAKEN U/S 154 OF THE ACT. BU T THE ASSESSING OFFICER IGNORING THE OBJECTIONS OF THE ASSESSEE THA T NO ACTION CAN BE TAKEN U/S 154 OF THE ACT IN THE GIVEN FACTS AND THE CIRCUMSTANCES OF THE CASE, PASSED ORDER U/S 154 ON 8.3.2010 REDUCING 90% OF ` 11,59,908/- CLAIMED AS INTEREST ON KDR DEPOSITS FR OM THE PROFITS OF THE BUSINESS FOR THE CALCULATION OF DEDUCTION U/S 8 0HHC AND PASSED ASSESSMENT ORDER ACCORDINGLY, DETERMINING THE INCOM E AT ` 59,31,870/-. BEING AGGRIEVED, THE ASSESSEE PREFERR ED APPEAL BEFORE LD. CIT(A), WHO HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THIS ACTION OF THE ASSESSING OFFICER TAKEN U/S 154 IS NO T PERMISSIBLE IN A CASE WHERE A PARTICULAR ISSUE IS FOUND TO BE DEBATA BLE ONE. AS A ITA 2063/10 :- 3 -: RESULT, HE HAS QUASHED THE ORDER PASSED BY THE ASSE SSING OFFICER DATED 8.3.2010 U/S 154 AND HAS RESTORED THE RE-ASSESSMEN T ORDER PASSED U/S 143(3) R.W.S 147 ON 22.12.2006 WHEREIN INTEREST INCOME OF ` 12,88,787/- WAS ALLOWED AS DEDUCTION U/S 80HHC. NO W THE REVENUE IS AGGRIEVED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE CRUX- ISSUE RAISED IN THIS APPEAL OF THE REVENUE IS THAT THE HON'BLE MADRAS HI GH COURT IN THE CASE OF M/S DOLLAR APPARELS VS ITO, 294 ITR 484, HA S HELD THAT THE RECEIPT OF INTEREST IS ONLY A BUSINESS INCOME AND NOT OTHERWISE. ON THE FORCE OF THIS DECISION, THE LD.DR HAS SUBMITTED THAT ALTHOUGH THE DECISION IN THE CASE OF DOLLAR APPARELS WAS RENDERE D ONLY ON 21.2.2007 AND THE RE-ASSESSMENT ORDER WAS PASSED ON 22.12.200 6, THIS DECISION WOULD HAVE RETROSPECTIVE EFFECT WHICH WILL GIVE A V ALID JURISDICTION TO THE ASSESSING OFFICER TO RECTIFY THIS ORDER. THE L D.DR HAS FURTHER ARGUED THAT A JUDICIAL DECISION ACTS RETROSPECTIVEL Y AND THEREFORE, THE FINDING OF THE LD. CIT(A) IS NOT CORRECT. ON THE O THER HAND, IT WAS ARGUED BY THE LD.AR THAT THE DECISION IN THE CASE O F DOLLAR APPARELS(SUPRA) WAS RENDERED SUBSEQUENT TO THE PASS ING OF THE ASSESSMENT ORDER IN THIS CASE AND THE ASSESSING OFF ICER DID NOT HAVE ITA 2063/10 :- 4 -: BENEFIT OF THIS DECISION WHEN THE ASSESSMENT ORDER WAS PASSED. IT WAS ARGUED THAT U/S 154 THE ASSESSING OFFICER HAS GOT T HE POWER ONLY TO RECTIFY MISTAKES APPARENT FROM RECORD AND NOT OTHER WISE. IT WAS FURTHER ARGUED THAT THERE ARE CONTRADICTORY DECISIO NS ON THE ISSUE IN QUESTION AND THEREFORE, IT IS A DEBATABLE ISSUE AND A DEBATABLE ISSUE DOES NOT TANTAMOUNT TO A MISTAKE APPARENT ON RECORD . 4. AFTER COGITATING THE SUBMISSIONS FROM BOTH SIDES, W E FIND THAT THE DECISION IN THE CASE OF DOLLAR APPARELS OF HON'BLE MADRAS HIGH COURT SUPPORTS THE VIEW TAKEN BY THE ASSESSING OFFI CER THAT INTEREST INCOME ON KDR DEPOSITS WOULD NOT BE APPLIED FOR REC TIFYING THE ASSESSMENT ORDER BECAUSE THIS DECISION WAS PASSED S UBSEQUENT TO THE PASSING OF ASSESSMENT ORDER. WHEN THIS DECISION W AS NOT BORN UPTO THE DATE OF ASSESSMENT ORDER HOW CAN IT BE SAID TO BE A MISTAKE APPARENT ON RECORD AND HOW THE RATIO OF THAT DECISI ON COULD BE APPLIED AT THE TIME OF PASSING OF THE ASSESSMENT OR DER. IT IS ALSO A CORRECT LEGAL SITUATION THAT ON THIS ISSUE DIVERGE NT DECISIONS WERE AVAILABLE; BOTH FOR AND AGAINST WHEN THE ASSESSMENT ORDER WAS PASSED. BUT TO BE VERY SPECIFIC, A DECISION OF A JURISDICTIONAL HIGH COURT VERILY HAS A BINDING EFFECT AFTER IT IS REND ERED, BUT NOT PRIOR TO THAT. ONLY THE DECISIONS OF HON'BLE SUPREME C OURT, RENDERED AT ITA 2063/10 :- 5 -: ANY TIME, ARE TREATED AS THE LAW FROM VERY INCEPTIO N. THIS PRESCRIPTION HAS BEEN ORDAINED BY ARTICLE 141 OF THE CONSTITUTI ON OF INDIA. IN THE CASE OF DECISIONS OF HIGH COURTS, THIS CRITERIA DOE S NOT APPLY. AS A RESULT, THERE BEING NO MISTAKE APPARENT FROM RECOR D IN THE ASSESSMENT ORDER AND THE ISSUE BEING DEBATABLE ONE, ACTION TAK EN BY THE ASSESSING OFFICER U/S 154/155 CANNOT BE APPROVED. THE LD. CIT(A) HAS CORRECTLY QUASHED THE IMPUGNED ORDER WHICH IS BASED ON INVALID ASSUMPTION OF JURISDICTION U/S 154 OF THE ACT. WE D O NOT FIND ANY INFIRMITY IN THE APPELLATE ORDER, HENCE, WE CONFIR M THE SAME. ACCORDINGLY, THE APPEAL OF THE REVENUE STANDS DISMI SSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 05-09-2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 5 TH SEPTEMBER, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR