M/s. Concorde Agencies, CHENNAI V. ACIT, CHENNAI

ITA 214/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2554 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI JT
• Assessee Lawyers: V S JAIKUMAR
• Keywords: Retrospective amendment
• Section: 80HHC; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.214/MDS/2013 ASSESSMENT YEAR : 2001-02 M/S CONCORDE AGENCIES OLD NO.3, NEW NO.7, 8 TH STREET DR. RADHAKRISHNA SALAI CHENNAI 600 004 VS THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE XV CHENNAI [PAN AAAFC 0578 P] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S.JAIKUMAR, ADVOCATE RESPONDENT BY : SHRI T.N.BETGIRI, JT.CIT DATE OF HEARING : 02-05-2013 DATE OF PRONOUNCEMENT : 09-05-2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, IT ASSAILS AN ORDER DATED 15.11.2012 OF LD. CIT(A)-XII, CHENNAI, IN WHICH HE CONFIRMED A RECTIFICATION PASSED ON 3.4.2009 BY THE ASSESSING O FFICER FOR THE IMPUGNED ASSESSMENT YEAR. 2. FACTS APROPOS ARE THAT ASSESSEE HAD, WHILE WORKING OUT ITS DEDUCTION U/S 80HHC OF THE ACT, CONSIDERED A SUM O F ` 1,59,27,755/- I.T.A.NO.214/13 :- 2 -: RECEIVED ON TRANSFER/SALE OF DEPB SCHEME. AT THE T IME WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED, ITS CLAIM WAS AL LOWED SINCE THE AMENDMENT TO SECTION 80HHC WHEREBY THIRD AND FOURTH PROVISOS WERE ADDED THERETO, HAD YET NOT COME IN PLACE. THEREAFT ER ON 23.3.2009, ASSESSEE WAS PUT A NOTICE AS TO WHY A RECTIFICATION SHOULD NOT BE EFFECTED FOR RE-WORKING THE DEDUCTION U/S 80HHC O F THE ACT BY EXCLUDING THE DEPB SALE PROCEEDS RECEIVED BY IT. R EPLY OF THE ASSESSEE WAS THAT AMENDED PROVISIONS WERE NOT CONSI DERED IN ORIGINAL ASSESSMENT. AS PER THE ASSESSEE, EVEN AN APPEAL F ILED AGAINST SUCH ASSESSMENT STOOD DECIDED IN ITS FAVOUR. AS SUCH, S ECTION 154 COULD NOT BE APPLIED. ACCORDING TO THE ASSESSEE, WHEN IT WA S GIVEN THE BENEFIT OF SECTION 80HHC TO THE PROCEEDS ON TRANSFER OF DEP B ENTITLEMENT, LAW WAS CORRECTLY APPLIED. FURTHER, AS PER THE AS SESSEE, ON THE BASIS OF A SUBSEQUENT AMENDMENT WHICH CAME INTO EFFECT RE TROSPECTIVELY, 154 PROCEEDINGS COULD NOT BE INITIATED. ASSESSING OFFICER WAS NOT IMPRESSED AND HE PROCEEDED WITH SUCH A RECTIFICATIO N AND RE-WORKED THE DEDUCTION U/S 80HHC OF THE ACT BY EXCLUDING TH E DEPB SALE CONSIDERATION RECEIVED, RELYING ON THE THIRD PROVIS O TO SECTION 80HHC. AS PER THE ASSESSING OFFICER, ASSESSEE HAD TURNOVE R EXCEEDING ` 10 I.T.A.NO.214/13 :- 3 -: CRORES, BUT COULD NOT FULFILL THE CONDITIONS PROVI DED IN THIRD PROVISO SATISFACTORILY. 3. ASSESSEES APPEAL BEFORE THE LD. CIT(A) WAS NOT SU CCESSFUL. ACCORDING TO HIM, RETROSPECTIVE AMENDMENT TO SECTIO N 80HHC THROUGH WHICH THIRD AND FOURTH PROVISOS WERE INTRODUCED WIT H RETROSPECTIVE EFFECT FROM 1.4.1998, GAVE THE ASSESSING OFFICER JU RISDICTION TO INVOKE THE RECTIFICATORY POWERS VESTED UPON HIM, U/S 154 OF THE ACT. 4. NOW, BEFORE US, LD. A.R OF THE ASSESSEE, STRONGLY A SSAILING THE ORDERS OF THE AUTHORITIES BELOW, SUBMITTED THAT AMENDMENT MADE BY TAXATION LAWS (SECOND AMENDMENT ACT), 2005, WERE HELD TO BE PROSPECTIVE BY HON'BLE GUJARAT HIGH COURT IN THE CA SE OF AVANI EXPORTS AND OTHERS VS CIT, 348 ITR 391. AS PER LD. A.R OF THE ASSESSEE, IT WAS HELD BY THEIR LORDSHIPS THAT SUCH RETROSPECTIVE AMENDMENT COULD ONLY BE CONSIDERED PROSPECTIVELY AS OTHERWISE THERE WOULD BE DISCRIMINATION BETWEEN THOSE PERSONS WHOSE ASSESSME NTS WERE COMPLETED WITHOUT CONSIDERING THE AMENDED PROVISION S AND THOSE PERSONS WHOSE ASSESSMENTS WERE STILL TO BE COMPLETE D. IN ANY CASE, ACCORDING TO HIM, AN AMENDMENT IN LAW COULD NOT BE A BASIS FOR INITIATING RECTIFICTORY PROCEEDINGS. I.T.A.NO.214/13 :- 4 -: 5. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. HON'BLE APEX COURT IN THE CASE OF CIT VS MAX INDIA LTD. 295 ITR 282, HAS HELD THAT THE MECHANISM OF SECTION 80HHC HAD BE COME SO COMPLICATED OVER THE YEARS THAT TWO VIEWS WERE INHE RENTLY POSSIBLE. SUBSEQUENT AMENDMENTS IN 2005 TO SUCH A SECTION EVE N THOUGH RETROSPECTIVE, WILL NOT ATTRACT THE PROVISIONS OF S ECTION 263 OF THE ACT. IF A SUBSEQUENT AMENDMENT COULD NOT ATTRACT A REVIS IONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT, THERE IS NO WAY IT CAN BE CONSIDERED AS A MISTAKE WHICH IS APPARENT FROM THE RECORD, FOR INVOKING SECTION 154 OF THE ACT. IN ANY CASE, HON' BLE GUJARAT HIGH COURT IN THE CASE OF AVANI EXPORTS AND OTHERS VS CI T (SUPRA) HAS HELD THAT THE AMENDMENT COULD ONLY BE CONSTRUED PROSPEC TIVELY, BECAUSE OF DIFFERENTIATION MADE BETWEEN COMPLETED ASSESSMEN TS AND NON- COMPLETED ASSESSMENTS. WE ARE, THEREFORE, OF THE O PINION THAT WHETHER DEDUCTION U/S 80HHC COULD BE GIVEN TO DEPB SALE PROCEEDS AND IF SO WHAT WAS THE AMOUNT TO BE CONSIDERED WERE ALL DEBATABLE QUESTIONS NOT AMENABLE TO A RECTIFICATORY PROCEEDIN GS U/S 154 OF THE ACT. WE, THEREFORE, QUASH THE RECTIFICATORY PROCEE DINGS. I.T.A.NO.214/13 :- 5 -: 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 09 TH OF MAY, 2013, AT CHENNAI. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER DATED: 09 TH MAY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR