Meghmani Industries Ltd., Ahmedabad V. The Dy.CIT., Cent.Circle-1, Ahmedabad

ITA 2209/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94849 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 02-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH SR D R
• Keywords: Retrospective amendment; Question of law
• Section: 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2209/AHD/2011 ( / ASSESSMENT YEAR : 2004-05) MEGHMANI INDUSTRIES LTD. 27, PHASE-1, GIDC VATVA, AHMEDABAD / VS. THE DCIT CENTRAL CIRCLE-1(1) AHMEDABAD ./ ./ PAN/GIR NO. : AABCM 0535 G ( ' / APPELLANT ) .. ( #' / RESPONDENT ) ' $ / APPELLANT BY : MS.URVASHI SHODHAN, AR #' % $ / RESPONDENT BY : SHRI DINESH SINGH, SR.DR &'( % ) / DATE OF HEARING 18/11/2015 *+, % ) / DATE OF PRONOUNCEMENT 07/12/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD [CIT(A) IN SHORT] DATED 03/06/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2004-05. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- (WITHOUT PREJUDICE TO EACH OTHER) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE REALIZED THAT IN ALL PROBABILITY THE IMPUGNED ASSESSMENT ORDER DATED 31.3.2010 WAS BARRED BY LIMITATION AND HENCE A NULLITY IN LAW. ITA NO.2209/AHD /2011 MEGHMANI INDUSTRIES LTD. VS. DCIT ASST.YEAR 2004-05 - 2 - 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE CIT(A) SHOULD HAVE CANCELLED THE ADJUSTMENTS MA DE BY THE ASSESSING OFFICER IN THE COMPUTATION OF DEDUCTION U /S.80HHC. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE UPHELD THE ASSESSEES OBJECTION TO THE LEVY OF INTERESTS U/S.234A, U/S.234B, U/S.234C AND U/S.234D PARTICULA RLY BECAUSE THE LIABILITY AROSE PRIMARILY ON ACCOUNT OF RETROSPECTI VE AMENDMENT OF THE ACT BROUGHT ABOUT SUBSEQUENTLY BY THE FINANCE A CT, 2005 ON THE ASPECT OF DISALLOWANCE U/S.80HHC IN RESPECT OF DEPB INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/3/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MAD ADJUSTMENT INTO THE DEDUCTION CLAIMED U/S.80HHC OF THE ACT. THE AO EXCLUDED THE EXCISE DUTY AND SALES TAX FROM THE TUR NOVER AND ALSO ADDED THE DEPB INCOME. THE AO ALSO DIRECTED TO CHARGE TH E INTEREST U/S.234A, 234B, 234C & 234D OF THE ACT AS PER LAW. THE ASSE SSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER, PREFERRED AN APP EAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. APROPOS TO GROUND NO.1 WHICH IS AGAINST THE ASSE SSMENT BEING BARRED BY TIME, NO EFFECTIVE ARGUMENT WAS MADE BY T HE LD.COUNSEL FOR THE ITA NO.2209/AHD /2011 MEGHMANI INDUSTRIES LTD. VS. DCIT ASST.YEAR 2004-05 - 3 - ASSESSEE DURING THE COURSE OF HEARING. THEREFORE, THE SAME IS DISMISSED AS SUCH. 4. APROPOS TO GROUND NO.2, THE LD.COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASS ESSEE BY THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT V. DYNTEX DYECHEM LTD. REPORTED AT (2014) 42 TAXMANN.C OM 227 (GUJARAT). 4.1. ON THE CONTRARY, THE LD.SR.DR SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. WE FIND THAT THE HONBLE HIGH COURT OF GUJARAT HAD FRAMED THE FOLLOWING SUBSTANTIAL QUESTION OF LAW AS UNDER:- WHETHER THE APPELLATE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE EXCISE D UTY AND SALES TAX FROM THE TOTAL TURNOVER COMPUTING DEDUCTION U/S.80H HC? 5.1. THE HONBLE HIGH COURT OF GUJARAT ANSWERED THI S QUESTION IN PARA-7 OF THE JUDGEMENT, WHICH READS AS UNDER:- 7. APPLYING RATIO LAID DOWN BY THE HONBLE SUPREM E COURT IN THE CASE OF LAKSHMI MACHINE WORKS (SUPRA) AND SHIVA TEX YARN LTD. (SUPRA) AS WELL AS RECENT DECISION OF THIS COURT IN TAX APPEAL NO.884 OF 2006 AND OTHER ALLIED APPEALS, TO THE FACTS OF THE CASE ON H AND THE QUESTION RAISED IN THE PRESENT TAX APPEAL IS ANSWERED AGAINST THE R EVENUE AND IT IS HELD THAT THE LEARNED TRIBUNAL HAS NOT COMMITTED ANY ERR OR IN HOLDING THAT THE COMPONENTS OF SALES TAX AND CENTRAL EXCISE DO N OT FORM PART OF SALE PROCEEDS FOR THE PURPOSE OF SECTION 80HHC OF THE AC T DESPITE INSERTION OF SECTION 145A OF THE ACT. ITA NO.2209/AHD /2011 MEGHMANI INDUSTRIES LTD. VS. DCIT ASST.YEAR 2004-05 - 4 - 5.2. THE LD.SR.DR COULD NOT POINT OUT HOW THE JUDGE MENT AS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE IS NOT APPL ICABLE ON THE FACTS OF THE PRESENT CASE. THEREFORE, RESPECTFULLY FOLLOW ING THE JUDGEMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS . DYNTEX DYECHEM LTD.(SUPRA), WE HEREBY DIRECT THE AO TO INCLUDE THE SALES TAX AND EXCISE DUTY IN THE TURNOVER OF THE ASSESSEE FOR THE PURPOS E OF COMPUTING THE DEDUCTION U/S.80HHC OF THE ACT AND, ACCORDINGLY, RE COMPUTE THE DEDUCTION U/S.80HHC OF THE ACT. THUS, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 6. GROUND NO.3 IS AGAINST CHARGING OF CHARGING OF I NTEREST U/S.234A, U/S.234B, U/S.234C AND U/S.234D OF THE ACT. THE LD .COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS-CUM-SYNOPSIS. 6.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE I N THE STATEMENT OF FACTS- CUM-SYNOPSIS IS AS UNDER:- ITA NO.2209/AHD /2011 MEGHMANI INDUSTRIES LTD. VS. DCIT ASST.YEAR 2004-05 - 5 - 11. IN REGARD TO THE LEVY OF INTEREST U/S.234A, 234B, 234C AND 234D THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE AS SESSEE WAS MERELY ENTITLED TO CONSEQUENTIAL RELIEF. 12. IT IS SUBMITTED THAT THE ASSESSMENT ORDER ITSEL F RECORDS THAT RETURN OF INCOME WAS FILED ON 31.12.2004. OBVIOUSLY, IT W AS FILED WITHIN THE TIME ALLOWED U/S.139 AND HENCE INTEREST U/S.234A WA S NOT AT ALL LEVIABLE. 13. FURTHER, INTEREST U/S.234B AND U/S.234 HAS BEE N CHARGED WITH REFERENCE TO THE INCOME FINALLY ASSESSED. IT IS SU BMITTED THAT ON THE SPECIAL FACTS AND CIRCUMSTANCES OF THIS CASE THESE ITEMS OF INTEREST WERE NOT CHARGEABLE PARTICULARLY WHEN LOWER DEDUCTION U/ S.80HHC AND HENCE HIGHER SUM OF TOTAL INCOME IS DETERMINED ON A CCOUNT OF A SUBSEQUENTLY BROUGHT ABOUT RETROSPECTIVE AMENDMENT OF THE INCOME-TAX ACT BY THE FINANCE ACT, 2005. 14. IN REGARD TO INTEREST U/S.234C IT IS SUBMITTED THAT IT IS QUANTIFIED WITH REFERENCE TO THE RETURNED INCOME AND ON THAT B ASIS THE ASSESSEE HAD COMPUTED INTEREST U/S.273C; THAT FIGURE CAME TO RS.1,87,991 AND DESERVES TO BE ACCEPTED. 7.1. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSES SEE IS THAT THE RETURN OF INCOME WAS FILED WELL BEFORE THE DUE DATE. THER EFORE, THE AUTHORITIES WERE NOT JUSTIFIED IN CHARGING THE INTEREST U/S.234 A OF THE ACT. WE FIND THAT THE AO HAS RECORDED THAT THE ASSESSEE HAD FILE D THE RETURN ON 31/10/2014. AS PER THE ASSESSEE, THE RETURN OF INC OME WAS FILED BEFORE THE PRESCRIBED DATE. THIS FACT REQUIRES VERIFICATI ON AT THE END OF THE AO AND IF THE AO FINDS THAT THE RETURN WAS FILED WITHI N THE PRESCRIBED TIME, IN THAT EVENT, THE AO WOULD DELETE THE INTEREST CHARGE D U/S.234A OF THE ACT. IN RESPECT OF CHARGING OF INTEREST U/S.234B & U/S.2 34D OF THE ACT, IT IS ITA NO.2209/AHD /2011 MEGHMANI INDUSTRIES LTD. VS. DCIT ASST.YEAR 2004-05 - 6 - SUBMITTED THAT THE INTEREST HAVE BEEN CHARGED WITH REFERENCE TO INCOME FINALLY ASSESSED. IT IS SUBMITTED THAT ON THE PECU LIAR FACTS AND CIRCUMSTANCES OF THE CASE, THESE ITEMS OF INTEREST ARE NOT CHARGEABLE PARTICULARLY WHEN LOWER DEDUCTION U/S.80HHC AND, HE NCE, HIGHER SUM OF TOTAL INCOME IS DETERMINED ON ACCOUNT OF A SUBSEQUE NTLY BROUGHT ABOUT RETROSPECTIVE AMENDMENT OF THE INCOME-TAX ACT BY TH E FINANCE ACT, 2005. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION O F THE SUBMISSIONS OF THE LD.COUNSEL FOR THE ASSESSEE. AS PER SECTION 23 4B OF THE ACT, AN ASSESSEE WHO IS LIABLE TO PAY ADVANCE TAX UNDER SEC TION 208 HAS FAILED TO PAY SUCH ADVANCE TAX WOULD BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ASSESSED TAX. IN THE CASE IN HAND, THE AMENDMENT WAS BROUGHT ON THE STATUTE BOOK RETROSPECTIVELY. THEREFORE, IN OUR C ONSIDERED VIEW, THE AO WAS NOT JUSTIFIED IN CHARGING THE INTEREST FOR FAIL URE TO PAY THE ADVANCE TAX IN RESPECT OF THE ITEMS WHICH WERE EARLIER EXCLUDED FROM TAXABLE INCOME AND INCLUDED BY WAY OF RETROSPECTIVE AMENDMENT. IN RESPECT OF CHARGING OF INTEREST U/S.234D OF THE ACT, THE ISSUE IS RESTO RED BACK TO THE FILE OF AO TO DECIDE THE SAME IN ACCORDANCE WITH LAW, THEREFOR E NO INTERFERENCE IS CALLED FOR. IN RESPECT OF CHARGING OF INTEREST U/S .234C OF THE ACT, IT IS SUBMITTED THAT IT IS QUANTIFIED WITH REFERENCE TO T HE RETURNED INCOME AND ON THAT BASIS THE ASSESSEE HAD COMPUTED INTEREST U/ S.271C OF THE ACT, THAT FIGURE CAME TO RS.1,87,991/- AND DESERVES TO BE ACC EPTED. IT IS SUBMITTED THAT THE INTEREST IS CHARGEABLE ON FAILURE TO PAY T HE ADVANCE TAX. SINCE THE CHARGING OF INTEREST IS WITH REFERENCE TO RETURNED INCOME U/S.234C OF THE ITA NO.2209/AHD /2011 MEGHMANI INDUSTRIES LTD. VS. DCIT ASST.YEAR 2004-05 - 7 - ACT, THE ISSUE IS RESTORED TO THE FILE OF AO TO VER IFY WHETHER THE INTEREST HAS BEEN COMPUTED WITH REFERENCE TO RETURNED INCOME OR NOT AND AO IS DIRECTED TO DECIDE THE SAME ACCORDINGLY. THUS, THE SE ISSUES ARE ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.4 IS GENERAL IN NATURE WHICH REQUIRES NO INDEPENDENT ADJUDICATION. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 7 TH DAY OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 07/ 12 /2015 0)..& , '.&../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 123 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A)-I, AHMEDABAD 5. 5'6 &23 , ) 23 , , 1 / DR, ITAT, AHMEDABAD 6. 689 :( / GUARD FILE. / BY ORDER, #5 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD