ACIT, CHENNAI V. M/s. May (India) Laboratories Pvt Ltd., CHENNAI

ITA 222/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58159 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 03-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B NANDHA KUMAR
• Keywords: Retrospective amendment
• Section: 80HHC; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 220, 221 & 222/MDS/2012 (ASSESSMENT YEARS : 2001-02, 2002-03 & 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI - 600 034 . (APPELLANT) V. M/S MAY (INDIA) LABORATORIES P. LTD., NARBAVI, NO.3, LAKSHMANAN STREET, T. NAGAR, CHENNAI - 600 017. PAN : AABCM8772F (RESPONDENT) C.O. NOS. 38, 39 & 40/MDS/2012 (IN I.T.A. NOS. 220, 221 & 222/MDS/2012) (ASSESSMENT YEARS : 2001-02, 2002-03 & 2004-05) M/S MAY (INDIA) LABORATORIES P. LTD., (SINCE AMALGATED WITH CAPLIN POINT LABORATORIES LTD.), NO.3, LAKSHMANAN STREET, T. NAGAR, CHENNAI - 600 017. (CROSS-OBJECTOR) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI - 600 034 . (RESPONDENT) REVENUE BY : SHRI B. NANDHA KUMAR, JCIT ASSESSEE BY : SHRI VIKRAM VIJAYARAGHAVAN DATE OF HEARING : 29.03.2012 DATE OF PRONOUNCEMENT : 29.03.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THESE APPEALS OF THE REVENUE, ITS GRIEVANCE IS THAT CIT(APPEALS) DIRECTED THE A.O. TO DEDUCT 90% OF SAL E PROCEEDS OF I.T.A. NO. 220 TO 222/MDS/12 C.O. NOS. 38 TO 40/MDS/12 2 DEPB CREDIT UNDER CLAUSE (BAA) OF EXPLANATION TO SE CTION 80HHC OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WHILE COM PUTING ELIGIBLE DEDUCTION UNDER THE SAID SECTION. AS PER THE REVEN UE, SUCH DIRECTION OUGHT HAVE BEEN LIMITED TO PROFITS DERIVE D BY THE ASSESSEE FROM TRANSFER OF DEPB CREDIT. AGAINST THIS COMMON GROUND TAKEN BY THE REVENUE, ASSESSEE IN ITS CROSS-OBJECTIONS, IS A GGRIEVED THAT CIT(APPEALS) DID NOT DIRECT THE ASSESSING OFFICER T O EXCLUDE ONLY PROFIT ON SALE OF DEPB SINCE, AS PER THE ASSESSEE, THE DECISION OF HONBLE APEX COURT IN THE CASE OF TOPMAN EXPORTS V. CIT (342 ITR 49), THE A.O. WAS TO EXCLUDE ONLY THE PROFIT ON SAL E OF DEPB AND NOT THE SALE PROCEEDS. ONE MORE GRIEVANCE RAISED BY T HE ASSESSEE IN ITS CROSS-OBJECTIONS IS THAT CIT(APPEALS) DID NOT D ELETE THE INTEREST LEVIED UNDER SECTION 234B OF THE ACT. ACCORDING TO ASSESSEE, THE DISALLOWANCE MADE UNDER SECTION 80HHC OF THE ACT AR OSE OUT OF RETROSPECTIVE AMENDMENT MADE IN THE SAID SECTION IN 2005 AND IN VIEW OF CBDTS CIRCULAR NO.2 OF 2006 DATED 17.1.200 6, NO SUCH INTEREST COULD BE LEVIED. 2. WHEN THE MATTER CAME UP FOR HEARING, LEARNED COU NSELS OF BOTH SIDES POINTED OUT THAT HONBLE APEX COURT IN THE RE CENT DECISION IN THE CASE OF TOPMAN EXPORTS (SUPRA), HAS CLEARLY LAI D DOWN THE LAW REGARDING TREATMENT OF DEPB AT THE TIME OF APPLYING OF DEPB CREDIT I.T.A. NO. 220 TO 222/MDS/12 C.O. NOS. 38 TO 40/MDS/12 3 AS WELL AS AT THE TIME OF SALE OF DEPB CREDITS WHIL E COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. 3. NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(AP PEALS) HAD THE WISDOM OF THE RECENT JUDGMENT OF HONBLE APEX COURT (SUPRA) WHILE DEALING WITH THE ISSUE REGARDING CLAIM OF THE ASSES SEE UNDER SECTION 80HHC OF THE ACT INSOFAR AS DEPB CREDITS AND SALE P ROCEEDS WERE CONCERNED. IN SUCH A SITUATION, WE ARE OF THE OPIN ION THAT THE MATTER REQUIRES FRESH LOOK BY THE ASSESSING OFFICER. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW INSOFAR AS THE ISSUE OF DEPB CREDIT IS CONCERNED, FOR CORRECT CALCULATION OF DEDUCTION AVAILABLE TO THE ASSESSEE UNDER SECTION 80HHC OF THE ACT, CONSIDERIN G THE LAW LAID DOWN BY HONBLE APEX COURT. 4. INSOFAR AS THE ISSUE OF INTEREST UNDER SECTION 2 34B OF THE ACT IS CONCERNED, IT MAY ALSO BE CONSIDERED AFRESH BY THE A.O. AFTER GIVING A CHANCE TO THE ASSESSEE TO EXPLAIN THAT CIRCULAR N O.2 OF 2006 DATED 17.1.2006 WAS APPLICABLE TO IT. THE A.O. SHALL PRO CEED IN ACCORDANCE WITH LAW. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND CROSS- OBJECTIONS OF THE ASSESSEE ARE ALLOWED FOR STATISTI CAL PURPOSES. I.T.A. NO. 220 TO 222/MDS/12 C.O. NOS. 38 TO 40/MDS/12 4 ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 29 TH MARCH, 2012. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH MARCH, 2012. KRI. COPY TO: (1) ASSESSEE (2) ASSESSING OFFICER (3) CIT(A)-VI, CHENNAI (4) CIT-III, CHENNAI (5) D.R. (6) GUARD FILE