M/S. J.B. ENTERPARISES, V. THE ITO 21(3)(3),

ITA 2311/MUM/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1020 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 14-07-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 24-03-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K BALODIA
• Assessee Lawyers: R P SINGH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.2311/MUM/2005 ASSESSMENT YEAR : 2001-02 M/S. J.B. ENTERPRISES (FIRM) 10-11, SHIVAI INDL. ESTATE KURLA ANDHERI ROAD MUMBAI-400 072. ..( APPELLANT ) P.A. NO. (AAAFJ 1374 L) VS. INCOME TAX OFFICER WARD-21(3)(3) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI R.P. SINGH RESPONDENT BY : SHRI N. K. BALODIA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED NIL PASSED BY THE LD. CIT U/S.263 OF TH E INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2001-02. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF EXPORTS OF MADE-UPS & CURTAINS, FILED RETURN DECLARING TOTAL INCOME OF RS .5,35,050/-. HOWEVER, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF ITA NO.2311/M/05 A.Y:01-02 2 RS.6,29,870/- AFTER ALLOWING DEDUCTION U/S.80HHC RS.34,88,526/- , VIDE ORDER DATED NIL PASSED U/S.143(3) OF THE ACT. SUBSEQUENTLY ON PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSES SING OFFICER, THE LD. CIT NOTICED THAT (I) THE ASSESSEE HAS REDUCED RS.1,26,707/- BEING DISCOUNT RECEIVED AND MISCELLANEOUS INCOME RS .13,591/- FROM THE DIRECT COST WHILE WORKING OUT THE DEDUCTION U/S .80HHC INSTEAD OF BEARING THE SAME TO THE TAX, (II) THE ASSESSING OFF ICER HAS FAILED TO CARRY OUT FULL AND PROPER ENQUIRIES TO ASCERTAIN TH E VERACITY OF LOSS OF RS.6,42,696/- AND (III) THE RECEIPT OF DEPB OF RS.3 0,79,852/- WHICH ARE NOT COVERED U/S.28(III)(A), 28(III)(B) AND 28(I II)(C) BUT ARE TAXABLE U/S.28(IV) OF THE ACT HAVE BEEN CONSIDERED WHILE CO MPUTING THE DEDUCTION U/S.80HHC OF THE ACT. THE LD. CIT AFTER CONSIDERING THE ASSESSEE'S SUBMISSION WHILE REJECTING THE SAME HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND HEN CE HE SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER PASSED BY THE LD. C IT THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.2311/M/05 A.Y:01-02 3 4. IN GROUND NO.1 AND 2 THE ASSESSEE CONTENDED THAT THERE WAS DIRECT NEXUS BETWEEN THE EXPORT AND DEPB CREDIT, TH E SAID RECEIPTS ARE DERIVED FROM EXPORT AND HENCE ELIGIBLE FOR DEDU CTION U/S.80HHC READ WITH THE PROVISO TO SEC.80HHC(3). 5. IN GROUND NO.3 THE ASSESSEE CONTENDED THAT THE LD. CIT ERRED IN HOLDING THAT THE ASSESSING OFFICER FAILED TO CAR RYOUT FULL AND PROPER ENQUIRY INTO THE VERACITY OF LOSS OF 6,42,969/- WI THOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS DECLARED THE INCOME OF R S.5,35,050/-. 6. IN GROUND NO.4 THE ASSESSEE CONTENDED THAT THE CIT ERRED IN HOLDING THAT THE DISCOUNT OF RS.1,26,707/- FROM SUP PLIERS ON PURCHASE AND RECOVERY OF STITCHING CHARGES AND SAMPLES OF RS .13,591/- COULD NOT BE DEDUCTED FROM THE DIRECT COST FOR THE PURPOS E OF DEDUCTION U/S.80HHC WITHOUT APPRECIATING THAT THE DISCOUNT WA S IN FACT AN ABATEMENT OF PRICE FOR PURCHASE OF MATERIAL, WHICH ALONG WITH OTHER RECEIPTS WOULD GO TO REDUCE THE DIRECT COST. 7. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE IN RESPECT OF GOUND NO.1 AND 2 SUBMITS THAT THE ASSESS EES TOTAL TURNOVER OF BUSINESS IS RS.3,73,07,895/- AND EXPORT TURNOVER OF BUSINESS IS RS.3,70,07,895/- WHICH IS NOT EXCEEDING RS.10.00 CRORES, ITA NO.2311/M/05 A.Y:01-02 4 THEREFORE, THE ASSESSEE IS ENTITLED TO A DEDUCTION U/S.80HHC ON THE AMOUNT RECEIVED ON THE TRANSFER OF DEPB. HE THEREF ORE SUBMITS THAT THE ORDER PASSED BY THE LD. CIT ON THIS ISSUE IS LI ABLE TO BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 8. WITH REGARD TO GROUND NO.3 AND 4 THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE HAS NO OBJECTION IF THE IS SUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE AFRESH . 9. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE LD. CIT. 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. BY THE SECOND PROVISO TO SECTION 80HHC(3) OF THE ACT IT WAS PROVIDED THAT IN THE CASE OF AN ASSESSEE HAVING AN EXPORT TURNOVER NOT EXCEEDING RS.10 CRORES, THE PR OFITS COMPUTED UNDER SECTION 80HHC(3) SHALL BE INCREASED BY 90% O F THE SUM REFERRED TO IN SECTION 28(IIID). BY THE 3 RD PROVISO IT WAS PROVIDED THAT IN THE CASE OF AN ASSESSEE HAVING AN EXPORT TURNOV ER EXCEEDING RS.10 CRORES, THE PROFITS COMPUTED UNDER SECTION 80 HHC(3) SHALL BE INCREASED BY 90% OF THE SUM REFERRED TO IN SECTION 28(IIID) SUBJECT TO THE TWO CONDITIONS SET OUT THEREIN. ITA NO.2311/M/05 A.Y:01-02 5 11. APPLYING THE ABOVE PROVISIONS OF LAW TO THE FAC TS OF THE PRESENT CASE WE FIND THAT THE SAID PLEA WAS NOT TAKEN BY TH E ASSESSEE BEFORE THE LD. CIT. ACCORDING TO THE LD. CIT THE INCOME R ECEIVED ON THE SALE OF DEPB OF RS.30,79,582/- IS CLEARLY NOT COVERED U/ S.28(III)(A), 28(III)(B) AND 28(III)(C) BUT ARE TAXABLE U/S.28(IV ) OF THE ACT . THIS BEING SO AND KEEPING VIEW THE FACT THAT THE ASSESS EE AT THIS STAGE IS NOT DISPUTING THE OTHER OBJECTIONS OF THE LD.CIT T AKEN IN GROUND NO.3 AND 4, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE LD. CIT IN GROUN D NO.1 AND 2 AND SEND BACK THE MATTER TO THE FILE OF THE ASSESSING O FFICER WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVAT IONS HEREINABOVE AND ACCORDING TO LAW INCLUDING THE RECENT DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. KALPATARU COL OURS AND CHEMICALS IN INCOME TAX APPEAL (LODG.)NO.2887 OF 2009 DATED 2 8/29 JUNE, 2010 AFTER PROVIDING REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THE REFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2311/M/05 A.Y:01-02 6 12. WITH REGARD TO GROUND NO.3 AND 4 THE LD. COUNSE L FOR THE ASSESSEE SUBMITS THAT HE HAS NO OBJECTION IF THE IS SUES ARE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. THAT BEING S O AND KEEPING IN VIEW THAT THE LD. CIT HAS ALREADY SET ASIDE THE ISSUES T O THE FILE OF THE ASSESSING OFFICER, THE GROUNDS TAKEN BY THE ASSESSE E ARE, THEREFORE, REJECTED. 13. IN THE RESULT THE ASSESSEE'S APPEAL STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.7.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.7.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.2311/M/05 A.Y:01-02 7 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 14.7.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 14.7.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 23.7.2010 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 26.7.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER