Shakti Polyweave Pvt.Ltd., Ahmedabad V. The CIT-IV, Ahmedabad

ITA 237/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62917 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-07-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 25-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Assessment record
• Section: 143(3); 80HHC; 80IB; 263

Judgement Text

ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, A HMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.A. NO.237/AHD/2010 (ASST. YEAR: 2001-02) SHAKTI POLYWEAVE PVT. LTD., 803 NARNARAYAN COMPLEX, NR.SWASTIK CHAR RASTA, NAVRANGPURA, AHMEDABAD. (APPELLANT) VS. THE COMMISSIONER OF INCOME TAX-IV, AHMEDABAD. (RESPONDENT) PAN: AACCS 1107M APPELLANT BY : NONE (WRITTEN SUBMISSIONS) RESPONDENT BY : MR. O.P. BATHEJA, SR. D.R. ( )/ ORDER DATE OF HEARING : 16 -7- 2012 DATE OF PRONOUNCEMENT : 24-8-2012 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT-IV, AHMEDABAD DATED 10-12-2009 FOR THE ASSESSMENT YEAR 2001-02. 2. THE ASSESSEE IN ITS APPEAL HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. THE APPELLANT SUBMIT THAT THE LD. CIT HAS GROSS LY ERRED IN LAW AND ON FACT TO PASS THE ORDER U/S. 263 OF THE I.T. ACT,1961 WITHOUT ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 2 CONSIDERING THE FACT THAT THE LD. A.O. HAS DULY CON SIDERED THE FACTS OF THE CASE AS WELL AS SUBMISSION OF THE ASSESSEE AT T HE TIME OF PASSING OF ORDER U/S. 143(3) R.W.S. 254 OF THE I.T. ACT. HE NCE, THE ORDER OF LD. CIT PASSED U/S. 263 OF THE ACT TO BE CANCELLED. 2. THE APPELLANT SUBMIT THAT THE LD CIT HAS GROSSLY ERRED IN LAW AND ON FACT TO PASS THE ORDER U/S. 263 OF THE I.T. ACT,1961 WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE PREFERRED AN APPEAL BEFORE HONBLE HIGH COURT OF GUJARAT AGAINST THE ORDER OF ITAT,AHMEDABAD AND THE SAME HAVE BEEN ADMITTED FOR HEARING THE ORD ER OF ITAT,AHMEDABAD AND THE SAME HAS BEEN ADMITTED FOR H EARING VIDE ORDER DATED 18-3-2009. HENCE, THE ORDER OF LD. CIT PASSED U/S. 263 OF THE ACT TO BE CANCELLED. 3. THE APPELLANT SUBMITS THAT THE LD. CIT HAS GROSS LY ERRED IN ALLOWING THE CLAIM U/S. 80HHC OF THE I. T. ACT,1961 AFTER DEDUCTING APPELLANTS CLAIM U/S. 80IB OF THE OF THE I.T. ACT, 1961 BE PERMITTED PRIOR TO CLAIM DEDUCTIBLE U/S. 80IB OF THE ACT,1961 AS CLAIMED BY THE APPELLANT. 4. THE APPELLANT SUBMIT THAT PENALTY U/S. 271(1)(C ) NOT TO BE IMPOSED ON DISALLOWING THE APPELLANTS CLAIM U/S. 8 0HHC /80IB IN VIEW OF CHANGE IN OPINION. 3. ON THE DATE OF HEARING ON 22-5-2012 NONE APPEARE D ON BEHALF OF THE ASSESSEE AND THEREFORE THE MATTER WAS ADJOURNED TO 16-7-2012. HOWEVER, AGAIN ON 16-7-2012 NONE APPEARED ON BEHALF OF THE A SSESSEE BUT ON THE BASIS OF WRITTEN SUBMISSIONS FILED ON 22-5-2012, TH E BENCH DECIDED TO PROCEED WITH THE MATTER. 4. IN THIS CASE THE ASSESSEE HAS CHALLENGED THE ORD ER OF LD. CIT U/S. 263 OF THE ACT. ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 3 5. THE FACTS OF THE CASE ARE THAT IN THIS CASE ASSE SSMENT WAS MADE U/S. 143(3) OF THE ACT ON 5-3-2003 AND THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.9,94,390/- AFTER ALLOWING DEDUCTIO N U/S. 80HHC OF RS.56,82,205/- AND DEDUCTION U/S. 80IB OF RS.4,26,1 66/-. THE A.O. COMPUTED DEDUCTION OF RS.4,26,166/- U/S. 80IB AFTER ALLOWING DEDUCTION OF RS.56,82,205/- U/S. 80HHC. AGAINST THE ORDER OF A.O . ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A). CIT (A) VIDE ORDER DATED 21-8-2003 ALLOWED THE APPEAL OF THE ASSESSEE AND DIRECTED A.O. TO ALLOW D EDUCTION U/S. 80IB ON THE TOTAL INCOME BEFORE REDUCING DEDUCTION U/S. 80H HC. AGAINST THE ORDER OF THE LD. CIT (A), REVENUE PREFERRED APPEAL BEFORE THE HON. TRIBUNAL. HONBLE TRIBUNAL VIDE ITS ORDER DATED 14-11-2007 AL LOWED THE APPEAL OF REVENUE AND FOLLOWING THE DECISION OF SPL. BENCH IN THE CASE OF CIT VS. ROGINI GARMENTS 108 ITD 49 (SB) DIRECTED THE A.O. T O REWORK THE CLAIM FOR DEDUCTION BY DIRECTING THAT RELIEF U/S.80IA BE DEDU CTED FROM THE PROFITS AND GAINS OF BUSINESS BEFORE COMPUTING RELIEF U/S. 80HH C. PURSUANT TO THE ORDER OF TRIBUNAL, ASSESSMENT ORDER WAS PASSED ON 1 5-4-2009. WHILE PASSING THE ORDER THE A.O. ALLOWED THE RELIEF U/S. 80HHC ON THE ENTIRE GROSS TOTAL INCOME WITHOUT REDUCING DEDUCTION U/S. 80IB. ON VERIFICATION OF THE ASSESSMENT RECORDS, THE CIT WAS, THUS OF THE VI EW THAT THE ORDER OF A.O. FRAMED U/S. 143(3) R.W.S.254 ON 15-4-2009 WAS NOT IN ACCORDANCE WITH THE DIRECTIONS OF HONBLE ITAT AND THUS THE ORDER P ASSED WAS BOTH ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY NOTICE U/S. 263 WAS ISSUED TO ASSESSEE ON 16-11-2009. IN RESPONSE TO THE NOTICE, THE ASSESSEE INTERALIA SUBM ITTED THAT ITAT HAD DIRECTED THE A.O. TO FOLLOW THE DECISION OF CHENNAI SPECIAL BENCH IN THE CASE OF ACIT VS. ROGINI GARMENTS (108 ITD 49 (SB).H OWEVER, MADRAS HIGH ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 4 COURT IN THE MATTER OF SCM CREATION VS. ACIT HAS D ECIDED THE MATTER IN FAVOUR OF THE ASSESSEE ON IDENTICAL FACTS. A.O. HAD FOLLOWED THE DECISION IN MADRAS HIGH COURT AND THEREFORE, THE ORDER CANNOT B E TERMED AS ERRONEOUS AND PREJUDICIAL. CIT DID NOT AGREE WITH THE CONTENT IONS OF THE ASSESSEE IN VIEW OF THE FACT THAT HONBLE ITAT IN ITS ORDER HAD ISSUED SPECIFIC DIRECTION TO THE A.O. TO RE-WORK THE DEDUCTION U/S. 80HHC AFT ER DEDUCTING CLAIM OF DEDUCTION U/S. 80IB. CIT WAS OF THE VIEW THAT SINCE THE ITAT IS SUPERIOR JUDICIAL FORUM, THE A.O. WAS NOT AT LIBERTY TO GO I NTRO THE MERITS OF THE DECISION AND APPLY THE RATIO OF SOME OTHER DECISION . WITH RESPECT TO THE DECISION OF MADRAS HIGH COURT IN THE CASE OF SCM CR EATION VS. ACIT WHICH WAS REFERRED BY THE ASSESSEE, CIT OBSERVED THAT THE HONBLE MADRAS HIGH COURT HAD NOT TAKEN COGNIZANCE OF THE MATERIAL CHAN GES BROUGHT BY THE INSERTION OF SUB-SECTION (9) IN SECTION 80IA W.E.F. 1-4-1999.HE ALSO REFERRED TO THE SPECIAL BENCH DECISION OF ITAT DELHI IN THE CASE OF HINDUSTAN MINT AND AGRO PRODUCTS PVT. LTD. VS. ACIT MORADABAD IN I TA NO.1537/DEL/07(2009) 119 ITD 107 (DEL) WHEREIN THE DECISION OF MADRAS HIGH COURT WAS CONSIDERED AND THE SPECIAL BENCH HEL D THAT DEDUCTION UNDER ANY OTHER PROVISION OF CHAPTER VIA WITH THE H EADING C IS TO BE REDUCED BY THE AMOUNT OF DEDUCTION ALLOWED U/S. 80I A OF THE ACT. IN VIEW OF THESE FACTS CIT MODIFIED THE ASSESSING OFFICERS OR DER DATED 15-4-2009 BY CALCULATING THE DEDUCTION U/S. 80HHC BEFORE ALLOWIN G DEDUCTION U/S. 80IB. AGAINST THE AFORESAID ORDER OF CIT, ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US IN THE WRITTEN SUBMISSION, THE ASSESSE E SUBMITTED THAT THE MATTER OF DEDUCTION WAS CONSIDERED BY TWO ASSESSING OFFICERS IN THEIR ASSESSMENT ORDERS DATED 5-3-2003 AND 15-4-2009. HE THEREFORE, SUBMITTED ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 5 THAT PROVISIONS OF SECTION 263 CANNOT BE APPLIED WH EN THE MATTER HAS ALREADY BEEN DISCUSSED BY THE A.O. FOR THIS PROPOS ITION HE RELIED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. HONDA SIEL PRODUCTS LTD.(DEL) (2010) 235 CTR 336. IT WAS ALSO SUBMITTED THAT SINCE THE MATTER OF CLAIM OF DEDUCTION U/S. 80HHC AND 80IB HAS ALREA DY BEEN DECIDED BY THE CIT (A), REVISION OF ASSESSMENT CANNOT BE DONE IN VIEW OF THE PROVISION OF SECTION 263(1)(C). FOR THIS PROPOSITION HE RELIE D ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF RANKA JEWELLERS VS . ADDL. CIT (2011) 238 CTR 153.(BOM.).IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE HONBLE GUJARAT HIGH COURT AGAINST THE ORDER OF ITAT AND THE SAME HAS BEEN ADM ITTED FOR HEARING. IT WAS THUS SUBMITTED THAT THE A.O. HAD CORRECTLY ALLO WED THE DEDUCTION U/S. 80HHC AND 80IA OF THE ACT AND THEREFORE, CIT WAS NO T RIGHT IN APPLYING THE PROVISIONS OF SECTION 263. 5. THE LD. D. R. ON THE OTHER HAND SUBMITTED THAT THE HONBLE ITAT VIDE ITS ORDER DATED 14-11-2007 HAD SPECIFICALLY DIRECTE D THE A.O. TO REWORK THE CLAIM OF DEDUCTION BY DEDUCTING THE RELIEF U./S.80I B FROM THE PROFIT BEFORE COMPUTING THE RELIEF U/S. 80HHC. IN VIEW OF THIS MA TTER THE A.O. WAS NOT ENTITLED TO GO TO THE MERITS OF THE DECISION AND AP PLY THE RATIO OF SOME OTHER DECISION. HE ALSO PLACED ON RECORD THE DECISION IN THE CASE OF CIT VS. HINDUSTAN MINT AND AGRO PRODUCTS (P) LTD. (SUPRA) W HERE THE SPL BENCH HAS HELD THAT THE DECISION OF MADRAS HIGH COURT IN THE CASE OF SCM CREATION CANNOT BE SAID TO BE VALID FOR PROPOSITION AS TO HOW THE PROVISIONS OF SECTION 80IA(9) WHICH HAVE BEEN MADE APPLICABLE W.E.F. 1999-00 ARE TO BE APPLIED. IT WAS FURTHER HELD THAT THE FACT AND I MPLEMENTATION OF SECTION ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 6 80IA(9) WERE NOT RAISED NOR EXAMINED, NOR DECIDED B Y THE MADRAS HIGH COURT. IT WAS THUS HELD THAT THE APPLICATION OF RES TRICTIONS AS UPHELD BY THE SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS WAS HE LD TO BE APPLICABLE FROM A.Y. 1999-00 ONWARDS. THE LD. D.R. FURTHER SUB MITTED THAT CIT IS EMPOWERED TO EXERCISE HIS POWERS U/S. 263 OF THE AC T WHEN THE ORDER OF ITO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE PRESENT CASE, SINCE A.O. HAS NOT FOLLOWED THE DIRECTIONS OF HONBLE ITAT THE ORDER CAN BE TERMED TO BE ERRONEOUS. FURTHER DUE TO THE M ETHOD FOLLOWED BY A.O. FOR COMPUTATION OF DEDUCTION U/S. 80HHC AND 80IB, T HERE IS LOSS OF REVENUE. ACCORDINGLY THE ORDER OF THE A.O. IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFOR E, IN THE PRESENT CASE THE CIT HAS RIGHTLY EXERCISED HIS REVISIONAL POWERS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS OF THE CASE IS THAT THE ASSESS EE IS ELIGIBLE FOR DEDUCTION U/S. 80HHC AND 80IB.DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) A.O. COMPUTED DEDUCTION U/S . 80IB ON THE INCOME REMAINING AFTER ALLOWING DEDUCTION U/S. 80HHC. ASSE SSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) HELD THAT DEDUCTION U/S. 80IB IS TO BE ALLOWED ON THE TOTAL INCOME AND BEFORE ALLOWING DEDUCTION U /S. 80HHC. AGAINST THE ORDER OF CIT (A), THE REVENUE CARRIED THE MATTER BE FORE HON. TRIBUNAL. HON. TRIBUNAL DIRECTED THAT THE DEDUCTION U/S. 80IB BE DEDUCTED FROM PROFITS BEFORE COMPUTING RELIEF U/S. 80HHC BY FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS. A.O. HOWEVER WORKED OUT THE DEDUCTION U/S. 80HHC ON THE ENTIRE INCOME WITHOUT R EDUCING THE DEDUCTION U/S. 80IB.THIS ORDER OF A.O. WAS CONSIDERED BY CIT TO BE ERRONEOUS AND ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 7 PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE REAS ON THAT SINCE ITAT IS A SUPERIOR JUDICIAL FORUM, THE A.O. WAS NOT AT LIBERT Y TO GO INTO THE MERITS OF THE DECISION AND APPLY THE RATIO OF SOME OTHER DECI SION. WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY CIT FOR THE REASON THAT IN THE CASE OF GARDEN SILK MILLS (1996) 221 ITR 861 (GUJ.),THE HON BLE HIGH COURT HAS HELD THAT THE DECISIONS REACHED BY TRIBUNAL OR THE HIGH COURT ARE BINDING UPON THE A.O. AND DISCIPLINE DEMANDS THAT HE SHOULD FOLLOW THE DECISION OF THE TRIBUNAL OR THE HIGH COURT AS THE CASE MAY BE. IT IS NOT OPEN FOR HIM TO IGNORE THE SAME ON THE GROUND THAT THE TRIBUNALS O R HIGH COURTS RULING ON THE QUESTION IS SUBJECT MATTER OF REVISION OR APPEA L BEFORE THE HIGHER FORUM. IF HE IS PERMITTED TO TAKE SUCH A VIEW, IT WOULD IN TRODUCE NOTHING BUT JUDICIAL INDISCIPLINE, WHICH IS NOT CALLED FOR. IT WOULD LEA D TO A CHAOTIC SITUATION. EVEN ON THE MERITS WE FIND THAT THE SPL. BENCH IN THE CA SE OF ACIT VS. HINDUSTAN MINT & AGRO (SUPRA) HAS HELD AS UNDER:- IN VIEW OF THE ABOVE SUBMISSIONS THE FIRST QUEST ION TO BE DECIDED IN THE CASE OF SCM CREATIONS(SUPRA) HAS IMP LIEDLY OVERRULED THE SPECIAL BENCHS DECISION OF ROGINI GARMENTS CA SE (SUPRA),NOTWITHSTANDING PROVISION OF SECTION 80-IA( 9). PERUSAL OF THE DECISION OF SCM CREATIONS (SUPRA) SHOWED THAT APPLICABILITY OF SECTION 80-IA (9) OR SIMILAR PROVI SION UNDER SECTION 80- IB WAS NOT CONSIDERED BY THE HIGH COURT IN THE SAID CASE. THOUGH THE CASE PERTAINED TO AN ASSESSMENT YEAR AFTER 1-4-1999 , YET THE PRE- AMENDED LAW WAS APPLIED. IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT DECIS ION OF THE MADRAS HIGH COURT IN SCM CREATIONS (SUPRA) IS AN AU THORITY FOR THE PROPOSITION AS TO HOW PROVISIONS OF SECTION 80-IA(9 ) MADE APPLICABLE WITH EFFECT FROM THE ASSESSMENT YEAR 1999-2000 ARE TO BE APPLIED. EFFECT AND IMPLEMENTATION OF ABOVE PROVISIONS WERE NEITHER RAISED, NOR EXAMINED NOR DECIDED BY THE MADRAS HIGH COURT. IN THE LATER ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 8 DECISION OF THE MADRAS HIGH COURT IN THE CASE OF GE NERAL OPTICS (ASIA) LTD. VS. SCIT (A) DECIDED ON 27-12-2008 WHE REIN SIMILAR QUESTION WAS RAISED, THE TRIBUNAL, AFTER FOLLOWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS (SUPRA ), HAD ALLOWED DEDUCTION UNDER SECTION 80HHC AFTER DEDUCTING RELIE F ALLOWED UNDER SECTION 80-IA(9). IT IS CLEAR FROM ABOVE THAT APPLICATION OF RESTRICT IONS AS UPHELD BY THE SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS (SUPRA) WAS HELD TO BE APPLICABLE FROM THE ASSESSMENT YEAR 1999 -2000 ONWARDS. IN THE LIGHT OF ABOVE DISCUSSION, IT WAS TO BE HELD THAT DECISION OF THE MADRAS HIGH COURT IN THE CASE OF SCM CREATIONS (SUP RA) DID NOT IMPINGE UPON THE RATIO OF THE SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS (SUPRA). IT WAS, ACCORDINGLY, HELD THAT TH E BENCHES OF THE TRIBUNAL, WHICH HAVE TAKEN A VIEW CONTRARY TO THE V IEW OF ROGINI GARMENTS CASE (SUPRA) DID NOT CORRECTLY APPRECIATE THE LEGAL POSITION. 7. WE FIND THAT BY NOT FOLLOWING THE DIRECTIONS OF CIT, THE ORDER PASSED BY A.O. IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FURTHER THE CASE LAWS RELIED UPON BY THE LD. A.R.AR E DISTINGUISHABLE ON FACTS. IN VIEW OF THE TOTALITY OF FACTS, WE ARE OF THE VIEW THAT CIT HAS RIGHTLY EXERCISED POWER U/S. 263 AND IT DOES NOT CALL FOR I NTERFERENCE FROM OUR SIDE. WE THUS UPHOLD THE ORDER PASSED BY CIT U/S. 263. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 24- 8- 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT AC COUNTANT MEMBER ITA NO.2 37 /AHD/2010 ASST YEA RS 2001- 02 . 9 AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) XX, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD 1.DATE OF DICTATION 16 - 7 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 7,8,21 / 8 / 2012 MEMBER.OTHER MEMBER . 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 23 - 8 - 2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 24 - 8 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 24 - 8 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 24 - 8 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..