DCIT Range-I, Moradabad V. Marshal Exports, Moradabad

ITA 2393/DEL/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 7455 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 24-06-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA. NO.2393/D/08 ASSESSMENT YEAR : 2004-05 D.C.I.T., VS. M/S MARSHAL EXPORTS, RANGE-1, MORADABAD LAJPAT NAGAR, MORADABAD PAN NO.AAAAM 1375P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. CHAND, DR RESPONDENT BY: NONE ORDER PER K.G. BANSAL: AM: THIS APPEAL OF THE REVENUE EMANATES FROM THE ORDER OF CIT(A), BAREILLY, PASSED ON 18.03.2008 IN APPEAL NO.736/ACI T.1.MBD/06-07, AND IT PERTAINS TO ASSESSMENT YEAR 2004-05. THE C ORRESPONDING ASSESSMENT ORDER WAS FRAMED BY THE DCIT, RANGE-1, M ORADABAD ON 17.10.2006 UNDER THE PROVISIONS OF SECTION 143(3) O F THE INCOME-TAX ACT, 1961. 2. THE REVENUE HAS TAKEN TWO SUBSTANTIVE GROUNDS IN THE APPEAL, THE SUM AND SUBSTANCE OF WHICH IS THAT THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO CALCULATE DEDUCT IONS U/S 801B AND 80HHC ON GROSS TOTAL INCOME IN VIOLATION OF THE PRO VISION CONTAINED IN SECTION 801B(13) OF THE ACT. THE CASE WAS BLOCKED FOR THREE MONTHS ON 15.02.2008 AT THE REQUEST OF THE LEARNED COUNSEL FOR THE ASSESSEE AS THE ISSUE WAS PENDING BEFORE THE SPECIAL BENCH. IT WAS AGAIN 2 BLOCKED FOR THREE MONTHS ON 12.11.2008. THE NOTICE OF HEARING WAS THEREAFTER ISSUED, FIXING THE CASE ON 29.07.2010. 2.1 NONE ATTENDED ON BEHALF OF THE ASSESSEE ON THIS DATE WHILE THE LEARNED DR SHRI N.K. CHAND EXPLAINED THE LEGAL ISSU E INVOLVED IN REVENUES APPEAL. IT HAS BEEN SUBMITTED THAT AN ID ENTICAL ISSUE WAS DECIDED BY SPECIAL BENCH OF DELHI TRIBUNAL CONSISTI NG OF FIVE MEMBERS IN THE CASE OF ASSTT. COMMISSIONER OF INCOM E-TAX, RANGE-2, MORADABAD VS. HINDUSTAN MINT AND AGRO PRODUCTS (P) LTD. (2009) 119 ITD 107. THE QUESTION BEFORE THE SPECIAL BENCH WAS WHETHER IN VIEW OF THE PROVISIONS OF SECTION 801A(9) READ W ITH SECTION 801B(13), THE DEDUCTION OF INCOME UNDER CHAPTER-VI- A CAN BE ALLOWED ON THE ENTIRE PROFIT AND GAINS OF AN UNDERT AKING OR AN ENTERPRISE OF AN ASSESSEE OR IT HAS TO BE ALLOWED O N SUCH PROFITS AND GAINS AS ARE REDUCED BY THE DEDUCTION CLAIMED AND A LLOW U/S 801B/801A? THE SPECIAL BENCH DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. WHILE DOING SO T HE DECISION IN THE CASE OF SCM CREATION VS. ACIT (2008) 204 ITR 31 9 (MADRAS) WAS NOT FOLLOWED AND IT WAS MENTIONED THAT THE LATE R DECISION OF THE SAME COURT IN THE CASE OF JAIN OPTICS (ASIA) LTD. V S. DCIT DECIDED ON 27.12.2008 HAS MADE THE TASK OF THE BENCH EASIER . FINALLY, IT WAS HELD THAT IF DEDUCTION U/S 801A OR 801B IS ALLOWED, THE DEDUCTION U/S 80HHC SHALL BE ADMISSIBLE ON THE AMOUNT OBTAINED BY REDUCING THE DEDUCTION FROM THE GROSS TOTAL INCOME. THE RELEVAN T PORTION OF THE DECISION IN CASE OF HINDUSTAN MINT & AGRO PRODUCTS (SUPRA), CONTAINED IN PARAGRAPHS 36 & 37 IS REPRODUCED BELOW FOR READY REFERENCE: 3 36. SHRI VOHRA, ON THE APPLICABILITY OF THE DECISI ON OF HONBLE MADRAS HIGH COURT IN THE CASE OF SCM CREATI ONS (SUPRA), SUBMITTED THAT PRINCIPLE OF SUB-SILENCIO R ULE COULD NOT BE APPLIED TO THE DECISION OF HIGH COURT BEING DECISION OF A SUPERIOR COURT HAS TO BE GIVEN PREFER ENCE OVER THE DECISION OF ROGINI GARMENTS CASE (SUPRA) (SPECIAL BENCH). IN SUPPORT OF THIS CONTENTION, IT WAS SUBMITTED THAT EVEN DECISION OF NON-JURISDICTIONAL HIGH COURT IS TO BE GIVEN PREFERENCE OVER THE SPECIAL BE NCH DECISION. IN THIS CONNECTION, RELIANCE WAS PLACED ON THE DECISION OF MADRAS PRADESH HIGH COURT IN THE CASE O F NATIONAL TEXTILE CORPORATION LIMITED VS. CIT (2008) 171 TAXMAN 339 AS ALSO ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ALL INDIA LAKSHMI COMMERCIAL B ANK OFFICERS UNION VS. UNION OF INDIA (1984) 150 ITR 1. SHRI VOHRA ALSO SUBMITTED THAT CERTAIN OBSERVATIONS OF T HE BENCH OF ITAT IN THE CASE OF NODI EXPORTS (SUPRA), MORADABAD, CLEARLY EXCEEDED ITS JURISDICTION. AFTE R CAREFUL CONSIDERATION OF DECISION OF HONBLE MADRAS HIGH CO URT IN THE CASE OF SCM CREATIONS (SUPRA), WE HAVE ALREADY HELD THAT THE SAID DECISION CANNOT BE TREATED AS A PRECE DENT. THE ISSUE HAS BEEN DISCUSSED THREADBARE AND THOSE REASONS NEED NOT BE REPEATED AGAIN. OBSERVATIONS O F HONBLE MADRAS HIGH COURT IN THE LATER DECISION DAT ED 20.12.2008 IN CASE OF GENERAL OPTICS (ASIA) LTD. (S UPRA) HAS PUT THE CONTROVERSY BEYOND ANY SHADOW OF DOUBT. IN THE ABOVE CASE, AMENDMENT BROUGHT WITH EFFECT FROM 01.04.1999 INTRODUCING SECTIONS (9) AND (9A) IN 80- 1A AND 80-1B RESPECTIVELY WERE CLEARLY NOTICED. THESE AMENDMENTS WERE NOT BROUGHT TO THE KNOWLEDGE OF THE HONBLE COURT IN THE CASE OF SCM CREATIONS. THEREF ORE, THERE IS NO QUESTION OF SUPERSESSION OF SPECIAL BEN CH DECISION IN THE CASE OF ROGINI GARMENTS (SUPRA). T HE SAID DECISION IS APPLICABLE WITH FULL FORCE. WE DO AGREE THAT CORRECT PROPOSITIONS IN THE CASE OF NODI EXPOR TS (SUPRA) ARE OVERSTATED. THERE IS NO QUESTION OF TR IBUNAL NOT FOLLOWING AND APPLYING DECISION OF SUPERIOR COU RT. THE QUESTION INVOLVED HERE IS WHETHER DECISION OF SCM CREATIONS CANNOT BE TREATED AS A PRECEDENT. FOR TH E REASONS ALREADY GIVEN, THE SAID DECISION DID NOT LA Y DOWN 4 THAT SECTION 80-1A(9) OR 80-1B(13) SHOULD BE DISREG ARDED WHILE COMPUTING DEDUCTION U/S 80HHC OR OTHER DEDUCT ION UNDER CHAPTER C OF VI-A. 37. WE ACCORDINGLY HOLD THAT DEDUCTION TO BE ALLOWE D UNDER ANY OTHER PROVISION OF CHAPTER VI-A WITH THE HEADING C IS TO BE REDUCED BY AMOUNT OF DEDUCTION ALLOWED U/S 80-1B/80-1A OF THE INCOME-TAX ACT. WE ANSWER THE QUESTION REFERRED TO THE SPECIAL BENCH I N THE AFFIRMATIVE I.E. IN FAVOUR OF THE REVENUE. 2.2 AS THE AFORESAID DECISION HAS BEEN RENDERED BY A BENCH OF FIVE MEMBERS OF THE TRIBUNAL, IT HAS THE FORCE OF A BIND ING PRECEDENT. RESPECTFULLY FOLLOWING THE DECISION IT IS HELD THAT THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RECALCU LATE THE DEDUCTIONS U/S 80-1B AND 80HHC INDEPENDENTLY AND ON THE GROSS TOTAL INCOME. 3. IN RESULT, THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13.08.2010. ( RAJPAL YADAV ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER DT.13.08.2010. NS COPY FORWARDED TO:- 1. DCIT, RANGE-1, MORADABAD. 2. M/S MARSHAL EXPORTS, LAJPAT NAGAR, MORADABAD. 3. THE CIT 4. THE CIT (A), NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY BY ORDER (ITAT, NEW DELHI).