SHREE KRISHNA DYEING & PRINTING WORKS, MUMBAI V. DCIT CIR 17(3), MUMBAI

ITA 2395/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7190 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 24-03-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 15-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED USMAN
• Keywords: Business income; Set aside
• Section: 80HHC; 80HH; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I: MUMBAI BEFORE SMT P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.2395/MUM/2009 ASSESSMENT YEARS 1999-2000 SHREE KRISHNA DYEING & PRINTING WORKS, B/4, GIRI VIHAR DARSHAN, MOSA KILLEDAR STREET, JACOB CIRCLE, MUMBAI -400 0011 PAN AACFS 3424 J VS D C OF INCOME-TAX, CIRCLE 17(3), PIRAMAL CHAMBERS, PAREL, MUMBAI (APPELLANT) (RESPONDENT) FOR APPELLANT : NONE FOR RESPONDENT : SHRI MOHAMMED USMAN ORDER PER RAJENDRA SINGH, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.12.2008 OF CIT (A) FOR THE ASSESSMENT YEAR 1999-2000. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING ALLOWABILITY OF DEDUCTION U/S 80HHC IN RESPECT OF D EPB RECEIPTS. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO WAS DOING THE BUSINESS OF EXPORTING READYMADE GARMENTS, TEXTILE ITEMS ETC HAD RECEIVED A SUM OF RS 26,92,493/- ON T RANSFER OF DEPB LICENSES. THE ASSESSEE HAD DEDUCTED 90% OF DEPB IN COME FROM THE PROFIT OF THE BUSINESS AS PER EXPLANATION (BAA) AND HAD ALSO INCREASED THE PROFIT OF BUSINESS BY 90% OF DEPB RECEIPTS IN T HE RATIO OF EXPORT TURNOVER TO THE TOTAL TURNOVER AS PER FIRST PROVISO TO SECTION 80HHC(3). THE ASSESSING OFFICER, HOWEVER, HELD THAT ENTIRE RE CEIPTS WERE COVERED SHREE KRISHNA DYEING & PRINTING WORKS ITA 2395/M/2009 2 BY SECTION 28(IIID) AND, THEREFORE, SINCE THE TURNO VER OF THE ASSESSEE EXCEEDED 10 CRORES THESE WERE COVERED BY THE 3RD PR OVISO TO SECTION 80HHC(3) AS PER WHICH THE PROFIT COULD BE INCREASED ONLY WHEN THE TWO CONDITIONS MENTIONED THEREIN WERE SATISFIED. I N THIS CASE, SINCE THE ASSESSEE HAD NOT SATISFIED THE TWO CONDITIONS M ENTIONED IN THE THIRD PROVISO, THE ASSESSING OFFICER DID NOT INCREA SE THE PROFIT AS PER THE THIRD PROVISO TO SECTION 80HHC(3). IN APPEAL, CIT (A) AGREED WITH THE ASSESSING OFFICER THAT THE ENTIRE RECEIPTS ON T RANSFER OF DEPB LICENSES WERE PROFIT U/S 28(IIID) AND ACCORDINGLY H ELD THAT THE ASSESSING OFFICER HAD RIGHTLY DENIED THE BENEFIT TO THE ASSESSEE UNDER THE PROVISO TO SECTION 80HHC(3). AGGRIEVED BY THE SAID DECISION, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, NO ONE APPEARED TO REPRESENT THE CAS E ON BEHALF OF THE ASSESSEE THOUGH THE NOTICE OF HEARING HAD BEEN GIVEN WELL IN TIME. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING T HE LEARNED DEPARTMENTAL REPRESENTATIVE WHO PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY O F DEDUCTION U/S 80HHC IN RESPECT OF DEPB INCOME. THE ASSESSEE HAD TREATE D THE ENTIRE SALE PROCEED OF DEPB LICENSES AMOUNTING TO RS 26,92,493/ - AS BUSINESS PROFIT U/S 28(IIIA)/28(IIIB) AND ACCORDINGLY INCREA SED THE PROFIT OF BUSINESS BY 90% OF SAID INCOME IN THE RATIO OF EXPO RT TURNOVER TO THE TOTAL TURNOVER AS PER FIRST PROVISO TO SECTION 80HH C(3). THE AUTHORITIES BELOW, HOWEVER, TREATED THE ENTIRE SALE PROCEEDS OF DEPB LICENSES AS PROFIT OF BUSINESS U/S 28(IIID) AND HAD ACCORDINGLY APPLIED THE THIRD PROVISO TO SECTION 80HHC(3) AS PER WHICH THE PROFIT COULD BE INCREASED ONLY WHEN THE TWO CONDITIONS MENTIONED THEREIN WERE SATISFIED. ON SHREE KRISHNA DYEING & PRINTING WORKS ITA 2395/M/2009 3 CAREFUL CONSIDERATION WE FIND THAT THE ISSUE RAISED IS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN CA SE OF TOPMAN EXPORTS VS ITO (318 ITR 87) IN WHICH IT HAS BEEN HELD THAT FACE VALUE OF DEPB LICENSES IS BUSINESS INCOME U/S 28(IIIB) AND EXCESS OF SALE PROCEEDS OVER THE FACE VALUE IS BUSINESS PROFIT U/S 28(IIID) . THE ISSUE IS THEREFORE REQUIRED TO BE EXAMINED IN THE LIGHT OF T HE DECISION OF SPECIAL BENCH. WE, THEREFORE, SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFF ICER FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGH T OF THE DECISION OF SPECIAL BENCH (SUPRA) AND AFTER ALLOWING OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30TH DAY OF MARC H 2010. SD/- SD/- (P MADHAVI DEVI) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATE: 30TH MARCH, 2010 . COPY TO 1. THE APPELLANT. 2. THE RESPONDENT 3. CIT(A)-XXVII, MUMBAI. 4. CIT CITY-17, MUMBAI. 5. D R I BENCH, MUMBAI. 6. GUARD FILE. BY ORDER / / TRUE COPY / / ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI *CHAVAN/- SHREE KRISHNA DYEING & PRINTING WORKS ITA 2395/M/2009 4 SNO DATE INITIALS 1 DRAFT DICTATED ON 24-03-2010 SR.P.S 2. DRAFT PLACED BEFORE AUTHOR 25-03-2010 30-03-2010 SR.P.S 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S 6. KEPT FOR PRONOUNCEMENT ON SR.P.S 7. FILE SENT TO THE BENCH CLERK SR.P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER