Praveen Industries (P) Ltd, V. ITO Ward 14 (1),

ITA 241/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5809 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 25-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK MITTAL
• Keywords: Competent authority
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE HONBLE PRESIDENT SHRI VIMAL GANDHI AND SHRI R.C. SHARMA ITA NO.241/D/08 ASSESSMENT YEAR : 2004-05 M/S PRAVEEN INDUSTRIES PVT. LTD., VS. INCOME -TAX OFFICER, 32, PHASE-II, INDL. ESTATE, BADLI, WARD-14(1), NEW DELHI-42 NEW DELHI PAN NO.AAACP4029K ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI RAVI PRATAP MALL, ADVOCA TE RESPONDENT BY : SHRI ASHOK MITTAL, CIT-DR O R D E R PER R.C. SHARMA, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A) DATED 19.12.2007 FOR THE ASSESSMENT YEAR 2004-05, IN THE MATTER OF ASSESSMENT FRAMED BY ASSESSING OFFICER UNDER SECTION 143(3) OF THE I.T. ACT. 2. VARIOUS GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE BUT ONLY GROUND PERTAINING TO COMPUTATION OF DEDUCTION U/S 80HHC WI TH RESPECT TO THE EXPORT INCENTIVE IN THE FORM OF DEPB RECEIPTS WAS CHALLENG ED. LEARNED AR ALSO PLACED ON RECORD THE ORDER OF ITAT MUMBAI SPECIAL B ENCH IN THE CASE OF I.T.A. NO.241/D/08 2 TOPMAN EXPORTS IN I.T.A. NO.5769/M/2006, WHEREIN IS SUE WITH REGARD TO COMPUTATION OF DEDUCTION U/S 80HHC ON DEPB RECEIPTS , WAS CONSIDERED. 2.1 WE HAVE CONSIDERED THE RIVAL CONTENTION AND FOU ND FROM THE RECORD THAT ASSESSEE HAS DECLARED EXPORT INCENTIVES IN THE FORM OF DEPB RECEIPTS AMOUNTING TO RS.78.85 LACS. HOWEVER, THE ASSESSING OFFICER DECLINED ASSESSEES CLAIM ON THE PLEAS THAT ACCORDING TO THE TAXATION LAWS (AMENDMENT ACT, 2005), THE ASSESSEE HAD NOT FULFILL ED CONDITIONS LAID DOWN UNDER CLAUSE A & B OF THIRD PROVISO INSERTED IN SEC TION 80HHC BY THE TAXATION LAWS (AMENDMENT ACT, 2005). HE ACCORDINGL Y DECLINED ASSESSEES CLAIM OF DEDUCTION U/S 80HHC WITH REGARD TO DEPB RE CEIPTS AND THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY CIT(A). THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2.2 WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORIT IES BELOW, THE ISSUE WITH REGARD TO COMPUTATION OF DEDUCTION U/S 80HHC O N THE EXPORT INCENTIVES RECEIVED IN THE FORM OF DEPB RECEIPTS HAVE BEEN DEA LT WITH BY THE ITAT MUMBAI SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS, WHEREIN FOLLOWING WAS THE OBSERVATION:- 89. THE QUESTION RAISED BEFORE THE SPECIAL BENCH H AS TWO PARTS. IN SO FAR AS THE FIRST PART : WHETHER THE ENTIRE AMOUNT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PR OFIT CHARGEABLE UNDER SECTION 28(IIID) OF THE INCOME TAX ACT, IS I.T.A. NO.241/D/08 3 CONCERNED, WE ANSWER IT IN NEGATIVE AND THE SECOND PART OF THE QUESTION : OR THE PROFIT REFERRED TO THEREIN REQUI RES ANY ARTIFICIAL COST TO BE INTERPOLATED? IS REPLIED IN AFFIRMATIVE TO THE EXTENT THAT THE FACE VALUE OF DEPB SHALL BE DEDUCTED FROM THE SALE PROCEEDS. AS REGARDS THE GROUNDS RAISED IN THESE A PPEALS AGAINST THE DENIAL OF DEDUCTION U/S 80HHC, IN FULL OR PART, WE FIND THAT THE COMPUTATION OF PROFITS DERIVED FROM E XPORTS AND THE RESULTANT AMOUNT OF DEDUCTION UNDER THIS SECTIO N CAN BE MADE ONLY WHEN THE DECISION IS TAKEN ON THE AMOUNT AND THE TIMING OF TAXABILITY OF THE FACE VALUE OF DEPB AND THE PROFIT ON ITS SALE. ON THIS ISSUE WE HOLD THAT THE FACE VALU E OF DEPB IS CHARGEABLE TO TAX U/S 28(IIIB) AT THE TIME OF ACCRU AL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DEPB IS FILED WIT H THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFIT ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DE PB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28(II ID) AT THE TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB SHALL ALSO H OLD GOOD FOR DFRC, ON BOTH ITS COMPONENTS, VIZ., THE FACE VALUE OF DFRC AND PROFIT ON ITS TRANSFER, EXCEPT FOR THE FACT THA T THE PROFIT ON SALE OF DFRC SHALL BE CHARGED TO TAX U/S 28(IIIE). THERE IS NO DISPUTE ABOUT THE DUTY DRAWBACK, WHICH SHALL BE CHA RGEABLE TO TAX AT THE TIME OF ACCRUAL OF INCOME U/S 28(IIIC) W HEN APPLICATION IS FILED WITH THE COMPETENT AUTHORITY A FTER MAKING EXPORTS. SINCE THE NECESSARY FACTS FOR THE DETERMI NATION OF THE QUANTUM OF DEDUCTION U/S 80HHC, AS DISCUSSED ABOVE, ARE NOT AVAILABLE ON RECORD. WE, THEREFORE, SET ASIDE THE IMPUGNED I.T.A. NO.241/D/08 4 ORDERS AND DIRECT THE AO TO COMPUTE THE AMOUNT OF R ELIEF IN ACCORDANCE WITH THE VIEW EXPRESSED BY US HERE IN AB OVE. 3. AS THE ISSUE IN THE INSTANT CASE ALSO PERTAINS T O COMPUTATION OF DEDUCTION ON DEPB RECEIPTS, FOLLOWING THE DECISION OF SPECIAL BENCH, WE RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OF FICER FOR COMPUTING DEDUCTION U/S 80HHC ON DEPB RECEIPTS IN TERMS OF TH E PROPOSITION LAID DOWN BY MUMBAI SPECIAL BENCH AS DISCUSSED HEREINABO VE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART, IN TERMS INDICATED HEREINABOVE. 5. THIS ORDER PRONOUNCED IN THE COURT ON 25-03-2010 . SD/- SD/- ( VIMAL GANDHI ) ( R.C. SHARMA ) PRESIDENT ACCOUNTANT MEMBER DATED : 25-03-2010. NS : COPY FORWARDED TO : - 1. M/S PRAVEEN INDUSTRIES PRIVATE LIMITED, 32, PHAS E-II, INDUSTRIAL ESTATE BADLI. MEW DE;JO-110042 2. INCOME TAX OFFICER, WARD-14(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY DY. REGISTRAR, I.T.A. NO.241/D/08 5