M/s. G-Tex Exports, Surat V. The Income tax Officer, Ward-2(4), Surat

ITA 2743/AHD/2006

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0237 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 08-12-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PAHUJA, ACCOUNTANT MEMBER ITA NO.2743-2744/AHD/2006 & ITA NO.4600-4601/AHD/2007 ASSESSMENT YEARS:2000-01, 2002-03 TO 2004-05 DATE OF HEARING:13.1.10 DRAFTED:15.1.10 M/S. G-TEX EXPORTS, D- 3008, SURAT TEXTILE MARKET, RING ROAD, SURAT PAN NO.AACFG7304D V/S. COMMISSIONER OF INCOME TAX, CIRCLE-2, SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- WRITTEN SUBMISSIONS REVENUE BY:- SHRI SHELLEY JINDAL, CIT, DR O R D E R PER BENCH:- THESE FOUR APPEALS BY THE ASSESSEE ARE ARISING OUT OF DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX(APPEALS)-II, SURAT IN AP PEAL NOS.CAS/II/018-019/06-07 & CAS/II/41 & 468/06-07, 07-08 OF DIFFERENT DATE 05 -10-2006, 15-10-2007 AND 24-10- 007. THE ASSESSMENTS WERE FRAMED BY THE ITO WARD-2( 4) AND WARD-2(2) SURAT AND ACIT CIRCLE-2, SURAT, U/S.143(1) R.W.S 143(3) R.W.S . 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE THEIR D IFFERENT ORDERS DATE 20-02,2006, 23- 02-2006, 30-04-2007 AND 28-12-2006 FOR THE ASSESSME NT YEARS 2000-01, 2002-03 TO 2004-05 RESPECTIVELY. 2. THE FIRST COMMON ISSUE IN THESE APPEALS OF ASSES SEE IS AS REGARDS TO DEPB ENTITLEMENTS AND ALSO WHETHER THE ENTIRE SALE CONSI DERATION IS TO BE EXCLUDED OR ONLY PROFIT ELEMENT IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION ITA NO.2743-2744, 4600-4601/AHD/2006 A.YS 00-01,02-03 TO 04-05 M/S. G-TEX EXPORTS V. CIT CIR-, SURAT PAGE 2 U/S.80HHC OF THE ACT. FOR THIS, THE ASSESSEE HAS R AISED THE COMMON ISSUE IN ALL THE YEARS AS UNDER:- WHETHER THE ENTIRE AMOUNT RECEIVED ON SALE OF DEPB ENTITLEMENT REPRESENTS PROFIT CHARGEABLE U/S.28(IIID) OF THE INCOME TAX AC T, AND ACCORDINGLY WHILE CALCULATING DEDUCTION U/S.80HHC OF THE ACT, WHETHER THE ENTIRE AMOUNT OF DEPB IS TO BE EXCLUDED FROM THE PROFIT OF THE BUSIN ESS OR ONLY THE PROFIT ON SALE THEREOF IS TO BE EXCLUDED. 3. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AND R EQUESTED FOR DISPOSAL OF THESE APPEALS. THE LD. CIT DR, SHRI SHELLY JINDAL FAIRLY STATED THAT THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE SPECIAL BENCH OF THI S TRIBUNAL IN THE CASE OF TOPMAN EXPORTS V. ITO (2009) 318 ITR (AT) 87 (MUM) (SB), WHEREIN IT IS H ELD THAT ONLY THE NET PROFIT OF DEPB SHOULD BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80HHC OF THE ACT. HE REFERRED TO THE CASE LAW IN THE CASE OF TOPMAN EXPORTS (SUPRA) AND STATED THAT THE ISSUE CAN BE REVERT BA CK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE ISSUE IN TERMS OF TOPMAN EXPORTS (SUPRA). THE LD. CIT DR FURTHER STATED THAT THE ASSESSING OFFICER BE DIRECT ED TO COMPUTE THE ELIGIBILITY OF DEPB AND ALSO THE COST INCURRED BY THE ASSESSEE FOR ACQUIRING DEPB AND THEN DECIDE THE CLAIM OF DEDUCTION U/S.80HHC OF THE ACT. WE FIND THAT THE PLEA OF THE LD. CIT DR IS QUITE REASONABLE AND ACCORDINGLY WE DIREC T THE ASSESSING OFFICER TO COMPUTE THE ELIGIBILITY OF DEPB AND ALSO THE COST I NCURRED BY THE ASSESSEE FOR ACQUIRING DEPB AND THEN DECIDE THE CLAIM OF DEDUCTI ON U/S.80HHC OF THE ACT. ACCORDINGLY THIS COMMON ISSUE OF THE ASSESSEES APP EALS IS ALLOWED FOR STATISTICAL PURPOSES. 4. THE NEXT COMMON ISSUES IN ASSESSMENT YEARS 2002- 03 AND 2003-04 IS AS REGARDS TO AD HOC DISALLOWANCE OF TELEPHONE EXPENSE S AT 1/5 TH AND ALSO AD HOC DISALLOWANCE OF GENERAL EXPENSES AT 1/10 TH IN ASSESSMENT YEAR 2003-04. 5. AFTER HEARING THE LD. CIT DR AND GOING THROUGH T HE WRITTEN SUBMISSIONS, WE FIND THAT THE ASSESSEES CASE IS VOLUME OF BUSINESS IS HAVING TURNOVER OF MORE THAN RS.13 CRORES, THE TELEPHONE EXPENSES CLAIMED AT THE OFFICE PREMISES OF THE ASSESSEE, THE PERSONAL USER DOES NOT ARISE. AS REG ARDS TO GENERAL EXPENSES, THE ASSESSEE EXPLANATION IS THAT IN FACT THE AMOUNT OF EXPORT EXPENSES WAS TREATED AS GENERAL EXPENSES, WHEREAS THE GENERAL EXPENSES WAS RS.8,741/-. WE FIND FROM THE ITA NO.2743-2744, 4600-4601/AHD/2006 A.YS 00-01,02-03 TO 04-05 M/S. G-TEX EXPORTS V. CIT CIR-, SURAT PAGE 3 ABOVE THAT IT IS NOT THE CASE OF THE REVENUE THAT T HE EXPENSES ARE PERSONAL IN NATURE AND EVEN IT IS NOT THE CASE THAT THE TELEPHONE WAS USED FOR PERSONAL PURPOSES. THERE IS NO BASIS FOR DISALLOWANCE OF THESE EXPENSE S. ACCORDINGLY, WE DELETE THE DISALLOWANCE ON BOTH THE ISSUES AND ACCORDINGLY, TH E SAME IS ALLOWED IN BOTH THE YEARS. 5. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13/01/2010 SD/- SD/- (A.N.PAHUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 13/01/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD