AIA Engineering Ltd., Ahmedabad V. The ACIT.,Circle-1, Ahmedabad

ITA 2746/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89575 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Retrospective amendment
• Section: 80HHC; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2746/AHD/2011 ( / ASSESSMENT YEAR : 2004-05) AIA ENGINEERING LTD. 115, GVMM ESTATE ODHAV ROAD, ODHAV AHMEDABAD 382 415 / VS. THE ASST.CIT CIRCLE-1 AHMEDABAD ' ./ ./ PAN/GIR NO. : AABCA 2777 J ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '%( / APPELLANT BY : SHRI TUSHAR HEMANI, AR &''%)( / RESPONDENT BY : SHRI M.K. SINGH, SR.DR *) / DATE OF HEARING 14/05/2015 +,-.) / DATE OF PRONOUNCEMENT 05/06/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-6, AHMEDABAD (CIT(A) IN SHORT) DATED 04/10/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2004-05. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 2 - YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD PRESENTS THIS APPEAL AGAINST THE SAME BEFORE YOUR HONOR ON THE FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERR ED BOTH IN LAW AND ON FACTS IN HOLDING THAT ASSESSING OFFICER'S ACTION IN REDUCING THE CLAIM OF DEDUCTION U/S. 80HHC BY RS. 30,85,077/- WAS CORRECT . ON THE FACTS AND CIRCUMSTANCES AS WELL AS IN VIEW OF THE CORRECT LEG AL POSITION, THE DEDUCTION U/S. 80HHC IN RESPECT OF EXPORT INCENTIVES OUGHT TO HAVE BEEN ALLOWED AS CLAIMED. IT IS SUBMITTED THAT THE SAME BE HELD SO N OW. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERR ED IN LAW AND ON FACTS IN NOT ALLOWING THE GROUND OF THE APPELLANT THAT DEDUC TION U/S. 80HHC WAS ALLOWABLE AS CLAIMED IN THE RETURN OF INCOME CONSID ERING THE EXPORT INCENTIVES AS INCOME U/S. 28 OF THE INCOME TAX ACT. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERR ED IN LAW AND ON FACTS IN HOLDING THAT AS THE EXPORT TURNOVER EXCEEDED RS. 10 CRORES, THE APPELLANT WAS NOT ENTITLED TO ANY DEDUCTION U/S. 80HHC IN RESPECT OF DEPB INCOME. 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUG HT TO HAVE ORDERED TO GRANT THE DEDUCTION U/S. 80HHC AS CALCULATED BY THE APPELLANT THE SAME BEING ALLOWABLE. THE SAME BE SO HELD NOW AND DEDUCTION BE ORDERED TO BE ALLOWED FULLY AS CLAIMED. 5. THE ORDER PASSED BY THE LD.COMMISSIONER OF INCO ME-TAX (APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS . IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 6. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. 2. THIS IS SECOND ROUND OF LITIGATION. THE ONLY EF FECTIVE GROUND IN THIS APPEAL IS REGARDING THE CLAIM OF DEDUCTION U/S .80HHC OF THE ACT ON ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 3 - THE DEPB INCOME. THE LD.CIT(A) HAS RECORDED IN PAR A-2.1 OF HIS ORDER THE DIRECTION OF THIS TRIBUNAL WHICH READS AS UNDER :- 2.1 THE A.O. HAS STATED IN THE ASSESSMENT ORDE R DTD.22/11/2010 WHICH IS UNDER: 'THE HON'BLE ITAT VIDE ITS ORDER UNDER CONSIDERATIO N IN ITA NO.2940/AHD/2006 DATED-05/10/2009 HAS SET ASIDE AND RESTORED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND KEEPING IN VIEW THE DECISION OF THE SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS VS. ITO. THE RELEVANT PART OF THE ORDER OF THE HON'BLE ITAT IS REPRODUCED HEREUNDER: '5.2 IN THE LIGHT OF AFORESAID FINDINGS OF THE SPEC IAL BENCH AND THE UNDISPUTED SUBMISSIONS OF THE ID. A.R. WE CONSIDER IF FAIR AND APPROPRIATE TO SET ASIDE THE O RDER OF THE ID. CIT(A) AND RESTORE THE MATTER TO THE FILE O F THE AO FOR DECIDING THE ISSUE RELATING TO CLAIM OF DEDUCTI ON U/S. 80HHC OF THE ACT IN RELATION TO THE AMOUNT OF DEPB, AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFI CIENT OPPORTUNITY TO THE ASSESSEE AND KEEPING IN VIEW THE AFORESAID DECISION OF THE SPECIAL BENCH. WITH THESE DIRECTIONS, GROUND NOS. I TO 3 IN THE APPEAL ARE DI SPOSED OF.' 2.2. IN PURSUANCE OF THE DIRECTION OF THE TRIBUNAL, THE ASSESSING OFFICER (AO IN SHORT) PASSED ORDER DATED 22/11/2010 U/S.143 (3) R.W.S.254 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT). THE ASSESSEE FEELING AGGRIEVED BY THE ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) CONFIRMED THE ADDITION MA DE BY THE A.O. ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 4 - 2.3. AGAINST THE AFORESAID FINDING OF THE LD.CIT(A) , THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE AO DID NOT FOLLOW THE DIRECTION GIVEN BY THE HONBLE ITAT TO FOLLOW THE DECISION OF THE SPECIAL BENCH OF ITAT, MUMBAI IN TH E CASE OF TOPMAN EXPORTS VS. ITO (125 TTJ (MUMBAI)[SB] 289 ON THE BA SIS THAT THE DECISION OF THE SPECIAL BENCH WAS OVERRULED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CH EMICALS RENDERED IN ITA NO.2887 OF 2009. HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS. CIT REPORTED AT (201 2) 342 ITR 49(SC) HAS REVERSED THE JUDGEMENT OF THE HONBLE MUMBAI HI GH COURT RENDERED IN THE CASE OF CIT VS. KALPATARU COLOUR AND CHEMICA LS(SUPRA). 3.1. ON THE CONTRARY, LD.SR.DR FAIRLY CONCEDED THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS ISSUE B Y OBSERVING AS UNDER:- ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 5 - 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE; AS SESSMENT ORDER AND APPELLANTS SUBMISSION. THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80HHC ON DEPB INCOME WAS SET-ASIDE BY ITAT TO THE FILE OF AO TO BE DECIDED AS PER AMENDED PROVISIONS AND SPECIAL BENCH DECISION IN THE CASE OF TOPMAN EXPORTS. ASSESSING O FFICER EXAMINED THIS ISSUE IN DETAIL AND FOUND THAT APPELLANT DID N OT FULFILL THE REQUIREMENTS OF THE AMENDED PROVISIONS AND THE DECI SION OF SPECIAL BENCH OF ITAT IN THE CASE OF TOPMAN EXPORTS IS OVERRULED BY BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOU RS AND CHEMICALS. IT IS TRUE THAT THE MATTER IS PENDING IN SUPREME COURT HOWEVER AS THINGS STANDS TODAY, THE DECISION OF BOM BAY HIGH COURT IS BINDING AND THE SAME IS TO BE FOLLOWED. THE DECISION OF BOMBAY HIGH COURT IS QUOTED BY THE ASSESSING OFFICE R IN THE ASSESSMENT ORDER AND AS PER THAT APPELLANT IS NOT E NTITLED TO GET ANY RELIEF. IT IS WRONG ON THE PART OF APPELLANT TO CLAIM THAT DECISION OF TOP MAN EXPORTS IS TO BE APPLIED AS PER ITAT'S DIRECTION. WHEN THE SAID DECISION IS OVERRULED BY H IGH COURT, SUCH DECISION CANNOT BE APPLIED AND ACCORDINGLY ASSESSIN G OFFICER IS JUSTIFIED IN APPLYING BOMBAY HIGH COURT DECISION AN D REJECTING THE APPELLANT'S CLAIM OF DEDUCTION UNDER SECTION 80 HHC ON DEPB INCOME. THE ADDITION MADE BY THE AO IS ACCORDINGLY CONFIRMED. 4.1. WE FIND THAT THE HONBLE APEX COURT RENDERED I N THE CASE OF TOPMAN EXPORTS VS. CIT(SUPRA) HELD AS UNDER:- 22. THE AFORESAID DISCUSSION WOULD SHOW THAT WHERE AN ASSESSEE HAS AN EXPORT TURNOVER EXCEEDING RS. 10 CRORES AND HAS MADE PROFITS ON TRANSFER OF DEPB UNDER CL. (D) [SIC.-(II ID)] OF S. 28, HE WOULD NOT GET THE BENEFIT OF ADDITION TO EXPORT PRO FITS UNDER THIRD OR FOURTH PROVISO TO SUB-S. (3) OF S. 80HHC, BUT HE WOULD GET THE BENEFIT OF EXCLUSION OF A SMALLER FIGURE FROM 'PROF ITS OF THE BUSINESS' UNDER EXPLN. (BAA) TO S. 80HHC OF THE ACT AND THERE IS NOTHING IN EXPLN. (BAA) TO S. 80HHC TO SHOW THAT TH IS BENEFIT OF ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 6 - EXCLUSION OF A SMALLER FIGURE FROM 'PROFITS OF THE BUSINESS' WILL NOT BE AVAILABLE TO AN ASSESSEE HAVING AN EXPORT TURNOV ER EXCEEDING RS. 10 CRORES. IN OTHER WORDS, WHERE THE EXPORT TUR NOVER OF AN ASSESSEE EXCEEDS RS. 10 CRORES, HE DOES NOT GET THE BENEFIT OF ADDITION OF NINETY PER CENT OF EXPORT INCENTIVE UND ER CL. (IIID) OF S. 28 TO HIS EXPORT PROFITS, BUT HE GETS A HIGHER FIGU RE OF PROFITS OF THE BUSINESS, WHICH ULTIMATELY RESULTS IN COMPUTATION O F A BIGGER EXPORT PROFIT. THE HIGH COURT, THEREFORE, WAS NOT R IGHT IN COMING TO THE CONCLUSION THAT AS THE ASSESSEE DID NOT (SIC ) HAVE THE EXPORT TURNOVER EXCEEDING RS. 10 CRORES AND AS THE ASSESSE E DID NOT FULFILL THE CONDITIONS SET OUT IN THE THIRD PROVISO TO S. 8 0HHC(3), THE ASSESSEE WAS NOT ENTITLED TO A DEDUCTION UNDER S. 8 0HHC ON THE AMOUNT RECEIVED ON TRANSFER OF DEPB AND WITH A VIEW TO GET OVER THIS DIFFICULTY THE ASSESSEE WAS CONTENDING THAT TH E PROFITS ON TRANSFER OF DEPB UNDER S. 28(IIID) WOULD NOT INCLUD E THE FACE VALUE OF THE DEPB. IT IS A WELL-SETTLED PRINCIPLE OF STAT UTORY INTERPRETATION OF A TAXING STATUTE THAT A SUBJECT W ILL BE LIABLE TO TAX AND WILL BE ENTITLED TO EXEMPTION FROM TAX ACCORDIN G TO THE STRICT LANGUAGE OF THE TAXING STATUTE AND IF AS PER THE WO RDS USED IN EXPLN. (BAA) TO S. 80HHC READ WITH THE WORDS USED I N CLS. (IIID) AND (IIIE) OF S. 28, THE ASSESSEE WAS ENTITLED TO A DEDUCTION UNDER S. 80HHC ON EXPORT PROFITS, THE BENEFIT OF SUCH DEDUCT ION CANNOT BE DENIED TO THE ASSESSEE. 23. THE IMPUGNED JUDGMENT AND ORDERS OF THE BOMBAY HIG H COURT ARE ACCORDINGLY SET ASIDE. THE APPEALS ARE ALLOWED TO THE EXTENT INDICATED IN THIS JUDGMENT. THE AO IS DIRECTED TO C OMPUTE THE DEDUCTION UNDER S. 80HHC IN THE CASE OF THE APPELLA NTS IN ACCORDANCE WITH THIS JUDGMENT. THERE SHALL BE NO OR DER AS TO COSTS. 4.2. RELIANCE HAS BEEN PLACED BY THE LD.COUNSEL FOR THE ASSESSEE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF AVANI ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 7 - EXPORTS AND OTHERS VS. CIT REPORTED AT (2012) 348 I TR 391, WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER :- 26. ON CONSIDERATION OF THE ENTIRE MATERIALS ON RE CORD, WE, THEREFORE, FIND SUBSTANCE IN THE CONTENTION OF THE LEARNED COU NSEL FOR THE PETITIONERS THAT THE IMPUGNED AMENDMENT IS VIOLATIV E FOR ITS RETROSPECTIVE OPERATION IN ORDER TO OVERCOME THE DE CISION OF THE TRIBUNAL, AND AT THE SAME TIME, FOR DEPRIVING THE B ENEFIT EARLIER GRANTED TO A CLASS OF THE ASSESSEES WHOSE ASSESSMENTS WERE STILL PENDING ALTHOUGH SUCH BENEFIT WILL BE AVAILABLE TO THE ASSE SSEES WHOSE ASSESSMENTS HAVE ALREADY BEEN CONCLUDED. IN OTHER W ORDS, IN THIS TYPE OF SUBSTANTIVE AMENDMENT, RETROSPECTIVE OPERATION C AN BE GIVEN ONLY IF IT IS FOR THE BENEFIT OF THE ASSESSEE BUT NOT IN A CASE WHERE IT AFFECTS EVEN A FEWER SECTION OF THE ASSESSES. 27. WE, ACCORDINGLY, QUASH THE IMPUGNED AMENDMENT O NLY TO THIS EXTENT THAT THE OPERATION OF THE SAID SECTION COULD BE GIV EN EFFECT FROM THE DATE OF AMENDMENT AND NOT IN RESPECT OF EARLIER ASSESSME NT YEARS OF THE ASSESSEES WHOSE EXPORT TURNOVER IS ABOVE RS. 10 CRO RE. IN OTHER WORDS, THE RETROSPECTIVE AMENDMENT SHOULD NOT BE DETRIMENT AL TO ANY OF THE ASSESSEES. 4.3. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE APEX COURT RENDERED IN THE CASE OF TOPMAN EXPORTS VS. CIT(SUPR A) AND THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT REND ERED IN THE CASE OF AVANI EXPORTS AND OTHERS VS. CIT(SUPRA), WE HEREBY SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO ALLOW THE CLA IM OF THE ASSESSEE U/S.80HHC OF THE ACT IN RESPECT OF DEPB INCOME AND RE-COMPUTE THE DEDUCTION IN THE LIGHT OF THE ABOVE JUDGEMENTS OF T HE HONBLE APEX ITA NO.2746/AHD /2011 AIA ENGINEERING LTD. VS. ACIT ASST.YEAR 2004-05 - 8 - COURT AND HONBLE JURISDICTIONAL HIGH COURT. THUS, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 5 TH DAY OF JUNE, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05 / 06 /2015 2..,.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-6 AHMEDABAD 5. 78& 45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<* / GUARD FILE. ! / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 14.5.15 (DICTATION-PAD 6+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.5.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.05.06.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05.06.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER