M/s. CHOUDHARY GARMENTS, MUMBAI V. ACIT CIR. - 20(1), MUMBAI

ITA 2759/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7681 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-01-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 21-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: R R VORA
• Keywords: Reasonable cause; Difference of opinion; Change of opinion; Set aside
• Section: 80HHC; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. 2759 & 2760/MUM/2008 (ASSESSMENT YEARS: 2002-03 & 2004-05) M/S. CHOUDHARY GARMENTS DCIT - 20(1) PLOT NO. B-15, VEERA DESAI ROAD PIRAMAL CHAMBERS, 6 TH FLOOR NEAR MONGINIS, ANDHERI (W) VS. LALBAUG, MUMBAI 400013 MUMBAI 400053 PAN - AAAFC 1385 L APPELLANT RESPONDENT APPELLANT BY: SHRI R.R. VORA RESPONDENT BY: SHRI VIRENDRA OJHA O R D E R PER B. RAMAKOTAIAH, A.M. THESE APPEALS BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT(A) XX, MUMBAI DATED 10.06.2007 AND 05.07.2007 RESPECTIVELY . 2. THESE APPEALS ARE FIELD BELATEDLY BY 223 AND 209 DA YS RESPECTIVELY. THE REASONS FOR FILING THE APPEAL LATE HAS BEEN EXP LAINED THROUGH A CONDONATION APPLICATION FILED BY THE ASSESSEE ALONG WITH AN AFFIDAVIT BY SHRI KAMAL KUMAR CHOUDHARY, PARTNER OF THE FIRM. 3. AFTER GOING THROUGH THE CONTENTS OF THE CONDONATION APPLICATION WE FIND THAT THERE WAS A REASONABLE CAUSE IN NOT FILIN G THE APPEAL UNDER A BELIEF THAT THERE IS NO NEED TO FILE THE APPEALS AS SIMILA R ISSUES WERE INVOLVED IN ALL THESE APPEALS DECIDED BY THE CIT(A). KEEPING IN MIN D ALL THESE FACTORS AND LEGAL PRINCIPLES RELIED UPON, WE CONDONE THE DELAY IN FILING THE APPEALS BEFORE THE TRIBUNAL. 4. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - A.Y.: 2002-03 1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE A.O. IN REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE I .T. ACT BY ITA NO. 2759&2760/MUM/2008 M/S. CHOUDHARY GARMENTS 2 FOLLOWING HIS ORDERS OF PRECEDING YEARS, WITHOUT AP PRECIATING THE REASSESSMENT ON A MERE CHANGE OF OPINION, IS NOT JU STIFIED. 2) THE LEARNED CIT(A), IN THE CONTEXT OF DEDUCTION U/S 80-HHC, BY FOLLOWING HIS EARLIER ORDERS, HAS WRONGLY CONSIDERE D THE ENTIRE DEPB ENTITLEMENT RS.38,97,819/- INSTEAD OF PROFIT RS.N IL/ AS PER THE LANGUAGE SPECIFICALLY USED IN SECTION 28(IIID) AND THEREBY ERRED IN REDUCING THE QUANTUM OF DEDUCTION U/S 80-HHC OF THE I.T. ACT. A.Y.: 2004-05 1) THE LEARNED CIT(A), IN THE CONTEXT OF DEDUCTION U/S 80-HHC, BY FOLLOWING HIS EARLIER ORDERS, HAS WRONGLY CONSIDERE D THE ENTIRE DEPB ENTITLEMENT RS.2,42,16,025/- INSTEAD OF PROFIT RS .NIL/ AS PER THE LANGUAGE SPECIFICALLY USED IN SECTION 28(IIID) AND THEREBY ERRED IN REDUCING THE QUANTUM OF DEDUCTION U/S 80-HHC OF THE I.T. ACT. 5. DURING THE COURSE OF HEARING THE LEARNED COUNSEL DI D NOT PRESS GROUND NO. 1 FOR A.Y. 2002-03. HENCE, THIS GROUND IS DISMI SSED AS WITHDRAWN. 6. REGARDING GROUND NO. 2 FOR A.Y. 2002-03 AND GROUND NO. 1 FOR A.Y. 2004-05 THE ISSUE IS NOW STANDS COVERED BY THE DECI SION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S. TOPMAN EX PORTS VS. ITO 318 ITR (AT) 87 (MUM)(SB). THEREFORE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE A.O. W ITH THE DIRECTION TO RECOMPUTE THE DEDUCTION UNDER SECTION 80HHC IN ACCO RDANCE WITH THE VIEW TAKEN BY THE SPECIAL BENCH IN THE AFORESAID CASE. N EEDLESS TO SAY THAT THE ASSESSEE SHOULD BE ALLOWED REASONABLE OPPORTUNITY O F BEING HEARD BY THE A.O. IN THE FRESH PROCEEDINGS. 7. ASSESSEE HAS RAISED ADDITIONAL GROUNDS IN A.Y. 2004 -05. SINCE THESE ARE PURELY LEGAL ISSUES AND THE FACTS ARE AVAILABLE WITH THE AUTHORITIES THE SAME ARE ADMITTED. 8. ADDITIONAL GROUND NO. 1 IS WITH REFERENCE CONFIRMIN G THE ACTION OF THE A.O. IN DENYING DEDUCTION UNDER SECTION 80HHC IN RE SPECT OF SALE OF SCRAP. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO TH E FOLLOWING DECISIONS THROUGH WHICH THE ISSUE WAS COVERED IN FAVOUR OF TH E ASSESSEE: - (I) SONY INDIA (P) LTD. V. DCIT (DEL. H) 118 TTJ 865 (II) CLAAS INDIA LTD. V. ACIT (DEL. A ) 119 TTJ 173 (III) BHARAT HEAVY ELECTRICALS LTD. (98 TTJ 565) (DEL.) (IV) NIRMA INDUSTRIES LTD. V. ACIT (95 I TD 199)(SB) ITA NO. 2759&2760/MUM/2008 M/S. CHOUDHARY GARMENTS 3 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT NONE OF THESE DECISIONS HAVE CONSIDERED THE RA TIO OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. K. RAVI NDRANATHAN NAIR (295 ITR 228) IN WHICH IT WAS HELD THAT OTHER CHARGES ARE RE QUIRED TO BE INCLUDED IN THE TOTAL TURNOVER AND THE SAME CANNOT BE INCLUDED IN THE BUSINESS PROFITS. THEREFORE, THE DECISION IS REQUIRED TO BE FOLLOWED. 10. IN THE REJOINDER, THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT IN THE CASE OF K. RAVINDRANATHAN NAIR (SUPRA) THE I SSUE WAS RELATED TO THE PROCESSING CHARGES AND NOT SALE OF SCRAP. 11. AFTER CONSIDERING THE ISSUE WE ARE OF THE OPINION T HAT THE NATURE OF SALE OF SCRAP HAS TO BE EXAMINED BY THE AO. THEREF ORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS MATTER TO THE FILE OF TH E ASSESSING OFFICER TO DECIDE THE NATURE OF INCOME FROM SALE OF SCRAP AND DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF K. RAVINDRANATHAN NAIR (SUPRA) AS WELL AS THE DECISIONS OF THE TRIBUN AL IN THE CASE OF SONY INDIA (P) LTD. V. DCIT, CLASS INDIA LTD. VS. ACIT, BHARAT HEAVY ELECTRICALS LTD., NIRMA INDUSTRIES LTD. VS. ACIT (SUPRA). ISSUE RESTO RED TO THE FILE OF AO. 12. ADDITIONAL GROUND NO. 2 IS WITH REFERENCE TO THE DE NIAL OF DEDUCTION UNDER SECTION 80HHC IN RESPECT OF OCTROI REFUND. AF TER HEARING BOTH THE PARTIES, WE FIND THAT DEDUCTION UNDER SECTION 80HHC WAS DENIED IN THE AMOUNTS OF OCTROI REFUND RECEIVED BY THE ASSESSEE. THE LEARNED COUNSEL SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF ALFA LAVAL INDIA LTD. V. DCIT (266 ITR 418)(BOM). 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON T HE ORDERS OF LOWER AUTHORITIES. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULLY, WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ALFA LAVAL INDIA LTD. VS. DCIT (SUPRA) WAS HELD AS UNDER: ITA NO. 2759&2760/MUM/2008 M/S. CHOUDHARY GARMENTS 4 THAT THE INTEREST FROM CUSTOMERS AND SALES-TAX SET OFF RECEIVED BY THE ASSESSEE BEING ASSESSED AS PART OF THE BUSIN ESS PROFITS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION THE SAME COULD NOT BE EXCLUDED WHILE CALCULATING DEDUCT ION UNDER SECTION 80HHC. FOLLOWING THE ABOVE DECISION, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 15. IN THE RESULT, APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12 TH FEBRUARY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XX, MUMBAI 4. THE CIT XX, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.