ACIT, New Delhi V. Shri Baldev Raj Jaggi, New Delhi

ITA 280/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58559 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 19-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: S D KAPILA
• Keywords: Question of law; Competent authority
• Section: 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.280/DEL/2010 ASSESSMENT YEAR : 2002-03 ACIT, CIRCLE 22 (1), NEW DELHI . VS. BALDEV RAJ JAGGI, 224/1, PRAKASH MOHAILA, EAST OF KAILASH, NEW DELHI. PAN : AADPJ1292L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.D. KAPILA, ADVOCATE REVENUE BY : MRS. ANUSHA KHURANA, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER EARLIER THE PRESENT APPEAL WAS DECIDED BY THE TRIBUN AL VIDE ORDER DATED 17 TH MARCH, 2010 IN ITA NO.280/DEL/2010. IN THE SAID OR DER THE ISSUE REGARDING GRANT OF DEDUCTION U/S 80HHC ON DEPB C REDITS WAS DECIDED IN FAVOUR OF THE ASSESSEE FOLLOWING THE SPECIAL BENCH DECISION IN THE CASE OF TOPMAN EXPORTS VS. ITO (ITA NO.5769/MUM /2006). THE REVENUE BEING AGGRIEVED BY THE SAID ORDER OF THE TRI BUNAL HAD PREFERRED AN APPEAL BEFORE HONBLE DELHI HIGH COURT AND VIDE ORDER DATED 18 TH FEBRUARY, 2011, HONBLE HIGH COURT IN ITA NO.177/2 011 HAS RESTORED THE MATTER BACK TO THE FILE OF THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- ITA NO.280/DEL/2010 2 1. ALL THESE APPEALS INVOLVED COMMON QUESTION OF LAW. FOR THE SAKE OF CONVENIENCE, WE CAN REPRODUCE THE QUESTIONS O F LAW FRAMED IN ONE OF THESE APPEALS:- '(A) WHETHER ON A CORRECT INTERPRETATION OF THE RELEVANT STATUTORY PROVISIONS, TRIBUNAL WAS JUSTIFIED N LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80HHC OF THE ACT IN RESPECT OF 'PROFIT' ON SALE OF DEPB? (B)WHETHER ON THE FACTS OF THE PRESENT CASE, TRIBUNAL WAS JUSTIFIED IN LAW IN IMPLIEDLY HOLDING THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION AS PER THE FIRST PROVISO BELOW SUB-SECTION 3 OF SECTION 80HHC IN RESPECT OF DEPB CREDIT UTILIZED BY THE ASSESSEE?' 2. THE ORDERS PASSED BY THE TRIBUNAL IN ALL THESE CAS ES ARE BRIEF BECAUSE OF THE REASON THAT THE TRIBUNAL HAS SIMPLY FOLL OWED (WHICH IT WAS SUPPOSED TO) THE DECISION OF THE ITAT SPE CIAL BENCH, MUMBAI IN THE CASE OF TOPMAN EXPORT VS. ITO [I TA NO. 5769/MUM./2006 DECIDED ON DATED 11TH AUGUST, 2009.]. B Y THAT JUDGMENT, THE SPECIAL BENCH OF THE ITA NO. ITA 12/2011 & ORS. CONNECTED MATTERS PAGE 5 OF 6 TRIBUNAL HAS HELD THAT THE FACE VALUE OF DEPB IS CHARGEABLE TO TAX U/S 28 (IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLICATION FOR D EPB IS FILED WITH THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFIT I N SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28 (IIID) AT THE TIME OF ITS SALE. 3. THE REVENUE HAD FILED THE APPEAL IN THE HIGH COURT ADJUDICATE AT BOMBAY AGAINST THE AFORESAID DECISION OF THE SPECIAL BENCH OF THE ITAT. THE BOMBAY HIGH COURT HAS REVERSED THE DECIS ION OF THE TRIBUNAL AND THE JUDGMENT OF THE BOMBAY HIGH COURT I S REPORTED AS COMMISSIONER OF INC COMMISSIONER OF INC COMMISSIONER OF INC COMMISSIONER OF INCOME TAX VS. KALPATARU COLOURS OME TAX VS. KALPATARU COLOURS OME TAX VS. KALPATARU COLOURS OME TAX VS. KALPATARU COLOURS AND CHEMICALS, AND CHEMICALS, AND CHEMICALS, AND CHEMICALS, 328 ITR 451. 4. SINCE THE TRIBUNAL HAD SIMPLY FOLLOWED SPECIAL BE NCH DECISION IN TOPMAN EXPORTS TOPMAN EXPORTS TOPMAN EXPORTS TOPMAN EXPORTS (SUPRA) WHICH STANDS OVER RULED, WE S ET ASIDE THE ORDER PASSED BY THE TRIBUNAL IN ALL THESE CASES AN D REMIT THE CASES BACK TO THE TRIBUNAL TO DECIDE THESE APPEALS ON M ERITS AFTER TAKING INTO ACCOUNT FACTUAL POSITION IN ALL THESE CA SES. 5. THESE APPEALS STAND DISPOSED OF ON ABOVE TERMS. 2. ACCORDING TO THE AFOREMENTIONED DIRECTIONS OF HON BLE HIGH COURT, THE PRESENT APPEAL WAS FIXED TO DECIDE THE ISSUE REGARDING GRANT OF DEDUCTION U/S 80HHC IN RESPECT OF DEPB CREDITS. TH E CLAIM OF THE ITA NO.280/DEL/2010 3 ASSESSEE REGARDING DEDUCTION U/S 80HHC ON DEPB CREDITS WA S DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT T WIN CONDITIONS MENTIONED IN THE THIRD PROVISO OF SECTION 80HHC (3) WERE NOT FULFILLED BY THE ASSESSEE. THE RELEVANT OBSERVATIONS ON THIS ISSUE BY THE ASSESSING OFFICER ARE AS UNDER:- (A) HE HAD AN OPTION TO CHOOSE EITHER THE DUTY DRAWBACK OR THE DUTY ENTITLEMENT PASS BOOK SCHEME, BEING DUTY REMISSI ON SCHEME; AND (B) THE RATE OF DRAWBACK CREDIT ATTRIBUTED TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER THE DUTY ENTITLEMENT PASS BOOK SCHEME, BEING DUTY REMISSION SCHE ME: THE ASSESSEE WAS GIVEN OPPORTUNITY VIDE ORDER SHEET ENTRY DATED 17.11.2008 TO PROVE THAT IT SATISFIES THE TWO CONDITIONS LAID DOWN IN PROVISO THREE TO SUB SECTION 3 OF SECTION 80HHC IN ORDER TO BE GIVEN BENEFIT OF THE PROVISO. THE ASSESSEE SUBMITTED THAT IN RESPECT OF GOODS EXPORTED BY HIM, HE IS NOT ENTITLED FOR ANY DUTY DRAWBACK BENEFI T. THEREFORE, THE QUESTION OF SATISFYING THE TWO CONDITIONS AS LAID DOWN IN PROVISO 3 TO SUB SECTION 3 OF SECTION 80HHC DO ES NOT ARISE AT ALL. THE BENEFIT OF ADDING BACK 90% OF SECTI ON 28(IIID) RECEIPT IS NOT AVAILABLE TO THE ASSESSEE. 3. LD. CIT (A) HAD ALLOWED THE CLAIM OF THE ASSESSEE FO LLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF TOPMAN EXPOR TS VS. ITO 33 SOT 337 (MUM) (SB). THE TRIBUNAL CONFIRMED THE ORD ER PASSED BY THE LEARNED CIT (A) ON THE BASIS OF THE AFOREMENTIONED DE CISION OF SPECIAL BENCH. NOW, THE MATTER HAS BEEN RESTORED BACK TO US. 4. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE DOES NOT FULFILL THE AFOREMENTIONED TWO CONDITIONS AND THE TURNOVER OF TH E ASSESSEE IS EXCEEDING ` 10 CRORE. THE LEARNED AR OF THE ASSESSEE HA S ALSO FAIRLY CONCEDED THAT THE ASSESSEE DOES NOT FULFILL THE AFOREMEN TIONED TWO CONDITIONS. THEREFORE, AFTER CONSIDERING THE FACTS OF THE CASE, WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF DEDUCTIO N UNDER SECTION 80HHC ON DEPB CREDITS. ITA NO.280/DEL/2010 4 5. THIS VIEW OF OURS IS IN ACCORDANCE WITH THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU CO LOURS AND CHEMICALS (2010) 328 ITR 451 (BOM) WHEREIN THEIR LOR DSHIPS HAVE HELD AS UNDER:- ADMITTEDLY, IN THE ASSESSMENT YEAR IN QUESTION, THE ASSE SSEE HAD AN EXPORT TURNOVER EXCEEDING RS.10 CRORES AND DID NOT FULFILL THE CONDITIONS SET OUT IN THE THIRD PROVISO TO SECTION 80HHC ( 3), INTRODUCED BY THE FINANCE ACT OF 2005. AS A RESULT, THE ASSESSEE WAS NOT ENTITLED TO A DEDUCTION UNDER SECTION 80HHC ON THE AMOUNT RECEIVED ON TRANSFER OF DEPB. 6. THEREFORE, THE GROUND TAKEN BY THE REVENUE WITH REGARD TO DEDUCTION U/S 80HHC ON ACCOUNT OF DEPB CREDIT IS ALL OWED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.01.20 12. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 27.01.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES