Hamilton Housewares Pvt.Ltd., U T OF D & NH V. The ACIT.,Vapi Circle, Vapi

ITA 2824/AHD/2010

• Counselvise Citation: 282420514 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 07-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Assessee Lawyers: M K PATEL
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO.2824/AHD/2010 A.Y. 2003-04 HAMILTON HOUSEWARES PRIVATE LIMITED, PLOT NO.49/A, DANUDYOG INDUSTRIAL ESTATE, AMLI, PIPARIA, SILVASSA D. & N.H. PAN: AABCD 1683Q VS ACIT, VAPI CIRCLE, SHIVAM COMMERCIAL COMPLEX, NATIONAL HIGHWAY NO.8, VAPI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI VIMALENDU VERMA, CIT-D.R., ASSESSEE(S) BY : SHRI M.K. PATEL, A.R. / DATE OF HEARING : 26/02/2014 / DATE OF PRONOUNCEMENT: 26/02/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF LEARNED CIT(A), VALSAD, DATED 19.07.2010 AND THE GR OUNDS RAISED ARE REPRODUCED BELOW: 1. THE ORDER OF ASSESSMENT U/S. 143(3) R.W.S. 263 IS CONTRARY TO THE FACTS AND PREJUDICIAL TO THE ASSESSEE. 2. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND LAW, THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE CONTRARY T O LAW AND BASED ON ERRONEOUS UNDERSTANDING OF THE FACTS. 3. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES O F THE CASE LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN C ONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER EXCLUDING 90% OF GROS S LABOUR CHARGES AMOUNTING TO RS.22,10,242/- WHILE GRANTING DEDUCTIO N U/S. 80HHC WITHOUT CONSIDERING THE FACTUAL CALCULATION OF NET INCOME S UBMITTED BY THE APPELLANT COMPANY. ITA NO.2167/AHD/2010 PRAKASHBHAI PRAHALADBHAI GAMI VS. ITO, SURAT. FOR A.Y. 2006-07 - 2 - 4. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN NOT ACCEPTING THE ALTERNATE CONTENTION MADE BEFORE HIM THAT THE LEARN ED ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THE VARIOUS EXPENSES INCURRED BY THE APPELLANT COMPANY TO THE TUNE OF RS.21,55,745/- OUT OF THE LABOUR CHARGE S RECEIVED AND RESTRICTED THE EXCLUSION MADE WHILE GRANTING DEDUCTION U/S. 80 HHC TO THE NET INCOME OF RS.3,00,081/- ONLY. 2. THE ASSESSMENT WAS MADE U/S.143(3) R.W.S. 263 OF IT ACT, DATED 22.10.2008. IT WAS NOTICED BY THE LEARNED COMMISSIO NER THAT 90% OF THE GROSS RECEIPTS FROM LABOUR CHARGES AND CASH DISCOUN T SHOULD HAVE BEEN DEDUCTED IN TERMS OF EXPLANATION (BAA) TO SECTION 8 0HHC. A DECISION OF BANGALORE CLOTHING CO., (2003) 260 ITR 371 (BOM) HA S ALSO BEEN CITED. AN ANOTHER FACT HAS ALSO BEEN NOTED THAT THE ASSESS EE HAS CHALLENGED THE SAID ORDER PASSED U/S.263 OF IT ACT BEFORE RESPECTE D ITAT AND THE SAME WAS UPHELD BY LEARNED ITAT A BENCH AHMEDABAD IN I TA NO.473/AHD/2008 FOR A.Y. 2003-04, TITLED AS HAMILTO N HOUSEWARES PRIVATE LIMITED, DATED 09.05.2008, WHEREIN IT WAS H ELD AS UNDER: AT THE TIME OF HEARIN, THE LD. DEPARTMENTAL REPRES ENTATIVE HAS CITED THE CASE LAW OF THE HONBLE APEX COURT AS REPORTED IN THE CA SE OF CIT VS. K. RAVINDRANATHAN NAIR [2007] 295 ITR 229 (SC). ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE CASE L AW IN THE CASE OF CIT VS. INDIA GELATINE AND CHEMICALS LTD. (2005) 275 ITR 28 4 (GUJ.) FROM THE ABOVE CASE LAWS, IT IS CLEAR THAT HONBLE APEX COURT HAS LAID DOWN THE GUIDELINES, THAT THE ASSESSEE IF ENGAGED IN THE BUSINESS OF EXP ORT OF TRADING GOODS AND DERIVING INCOME FROM EXPORT OF TRADING GOODS AND AL SO FROM EXPORT INCENTIVE COMMISSION, INTEREST, ETC, THEN THE COMPUTATION OF DEDUCTION IS TO BE MADE APPLYING THE PROVISION OF CLAUSE BAA TO EXPLANATION OF 80HHC OF THE ACT. ACCORDINGLY, 10% OF EXPENSE FOR EARNING THE INCOMES ETC., ARE DEDUCTIBLE AND THE REST OF INCOME, I.E., 90% IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80HHC OF THE ACT. RESPECTFULLY FOL LOWING THE HONBLE APEX COURT, WE ARE OF THE CONSIDERED VIEW THAT THE LABOU R RECEIPTS ARE TO BE EXCLUDED TO THE EXTENT OF 90% BUT AS REGARDS TO CAS H DISCOUNT WHICH ARE ON ACCOUNT OF PURCHASE MADE FOR MANUFACTURING AND EXPO RTING THE GOODS, WE FEEL THAT THIS CASH DISCOUNT ARE PART OF EXPORT BUSINESS AND NOTHING IS TO BE EXCLUDED WHILE COMPUTING DEDUCTION U/S. 80HHC OF TH E ACT. ACCORDINGLY, AO IS DIRECTED TO RE-COMPUTE THE INCOME BY EXCLUDING 9 0% IN RESPECT OF LABOUR RECEIPTS IN TERM OF CLAUSE (BAA) TO EXPLANATION TO SECTION 80HHC OF THE ACT AND NOTHING IS TO BE EXCLUDED AS FAR AS CASH DISCOU NTS ARE CONCERNED. ITA NO.2167/AHD/2010 PRAKASHBHAI PRAHALADBHAI GAMI VS. ITO, SURAT. FOR A.Y. 2006-07 - 3 - 2.1 AS PER THE DIRECTION OF THE RESPECTED ITAT, ONL Y 90% OF THE LABOUR CHARGES WERE EXCLUDED FROM THE PROFIT ELIGIB LE FOR DEDUCTION U/S.80HHC AND ACCORDINGLY, THE INCOME WAS ASSESSED. 2.2 WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT( A), THE ACTION OF THE AO WAS AFFIRMED BY FOLLOWING THE DECISION IN TH E CASE OF K. RAVINDRANATHAN NAIR, 295 ITR 229 (SC). 3. IN THE LIGHT OF THE ABOVE FACTUAL AS WELL AS LEG AL BACKGROUND, WE HAVE HEARD BOTH THE SIDES. WE FIND NO FORCE IN THE GROUNDS OF THE ASSESSEE BECAUSE THE IMPUGNED PROCEEDINGS BEFORE THE AO HAVE BEEN STARTED IN CONSEQUENCE OF AN ORDER PASSED U/S.263 BY LEARNED C OMMISSIONER. THAT ORDER OF LEARNED COMMISSIONER WAS UPHELD BY ITAT VI DE ORDER DATED 09.05.2008 (SUPRA). MEANING THEREBY, THE CORRECT CO MPUTATION OF SECTION 80HHC TO BE READ WITH EXPLANATION (BAA) WAS APPROVE D BY THE TRIBUNAL. DUE TO THIS REASON, IT IS NOT REQUIRED TO INTERFERE WITH THOSE FINDINGS. MOREOVER, THE ISSUE NOW STOOD SETTLED IN FAVOUR OF THE REVENUE BY THE DECISION OF HONBLE APEX COURT AS CITED SUPRA. WE A RE NOT INCLINED TO DISTURB THE COMPUTATION OF SECTION 80HHC AS MADE BY THE AO; HENCE THIS GROUND OF THE ASSESSEE IS HEREBY DISMISSED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 26/02/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : ITA NO.2167/AHD/2010 PRAKASHBHAI PRAHALADBHAI GAMI VS. ITO, SURAT. FOR A.Y. 2006-07 - 4 - 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD