M/S. CROWN FROZEN FOODS, MUMBAI V. DCIT 12(2), MUMBAI

ITA 2829/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7762 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 04-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: YASHWANT V CHAVAN
• Keywords: Competent authority; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI R.V.EASWAR,SR.VICE PRESIDENT& SHRI T. R.SOOD (A.M) ITA NO.2829/MUM/2009(A.Y.2001-02) M/S. CROWN FROZEN FOODS, 203, DALAMAL CHAMBERS, NEW MARINE LINES, MUMBAI 400 020 PAN: AAAFC 3531E (APPELLANT) VS. THE DCIT 12(2), AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (RESPONDENT) APPELLANT BY : SHRI SHAILESH PARMAR RESPONDENT BY : SHRI. YASHWANT V. CHAVAN ORDER PER T.R.SOOD, A.M, THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A) XII, MUMBAI DATED 2/2/2009 FOR THE ASSESSMENT YEAR 2001- 02. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING SUBSTANTIAL GROUNDS:- 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT S IN HOLDING THAT DEPB INCOME AMOUNTING TO RS. 8,43,30,039/- IS NOT ELIGIB LE FOR DEDUCTION UNDER SECTION 80 HHC OF THE ACT. THE LEARNED CIT(A) OUGH T TO HAVE DIRECTED THE ASSESSING OFFICER TO GRANT THE DEDUCTION U/S. 80 HH C AFTER CONSIDERING THE ABOVE RECEIPT U/S. 28(IV) OF THE ACT. 3. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN H OLDING THAT DEPB INCOME AMOUNTING TO RS.8,43,30,039/- BEING EXPORT INCENTIV E FALLS WITHIN THE PROVISION OF SECTION 28(IIID) OF THE ACT AND FURTHE R ERRED IN HOLDING THAT THE SAID AMOUNT FALLS UNDER THE FOURTH PROVISO TO SECTI ON 80 HHC(3) OF THE ACT. 4. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN H OLDING THAT DEPB INCOME AMOUNTING TO RS.8,43,30,039/- BEING EXPORT INCENTIV E AS DEFINED U/S. 28(IIIA), (IIIB) AND (IIIC) OF THE ACT NOT FALL WIT HIN THE FIRST PROVISO TO SECTION 80 HHC(3) OF THE ACT. ITA NO.2829/M/09(A.Y.2001-02) 2 2. AT THE OUTSET, THE LEARNED REPRESENTATIVES OF TH E PARTIES SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT TOPMAN EXPORTS & OTHERS, [2009] 318 ITR (AT) 87(MUM.)(SB). 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT ON IDENTICAL SET OF FACTS THE ITAT SPECIAL BENCH HAS DECIDED THE SIMILAR ISSUE IN THE CASE OF M/S TOPMAN EXPORTS CITED SUPRA. THE RELEVANT FINDINGS OF THE SPECIAL BENCH ARE REPRODUCED BELOW: - 89. THE QUESTION RAISED BEFORE THE SPECIAL BENCH HAS TW O PARTS. IN SO FAR AS THE FIRST PART :`WHETHER THE ENTIRE AMOUNT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PROFIT CHARGEABLE UNDER SECTION 28(IIID) OF THE INCOME TAX ACT, IS CONCERNED, WE ANSWER IT IN NEGATIVE AND THE SECOND PART OF THE QUESTION :`OR THE PROFIT REFERRED TO THEREIN REQUIRES ANY ARTIFICIAL COST TO BE INTERPOLATED? IS REPLIED IN AFFIRMATIVE TO THE EXTENT THAT THE FACE VALUE OF DEPB SHALL BE DEDUCTED FROM THE SALE PROCEEDS. AS REGARDS THE GROUNDS RAISED I N THESE APPEALS AGAINST THE DENIAL OF DEDUCTION U/S 80HHC, IN FULL OR PART, WE FIND THAT THE COMPUTATION OF PROFITS DERIVED FROM EXPORTS AND THE RESULTANT AMOU NT OF DEDUCTION UNDER THIS SECTION CAN BE MADE ONLY WHEN THE DECISION IS TAKE N ON THE AMOUNT AND THE TIMING OF TAXABILITY OF THE FACE VALUE OF DEPB AND THE PROFIT ON ITS SALE. ON THIS ISSUE WE HOLD THAT THE FACE VALUE OF DEPB IS CHARG EABLE TO TAX U/S 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLIC ATION FOR DEPB IS FILED WITH THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFI T ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB O VER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28(IIID) AT THE TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB, SHALL ALSO HOLD GOOD FOR DFRC, ON BOTH ITS COMPONEN TS, VIZ, THE FACE VALUE OF DFRC AND PROFIT ON ITS TRANSFER, EXCEPT FOR THE FAC T THAT THE PROFIT ON SALE OF DFRC SHALL BE CHARGED TO TAX U/S 28(IIIE). THERE IS NO DISPUTE ABOUT THE DUTY DRAWBACK, WHICH SHALL BE CHARGEABLE TO TAX AT THE TIME OF ACC RUAL OF INCOME U/S 28(IIIC) WHEN APPLICATION IS FILED WITH THE COMPETENT AUTHORITY A FTER MAKING EXPORTS. SINCE THE NECESSARY FACTS FOR THE DETERMINATION OF THE QUANTU M OF DEDUCTION U/S 80HHC, AS DISCUSSED ABOVE, ARE NOT AVAILABLE ON RECORD, WE, THEREFORE, SET ASIDE THE IMPUGNED ORDERS AND DIRECT THE AO TO COMPUTE THE AM OUNT OF RELIEF IN ACCORDANCE WITH THE VIEW EXPRESSED BY US HERE IN AB OVE. ITA NO.2829/M/09(A.Y.2001-02) 3 4. IN THE LIGHT OF ABOVE DISCUSSION, WE REMIT THE M ATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN A CCORDANCE WITH THE JUDGMENT OF THE SPECIAL BENCH AFTER PROVIDING REASONABLE OPPORT UNITY OF HEARING TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 10 TH DAY OF FEB.2010. SD/- SD/- (R.V.EASWAR) (T.R.SOOD) SR. VICE PRESIDENT ACC OUNTANT MEMBER MUMBAI, DT. 10 TH FEB.2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT(A)CONCERNED 4. THE CIT,CONCERNED. 5. THE D.RC BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.2829/M/09(A.Y.2001-02) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 9/2/2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9/2/2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.2829/M/09(A.Y.2001-02) 5