DCIT, Cir.-6, Pune V. Rathi dye chem (P) Ltd., Pune

ITA 297/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56556 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 30-11-2011
• Assessment Year: 1990-1991
• Appeal Filed On: 02-03-2009
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 297/PN/2009 : A.Y. 1990-91 DY. CIT CIR. 6, PUNE APPELLANT VS. RATHI DYE CHEM (P) LTD., VRUNDALI, BLOCK NO. 1, 851/2 BHANDARKAR INSTITUTE ROAD DECCAN GYMKHANA, PUNE-4. PAN AABCR 3922 J RESPONDENT APPELLANT BY: SHRI S.K. AMBASTHA RESPONDENT BY: SHRI M.K. KULKARNI DATE OF HEARING: 30-11-2011 DATE OF PRONOUNCEMENT : 30-11-2011 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II PUNE DATED 12-11-2008 FOR A.Y. 1 990-91 ON THE POINT OF DELETION OF DISALLOWANCE OF RS. 17, 54,738/- ON ACCOUNT OF EXPENDITURE INCURRED ON EXPORT BUSINE SS. 2. THE ASSESSEE WAS ENGAGED IN THE EXPORT BUSINESS AND CARRYING ON A COMPOSITE BUSINESS. IN THE ORIGINAL ASSESSMENT FRAMED U/S 143(3) ON 29-3-1993 THE ASSES SING OFFICER DISALLOWED DEDUCTION U/S 80-HHC OF THE ACT HOLDING THAT THE ASSESSEE WAS NOT ENGAGED IN EXPORT BUSINES S, AND AS SUCH EXPORT ACTIVITY HAD RESULTED IN A LOSS AND THEREFORE, DISALLOWED THE EXPENDITURE OF RS. 17,54, 738/-. 2 ITA NO. 297/PN/2009 RATHI DYE CHEM (P) LTD. A.Y. 1990-91 ON APPEAL, THE CIT(A) VIDE ITS APPELLATE ORDER DATE D 15-2- 1994 HELD THAT THE ASSESSEE WAS ENGAGED IN THE EXPO RT BUSINESS AND WAS CARRYING ON A COMPOSITE BUSINESS. SINCE THE ASSESSEE HAS INCURRED A LOSS IN EXPORT BUSINESS , DEDUCTION U/S 80-HHC WAS NOT PERMISSIBLE. AS SUCH, THE EXPENSES OF RS. 17,54,738/- INCURRED FOR PURPOSE OF BUSINESS WAS ALLOWED BY THE CIT(A). AGAINST THIS O RDER OF THE CIT(A) BOTH THE ASSESSEE AND THE DEPARTMENT WEN T IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE IT S ORDER DATED 15-9-2003 IN ITA NO. 636/PN/1994 CONFIRMED TH E ACTION OF THE CIT(A) HOLDING THAT THE ASSESSEE WAS ENGAGED IN EXPORT BUSINESS AND THAT THE ASSESSEE HAD INCURR ED LOSS IN EXPORT BUSINESS AND PAYMENTS WERE MADE TO THE AG ENTS INCURRING THE EXPENDITURE TO THE EXTENT OF RS. 17,5 4,738/-. THE TRIBUNAL ALSO HELD THAT THE CASE OF THE ASSESSE E WAS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF INTERNATIONAL RESEARCH PARK LABORATORIES LID. VS ACIT (50 ITD 37) AND ALSO THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF SEA PE ARL INDUSTRIES VS. CIT (247 ITR 578). HENCE, THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THESE ASPECTS OF THE MATTER AFRESH ON THE BASIS OF THE MATERIALS AND THE DECISIONS WHICH MAY BE PRODUC ED BEFORE HIM BY THE ASSESSEE. 3. DURING THE FRESH ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER IGNORED THE DIRECTIONS OF THE TRI BUNAL AND AGAIN HELD THAT THE ASSESSEE IS NOT ENTITLED TO DED UCTION U/S 80-HHC IN VIEW OF THE SUPREME COURT DECISION IN THE CASE OF IPCA LABORATORIES (266 ITR 521) AS THERE WA S A LOSS IN EXPORT ACTIVITY AND ACCORDINGLY DISALLOWED THE E XPENSES OF RS. 17,54,738/- INCURRED FOR THE PURPOSE OF BUSI NESS, 3 ITA NO. 297/PN/2009 RATHI DYE CHEM (P) LTD. A.Y. 1990-91 WHICH WAS DELETED BY THE CIT(A). THE SAME HAS BEEN OPPOSED BY THE REVENUE IN APPEAL BEFORE US. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THAT THE ISSUE REG ARDING ALLOWABILITY OF EXPENDITURE INCURRED ON EXPORT BUSI NESS WAS NEVER RAISED BY THE DEPARTMENT IN THE EARLIER PROCE EDINGS. IT IS PERTINENT TO MENTION THAT DURING THE COURSE O F EARLIER PROCEEDINGS BEFORE THE CIT(A), THERE WAS NO SUCH GR OUND OF APPEAL RAISED BY THE ASSESSEE AND THE THEN CIT(A) H AD ALREADY ALLOWED THE APPEAL OF THE ASSESSEE. IN THE CIRCUMSTANCES THEREFORE, THE CIT(A) HAD AGREED WITH THE THEN CIT(A) WHO PASSED THE ORIGINAL APPELLATE ORDER STATING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DIS ALLOWING AN AMOUNT OF RS. 17,54,738/- PAID AS HANDLING/SERVI CE CHARGES WHICH GAVE RISE TO A LOSS FROM EXPORT BUSIN ESS. IN VIEW OF THIS, THE CIT(A) HAS RIGHTLY DELETED THE DI SALLOWANCE OF RS. 17,54,738/- WHICH DOES NOT CALL FOR ANY INTE RFERENCE AT OUR HANDS. WE UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN ON 30 TH NOVEMBER 2011. S D/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER S D/ - SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 30 TH NOVEMBER 2011. ANKAM 4 ITA NO. 297/PN/2009 RATHI DYE CHEM (P) LTD. A.Y. 1990-91 COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT II PUNE 4. CIT(A)-III PUNE 5. THE D.R, ITAT PUNE BENCH, PUNE 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, PUNE.