ACIT, Trichy V. A.D.Textiles, Karur

ITA 300/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77238 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 10-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM IRS
• Keywords: Business income
• Section: 143(3); 80HHC; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . . !' , # '$ % BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NOS.300 &301/MDS/2014. ( / ASSESSMENT YEARS : 2003-2004 & 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, TRICHY 620 001. ( &' /APPELLANT) VS M/S. A.D. TEXTILES, NO.1/104, SANJAY NAGAR, ERODE ROAD, ATHUR ROAD, KARUR. [PAN: AAAFA9561G] ( ()&' /RESPONDENT) / APPELLANT BY : SHRI. GURU BHASHYAM, IRS, JCIT. / RESPONDENT BY : NONE /DATE OF HEARING : 22.04.2014 /DATE OF PRONOUNCEMENT : 22.04.2014 '* / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THESE REVENUES APPEALS FOR ASSESSMENT YEARS 2003-0 4 AND 2004-05; EMANATE FROM SEPARATE ORDERS BOTH DATED 18 .11.2013 PASSED I.T.A.NO.300 &301/MDS/2014. :- 2 -: BY THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUCH IRAPPALLI IN ITA NO.299/10-11/CIT(A)/TRY AND ITA NO.481/06-07/CIT(A) /TRY RESPECTIVELY, IN PROCEEDINGS UNDER SECTION 143(3) R .W.S. 254 OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. SHRI. GURU BHASHYAM, JCIT HAS REPRESENTED THE REVE NUE. NONE IS PRESENT ON ASSESSEES BEHALF DESPITE SERVICE OF NOTICE IN BOTH CASES. SO, IT IS PROCEEDED EX-PARTE. 3. A COMBINED PERUSAL OF THE GROUNDS RAISED IN BOTH C ASES MAKES IT EVIDENT THAT THE SOLE IDENTICAL ISSUE SOUGHT TO BE RAISED IS ABOUT CLAIM OF DEDUCTION UNDER SECTION 80HHC FROM SALE OF DUTY ENTITLEMENT PASS BOOK (HEREINAFTER DEPB). SO, WE TAKE UP IT A NO.300/MDS/2014 AS THE LEAD CASE. ITA NO.300/MDS/2014. 4. THE FACTS OF THE CASE ARE IN A NARROW COMPASS. THI S IS SECOND ROUND OF LITIGATION BETWEEN THE PARTIES UP TO THE TRIBUNAL. THE ASSESSEE/ FIRM IS A TEXTILE MANUFACTURER. ON 14.10 .2003, IT HAD FILED ITS RETURN DECLARING TOTAL INCOME OF J82,58,037/-. TH E ASSESSEE HAD EXPORT TURNOVER OF J15,00,92,451/-. IT HAD CLAIME D DEDUCTION UNDER SECTION 80HHC OF J83,64,725/- COMPRISING AN AMOUNT OF J72,31,515/- I.T.A.NO.300 &301/MDS/2014. :- 3 -: FROM SALE OF DEPB. IN REGULAR ASSESSMENT FRAME D ON 24.2.2006, THE ASSESSING OFFICER QUOTED SECTION 80HHC (3 RD PROVISO) ALONGWITH SECTION 28(IIID) AND DISALLOWED DEDUCTION QUA 90% AMOUNT OF CONSIDERATION AFORESAID. THE ASSESSEE CARRIED THE MATTER UPTO T HE TRIBUNAL WHEREIN, VIDE ORDER DATED 17.11.2008, THE ISSUE WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. 5. IN CONSEQUENTIAL PROCEEDINGS, THE ASSESSING OFFICER IN HIS ORDER DATED 30.12.2010 DREW SUPPORT FROM ORDER OF THE HON BLE BOMBAY HIGH COURT CIT VS. KALPATARU COLOURS AND CHEMICALS REPOR TED AS 328 ITR 451 AND PROCEEDED TO DISALLOW AFORESAID DEDUCTION O N THE ANALOGY ADOPTED EARLIER. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL. THE C IT(A) HAS FOLLOWED THE CASE LAW OF M/S. TOPMAN EXPORTS VS. CI T 2012 (342) ITR 49 (SC) AND HELD THAT ONLY PROFIT AND NOT THE ENT IRE PRICE ARISING FROM SALE OF DEPB IS ENTITLED TO BE TREATED AS INCOME UNDER SECTION 28 (IIID) OF THE ACT. THIS LEAVES THE REVENUE AGGRIEVED. 7. WE HAVE HEARD THE APPELLANT/ REVENUE AND GONE THOUG H THE CASE FILE. THE LD. DEPARTMENTAL REPRESENTATIVE ST RONGLY ARGUES THAT I.T.A.NO.300 &301/MDS/2014. :- 4 -: NEITHER IN ASSESSMENT ORDER NOR IN LOWER APPELLATE ORDER, RELEVANT DETAILS QUA DEPB SALE I.E. FACE VALUE AND PROFIT S REALISED ARE FORTHCOMING. ON BEING PUT UP A QUERY ABOUT CASE LA W OF THE HONBLE SUPREME COURT (SUPRA), NO DISTINCTION HAS BEEN DRAW N. IN THESE CIRCUMSTANCES, THE SOLE QUESTION ARISES FOR OUR C ONSIDERATION IS AS TO WHETHER ENTIRE SALE CONSIDERATION INSTEAD OF PROFI T ONLY FROM A DEPBS TRANSFER IS LIABLE TO BE TREATED AS BUSINESS INCOME OR NOT. ADMITTEDLY, THE HONBLE APEX COURT HAS SETTLED TH E ISSUE AT REST BY HOLDING THAT ONLY PROFITS AND NOT THE ENTIRE SALE C ONSIDERATION COMPRISING OF FACE VALUE IS AN INCOME U/S 28(IIID) OF THE ACT. THUS, IN PRINCIPLE, THE REVENUES ARGUMENT HAS NO MERIT. HO WEVER, THE FACT ALSO REMAINS THAT NEITHER IN THE ASSESSMENT ORDER N OR IN LOWER APPELLATE PROCEEDINGS, EXACT DETAILS OF FACE VALUE AND PROFITS REALIZED FROM DEPB SALE HAVE BEEN EXAMINED. SO, WE DEEM IT A PPROPRIATE TO REMIT THIS ISSUE ONCE AGAIN TO THE ASSESSING OFFIC ER FOR ABOVE STATED LIMITED EXERCISE IN ACCORDANCE WITH LAW AFTER GIVIN G ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE REVENUE S APPEAL IN ITA NO.300/MDS/2014 IS ALLOWED FOR STATISTICAL PURPOSE. 8. SAME ORDER TO FOLLOW IN ITA NO.301/MDS/2014. I.T.A.NO.300 &301/MDS/2014. :- 5 -: 9. AS A RESULT, BOTH ITA NOS.300 &301/MDS/201 4 ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE T IME OF HEARING ON TUESDAY, THE 22 ND OF APRIL, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( . . !' ) # '$ (DR. O.K. NARAYANAN) VICE PRESIDENT (S.S. GODARA) JUDICIAL MEMBER DATED:22 ND APRIL, 2014. K.V !' #$ %$ /COPY TO: 1. & APPELLANT 2. / RESPONDENT 3. ' ( )/CIT(A) 4. ' /CIT 5. $() * /DR 6. )+ , /GF.