SYSTEMATIC EXPORTS, MUMBAI V. ACIT 20(3), MUMBAI

ITA 3006/MUM/2010

• Counselvise Citation: 300619914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 19-05-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 13-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: RISHABH CHATURVEDI
• Section: 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 3006/MUM./2010 (ASSESSMENT YEAR : 2000-01 ) DATE OF HEARING: 19.5.2011 SYSTEMATIC EXPORTS PLOT NO.6, F-11 & 12, SEEPZ CENTRAL ROAD, MIDC, ANDHERI (E) MUMBAI 400 093 AAAFS6049M APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-20(3), MUMBAI RESPONDENT ASSESSEE BY : MR. RISHABH CHATURVEDI REVENUE BY : MR. S.K. SINGH O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 21 ST JANUARY 2010, PASSED BY THE COMMISSIONER (APPEALS)-XXXI, MUMBAI, FOR ASSESSMENT YEAR 2000-01 , ON THE FOLLOWING GROUND:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE ASSE SSING OFFICER WHO HAD ERRED IN APPLYING THE DIRECTION GIVEN BY HONBL E ITAT VIDE ITS ORDER DATED 18 AUGUST 2006, THAT THE DEDUCTION UNDER SECT ION 80IB AND 80HHC WERE TO BE CALCULATED INDEPENDENTLY ON THE EL IGIBLE PROFITS OF THE APPELLANT AND, INSTEAD, CALCULATED DEDUCTION UN DER SECTION 80HHC ON THE RESIDUAL PROFITS AFTER REDUCING THEREFROM AM OUNT OF DEDUCTION UNDER SECTION 80IB. SYSTEMATIC EXPORTS ITA NO. 3006/MUM./2010 2 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT MUMBAI BENCH OF THE TRIBUNAL IN ITA NO.1901 AND 1902 /MUM./2003, VIDE O RDER DATED 18 TH AUGUST 2009, AT PARA-9, FOLLOWED THE ORDER OF ANOTHER BENC H OF THE TRIBUNAL IN THE CASE OF GEETANJALI CHEMICALS PVT. LTD. IN ITA NO.13 85/MUM./2004 AND DIRECTED THE ASSESSING OFFICER TO COMPUTE INDEPENDE NTLY DEDUCTION UNDER SECTIONS 80IA AND 80HHC OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). AFTER SUCH COMPUTATION, IT WAS DIRECTED THAT THE AS SESSING OFFICER SHOULD ENSURE THAT TOTAL DEDUCTION DOES NOT EXCEED THE PRO FIT AND GAINS OF THE UNDERTAKING. THE ASSESSING OFFICER HAS NOT FOLLOWED THESE DIRECTIONS. 3. AT PARA-3.3.1, THE COMMISSIONER (APPEALS) OBSERVED AS FOLLOWS:- 3.3.1 THEREFORE, FROM THE ABOVE, IT IS EXPLICITLY M ADE CLEAR THAT THE DEDUCTION UNDER SECTION 80IB AND 80HHC ARE TO B E COMPUTED INDEPENDENTLY ON THE ELIGIBLE PROFIT OF TH E UNDERTAKING. THE DEDUCTION UNDER SECTION 80IB IS TO BE ALLOWED F IRST AND DEDUCTION UNDER SECTION 80HHC IS TO BE ALLOWED ON T HE REMAINING PROFIT AND GAINS OF THE INDUSTRIAL UNDERT AKING. THE HONBLE ITAT HAS NOWHERE HELD THAT THE DEDUCTION UN DER SECTION 80HHC IS TO BE ALLOWED ON THE PROFIT OF THE BUSINES S INCLUDING DEDUCTION UNDER SECTION 80IB. ON THE OTHER HAND, AS NOTED ABOVE THE HONBLE ITAT HAS CLEARLY HELD THAT DEDUCT ION UNDER SECTION 80HHC IS TO BE ALLOWED ON THE REMAINING PRO FIT AND GAINS OF THE UNDERTAKING I.E., ON THE PROFIT OF THE BUSIN ESS REDUCED BY THE DEDUCTION ALLOWED UNDER SECTION 80IB. THEREFORE , ON ACCOUNT OF THESE SPECIFIC DIRECTIONS OF THE HONBLE ITAT, I FIND THAT THERE IS NO MISTAKE OR WRONG CALCULATION OF DEDUCTION UND ER SECTION 80IB AND 80HHC ON THE PART OF THE A.O. THE CLAIM OF THE APPELLANT AS MENTIONED ABOVE IS MISPLACED. ON THE O THER WORDS, THE CLAIM MADE IS AGAINST THE ORDER OF THE HONBLE ITAT. THEREFORE, I FIND NO INCONSISTENCY OR INCORRECT COM PUTATION OF DEDUCTION UNDER SECTION 80IB AND 80HHC OF THE ACT O N THE PART OF A.O. THE SAME IS ACCORDINGLY CONFIRMED. THEREFOR E, GROUND OF APPEAL FOR BOTH THE ASSESSMENT YEARS IS DISMISSED. 4. ON PLAIN READING OF THE ABOVE PARAGRAPH, IT IS CLEA R THAT THERE IS A CONTRADICTION IN THE ORDER OF THE COMMISSIONER (APP EALS). IN THE FIRST LINE, THE COMMISSIONER (APPEALS) SAYS THAT DEDUCTIONS UND ER SECTION 80IB AND SYSTEMATIC EXPORTS ITA NO. 3006/MUM./2010 3 80HHC ARE TO BE COMPUTED INDEPENDENTLY, WHEREAS, IN THE NEXT SENTENCE, HE SAYS THAT THE ASSESSING OFFICER IS RIGHT. 5. HON'BLE JURISDICTIONAL HIGH COURT IN ASSOCIATED CAP SULES PVT. LTD. V/S DCIT, 2011-TIOL-28-HC-MUM, HAS HELD AS FOLLOWS:- S. 80-IA(9) CANNOT BE INTERPRETED TO MEAN THAT S. 80-IA DEDUCTION HAS TO BE REDUCED FOR COMPUTING S. 80HHC DEDUCTION S. 80-IA (9) INSERTED W.E.F. 1.4.1989 PROVIDES THAT WHERE ANY AMOUNT OF PROFITS AND GAINS OF AN UNDERTAKING IS CLAIMED A ND ALLOWED UNDER S. 80-IA FOR ANY ASSESSMENT YEAR, DEDUCTION TO THE EXT ENT OF SUCH PROFITS AND GAINS SHALL NOT BE ALLOWED UNDER ANY OTHER PROV ISIONS OF CHAPTER VI-A (C) AND SHALL IN NO CASE EXCEED THE PROFITS AN D GAINS OF SUCH ELIGIBLE BUSINESS. THE COURT HAD TO CONSIDER WHETHE R THE DEDUCTION ALLOWED U/S 80-IA HAD TO BE REDUCED FROM THE PROFIT S FOR COMPUTING DEDUCTION U/S 80HHC. HELD DISSENTING FROM ROGINI GA RMENTS 108 ITD 49 (CHE)(SB), HINDUSTAN MINT & AGRO PRODUCTS 119 IT D 107 (DEL) (SB), GREAT EASTERN EXPORTS (DEL) & OLAM EXPORTS (I NDIA) LTD 184 TM 373 (KER) & DECIDING IN FAVOUR OF THE ASSESSEE: (I) THE ARGUMENT OF THE REVENUE THAT S. 80IA(9) MAN DATES THAT THE DEDUCTION U/S 80HHC HAS TO BE COMPUTED BY REDUCING THE AMOUNT OF PROFITS AND GAINS ALLOWED AS DEDUCTION U/S 80IA(1) IS NOT ACCEPTABLE. S. 80IA(9) USES THE WORDS SHALL NOT BE ALLOWED AN D NOT THE WORDS SHALL NOT QUALIFY OR SHALL NOT BE ALLOWED IN COM PUTING DEDUCTION. ACCORDINGLY,THE RESTRICTION IN S. 80IA(9) RELATES T O THE ALLOWANCE OF DEDUCTION AND NOT COMPUTATION OF DEDUCTION. THE MAN NER OF COMPUTATION OF DEDUCTION U/S 80HHC(1) IS SET OUT IN S. 80HHC(3). S. 80IA(9) DOES NOT DISTURB THE MECHANISM OF COMPUTING THE DEDUCTION PROVIDED U/S 80HHC (3). S. 80IA(9) COMES INTO OPERA TION ONLY AT THE STAGE OF ALLOWING THE DEDUCTION COMPUTED U/S 80HHC SO THAT THE COMBINED DEDUCTION U/S 80IA AND 80HHC DOES NOT EXCE ED THE TOTAL PROFITS OF THE BUSINESS OF THE UNDERTAKING. S. 80IA (9) SEEKS TO CURTAIL ALLOWANCE OF DEDUCTION AND NOT COMPUTABILITY OF DED UCTION UNDER ANY OTHER PROVISIONS UNDER HEADING C OF CHAPTER VIA; (II) THE REASONABLE CONSTRUCTION OF S. 80IA(9) IS T HAT WHERE DEDUCTION IS ALLOWED U/S 80IA(1), THEN THE DEDUCTION COMPUTED UNDER OTHER PROVISIONS UNDER HEADING C OF CHAPTER VIA HAS TO BE RESTRICTED TO THE PROFITS OF THE BUSINESS THAT REMAINS AFTER EXCLUDIN G THE PROFITS ALLOWED AS DEDUCTIONS U/S 80IA, SO THAT THE TOTAL DEDUCTION ALLOWED UNDER THE HEADING C OF CHAPTER VIA DOES NOT EXCEED THE PROF ITS OF BUSINESS. 6. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE DE DUCTION IN LINE WITH THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT C ITED SUPRA. SYSTEMATIC EXPORTS ITA NO. 3006/MUM./2010 4 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27.5.2011 SD/- N.V. VASUDEVAN JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH MAY 2011 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, J BENCH, ITAT, MUMBAI TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI