Tio Trend (P) Ltd., Kolkata V. DCIT, Circle - 11, Kolkata, Kolkata

ITA 313/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3186 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 27-02-2012
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Assessee Lawyers: D S DAMLE
• Keywords: Condonation of delay
• Section: 80HHC

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () . .. . . .. . , ,, , , ! ' #!' ' #!' ' #!' ' #!', ,, , ] ]] ] [BEFORE HONBLE SRI N.S.SAINI AM & HONBLE SRI M AHAVIR SINGH, JM] !% !% !% !% /ITA NOS.313 & 314/KOL/2012 #& '(/ ASSESSMENT YEARS : 2003-04 & 2004-05 (*+ / APPELLANT ) - - ( -.*+ /RESPONDENT) TRIO TREND (P) LTD. D.C.I.T., CIRCLE-11, KOKATA -VERSUS- KOLKATA (PAN : AABCT 0695 G) *+ / 0 / FOR THE APPELLANT: SHRI D.S.DAMLE, -.*+ / 0 / FOR THE RESPONDENT: SHRI K.N.JANA, SR,.DR 1 2 / 3 /DATE OF HEARING : 13.06.2013 4' / 3 /DATE OF PRONOUNCEMENT : 21.06.2013. 5 / ORDER PER SHRI N.S.SAINI, AM THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-XII, KOLKATA DATED 23.08.2011 FOR A.YRS. 2003-04 AND 2004-05. 2. IN BOTH THE APPEALS THE ASSESSEE HAS TAKEN COMM ON GROUNDS OF APPEAL. THE ISSUE INVOLVED IN BOTH THE YEARS FOR CONSIDERATION IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO DENYING DEDUCTION U/ S 80HHC OF THE IT ACT ON INCOME FROM SALE OF DEPB. 3 .THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURE A ND EXPORT OF LEATHER GOODS. THE ASSESSMENTS IN THESE CASES WERE COMPLETED U/S 1 43(3) OF THE ACT ON 27.01.2006 IN A.YR.2003-04 AND ON 22.12.2006 IN A.YR.2004-05. IN THE ASSESSMENTS THE AO EXCLUDED THE PROFIT ON TRANSFER OF DEPB LICENCE FOR COMPUTING DEDUCTION U/S 80HHC OF THE ACT RELYING ON THE AMENDMENT MADE BY THE TAX ATION LAWS (AMENDMENT) ACT, 2005 FOR THE REASON THAT THE TURN OVER OF THE ASSES SEE EXCEEDED RS,10 CRORES. ITA NOS.313 & 314/KOL/2012 TRIO TREND (P) LTD VS D.C.I.T., CIRCLE-11, KOLKATA. A.YRS.2003-04 & 2004- 05 2 4. BEING AGGRIEVED THE ASSESSEE FILED APPEALS BEFO RE THE LD. CIT(A). THE LD. CIT(A) HELD THAT THE AMOUNT OF DEPB CREDIT HAS TO B E EXCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80HHC(3) OF THE ACT IN VIEW OF THE AMENDMENT MADE BY THE TAXATION LAWS (AMENDMENT) ACT, 2005. 5. IT IS AGAINST THE ABOVE THE ORDER OF THE LD. CI T(A) THAT THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. THERE IS A DELAY OF 121 DAYS IN FILING THESE AP PEALS BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED A CONDONATION PETITION BEFORE TH E TRIBUNAL. THE DETAILED REASONS STATED BY THE ASSESEE COMPANY FOR THE DELAY IN FILI NG THESE APPEALS BEFORE THE TRIBUNAL ARE REPRODUCED BELOW :- TO THE INCOME TAX APPELLATE TRIBUNAL 225C, A.J.C.BOSE ROAD KOLKATA-700020. DEAR SIR, SUB : PETITION FOR CONDONATION OF DELAY IN FILING A PPEAL FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 WE ARE FILING APPEALS AGAINST THE ORDERS OF THE CIT (A) FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 BOTH DATED 23/08/2011. THE APPELLATE OR DERS WERE SERVED ON US ON 30/08/2011. THE APPELLATE ORDERS WERE SERVED ON US ON 30/08/2011. AS SUCH APPEALS BEFORE THE TRIBUNAL SHOULD HAVE BEEN FILED ON OR BE FORE 30 TH OCTOBER, 2011. DURING THE PREVIOUS YEARS RELATING TO ASSESSMENT YE ARS 2003-04 AND 2004-05, THE COMPANY WAS ENGAGED IN EXPORT OF LEATHER GOODS. IN BOTH THE YEARS EXPORT TURNOVER EXCEEDED RS.10 CRORES. BEING EXPORTER OF MANUFACTUR ED GOODS, WE WERE ENTITLED FOR EXPORT BENEFITS SUCH AS DUTY DRAW BACK AND DPB CRED IT. IN THE RETURN FILED FOR A.YS,.2003-04 AND 2004-05 WE HAD CLAIMED DEDUCTION U/S 80HHC IN RESPECT OF PROFITS DERIVED FROM EXPORT OF MANUFACTURED LEATHER GOODS. FOR THE PURPOSE OF COMPUTING DEDUCTION PERMISSIBLE U/S 80HHC, EXPORT INCENTIVE B Y WAY OF DEPB CREDIT WAS PERMISSIBLE U/S 80HHC, EXPORT INCENTIVE BY WAY OF D EPB CREDIT WAS CONSIDERED TO BE PART OF PROFITS OF BUSINESS. IN THE ASSESSMENT OR DERS U/S 143(3), THE AO, PLACING RELIANCE ON PROVISIONS OF TAXATION LAWS (AMENDMENT) ACT, 2005 HELD THAT THE COMPANY WAS NOT ENTITLED TO CLAIM DEDUCTION U/S 80HHC ON IN COME BY WAY OF DEPB CREDIT. AGAINST THE ORDERS OF THE A.O. APPEALS WERE FILED B EFORE THE CIT(A). WHILE THE APPEAL WAS PENDING BEFORE THE CIT(A), THE SPECIAL BENCH OF ITAT, MUMBAI, IN THE CASE OF TOPMAN EXPORTS PVT. LTD. VS ITO (33 SOT 337) HAD HELD THAT IN THE CASE OF DEPB CREDIT, THE SAME IS IN THE NATURE OF CASH A SSISTANCE PROVIDED BY GOVERNMENT AND THEREFORE THE DEPB CREDIT FALLS FOR CONSIDERATI ON U/S 28(IIIB) OF THE INCOME TAX ACT AND THEREFORE, QUALIFIES FOR DEDUCTION U/S 80HHC. I T IS ONLY WHEN THE DEPB CREDIT IS ITA NOS.313 & 314/KOL/2012 TRIO TREND (P) LTD VS D.C.I.T., CIRCLE-11, KOLKATA. A.YRS.2003-04 & 2004- 05 3 SOLD AND ON SUCH; SALE PROFIT IS REALIZED, SUCH PRO FIT FALLS FOR CONSIDERATION U/S 28(IIID) OF THE I.T.ACT WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S 80HHC, IF THE EXPORT TURNOVER EXCEEDS RS. 10 CRORES. IN THE APPELLANTS CASE, THE PROFIT ACCOUNTED IN ITS BOOKS ON SALE OF DEPB WAS IN THE NATURE OF DEPB CREDIT GRANTED BY THE GOVT. AND THEREFORE THE SAME WAS IN THE NATURE OF CASH ASSISTANCE U/S 28(IIIB). SUCH DEPB CREDIT THEREFORE, QUALIFIED FOR DEDUCTION U/S 80HHC. BEFORE THE CIT(A); THE COM PANY WAS DESIROUS OF RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE ITAT, MUMB AI, IN SUPPORT OF ITS CLAIM FOR DEDUCTION U/S 80HHC. HOWEVER, WHEN THE APPEAL WAS D ECIDED BY THE CIT(A), IN THE CASE OF TOPMAN EXPORTS PVT. LTD WAS REVERSED BY THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS (328 ITR 451) . IN VIEW OF THE LATER DECISION OF THE BOMBAY HIGH COURT, COMPANYS A/R WAS UNDER BON AFIDE BELIEF THAT NO RELIEF COULD BE CLAIMED BY THE COMPANY WITH REFERENCE TO DEPB CR EDIT EARNED BY THE COMPANY ON EXPORT OF LEATHER GOODS. THE COMPANY WAS THEREFORE, ADVISED THAT NO USEFUL PURPOSE WOULD BE SERVED BY FILING FURTHER APPEAL BEFORE THE TRIBUNAL AGAINST THE CIT(A)S ORDER REJECTING THE DEDUCTION U/S 80HHC ON DEPB. UNDER SU CH ADVICE OF OUR COUNSEL, APPEALS WERE NOT FILED BEFORE THE TRIBUNAL WITHIN THE DUE D ATE. THE HONBLE SUPREME COURT, HOWEVER, BY ITS JUDGMENT DATED 08.02.2012 IN THE CASE OF TOPMAN EXPORTS VS CIT UPHELD THE DECISION OF THE SP ECIAL BENCH OF THE ITAT, MUMBAI, AND DISAPPROVED THE BOMBAY HIGH COURTS JUDG MENT DELIVERED IN THE CASE OF KALPATARU (SUPRA). IN THE SAID JUDGMENT THE SUPREME COURT HAS HELD THAT DEPB CREDIT EARNED BY THE EXPORTER IS IN THE NATURE OF CASH ASS ISTANCE AND THEREFORE, FALLS U/S 28(IIIB) AND THEREFORE, QUALIFIES DEDUCTION U/S 80HHC. IT IS ONLY WHEN DEPB IS TRANSFERRED AT A PROFIT; THE PROFIT U/S 28(IIID) IS INELIGIBLE FOR D EDUCTION U/S 80HHC. IN THE LIGHT OF THE DECISION OF THE APEX COURT DATED 08.02.2012 THE COM PANY FINDS THAT IT WAS ELIGIBLE TO CLAIM DEDUCTION U/S 80HHC IN RESPECT OF ITS INCOME BY WAY OF DEPB CREDIT. SUCH BENEFICIAL DEDUCTION HAS HOWEVER BEEN DENIED BY THE AO AS WELL AS BY THE CIT(A) DUE TO WRONG INTERPRETATION OF THE STATUTORY PROVISIONS WHICH WERE NOT IN CONFORMITY WITH THE DECISION OF THE SUPREME COURT. AS SOON AS THE C OMPANY BECAME AWARE ABOUT THE CORRECT INTERPRETATION OF THE PROVISIONS OF SECTION 80HHC AS MADE BY THE SUPREME COURT, THE COMPANY HAS TAKEN STEPS TO FILE APPEALS AGAINST THE ORDERS OF THE CIT(A) FOR A.YS.2003-04 & 2004-05. THE COMPANY SUBMITS THAT TH E DELAY IN FILING OF APPEALS WAS NOT DELIBERATE NOR WILLFUL. FURTHERMORE, THE RELIEF CLAIMED BY THE COMPANY IN THE APPEALS IS IN CONFORMITY WITH THE DECISION OF THE SUPREME C OURT, WHICH WAS RENDERED ONLY 08.02.2012. WE, THEREFORE, REQUEST THE HONBLE TRIB UNAL TO KINDLY CONDONE THE DELAY, ADMIT THE APPEAL AND DECIDE THE SAME IN ACCORDANCE WITH THE DECISION OF THE SUPREME COURT. THANKING YOU YOURS FAITHFULLY FOR TRIO TREND PVT. LTD. SD/- DIRECTOR. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. ON G OING THROUGH THE REASONS STATED BY THE ASSESEE COMPANY IN THE CONDONATION PETITION FIL ED BEFORE US, WE FIND THAT THE ASSESSEE WAS NOT GUILTY OF NEGLIGENCE OR SUCH ATTRI BUTES IN NOT FILING THE APPEALS BEFORE THE TRIBUNAL IN TIME. IN FACT, THE ASSESSEE COMPANY HAS MADE A CLAIM OF DEDUCTION U/S ITA NOS.313 & 314/KOL/2012 TRIO TREND (P) LTD VS D.C.I.T., CIRCLE-11, KOLKATA. A.YRS.2003-04 & 2004- 05 4 80HHC OF THE ACT IN RESPECT OF DEPB. THE ASSESSE HA S CLAIMED SUCH DEDUCTION IN THE LIGHT OF THE DECISION OF THE INCOME TAX APPELLATE T RIBUNAL, MUMBAI SPECIAL BENCH RENDERED IN THE CASE OF TOPMAN EXPORTS VS ITO AND K ALPATARU COLOURS & CHEMICALS VS ADDL.CIT, 318 ITR (AT) 87 (MUMBAI) (SB). THEREAF TER THE HONBLE BOMBAY HIGH COURT RENDERED ITS JUDGEMENT IN THE CASE OF CIT VS KALPATARU COLOURS AND CHEMICALS 328 ITR 451 (BOM) WHEREIN THE HONBLE HIGH COURT RE VERSED THE ABOVE STATED DECISION OF THE I.T.A.T., MUMBAI SPECIAL BENCH. THE REAFTER THE HONBLE SUPREME COURT REVERSED THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT ON THE SUBJECT AND DECLARED THE LAW ON THE SUBJECT IN THE JUDGMENT REN DERED IN THE CASE OF TOPMAN EXPORTS VS CIT 342 ITR 49. ONCE AGAIN THE ISSUE CAM E TO BE DECIDED IN FAVOUR OF THE ASSESSEE. WITHOUT ANY FURTHER DELAY THE ASSESSEE HA S FILED APPEALS BEFORE THE TRIBUNAL. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE FI ND THAT IT IS ONLY JUST AND PROPER TO CONDONE THE DELAY CAUSED IN FILING THE APPEALS. ACCORDINGLY, THE DELAY IN FILING THESE APPEALS BEFORE THE TRIBUNAL IS CONDONED AND T HE APPEALS ARE ADMITTED ON THE ROLLS OF THE TRIBUNAL FOR HEARING AND DISPOSAL. 9. IT IS THE ARGUMENT RAISED BY THE ASSESSEE THAT T HE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS CIT, 342 ITR 49, SUPPORTS THE CLAIM MADE BY THE ASSESSEE AND, THEREFORE, THE BENEFIT OF DEDUCTION UNDER SECTION 80HHC HAS TO BE ALLOWED IN ASSESSEES CASE. 10. WE FIND MUCH FORCE IN THE ARGUMENT OF THE ASSES SEE. THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS CIT, 342 ITR 49, HAS HELD THAT WHERE AN ASSESSEE HAS AN EXPORT TURNOVER EXCEEDING RS.10 CRO RES AND HAS MADE PROFITS ON TRANSFER OF THE DEPB CREDIT UNDER CLAUSE (IIID) OF SECTION 28, HE WOULD NOT GET THE BENEFIT OF ADDITION TO EXPORT PROFITS UNDER THE THI RD OR FOURTH PROVISO TO SUB-SECTION (3) OF SECTION 80HHC, BUT HE WOULD GET THE BENEFIT OF E XCLUSION OF A SMALLER FIGURE FROM PROFITS OF THE BUSINESS UNDER EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. THE HONBLE COURT HELD THAT THERE IS NOTHING IN EXPLANA TION (BAA) TO SECTION 80HHC TO ITA NOS.313 & 314/KOL/2012 TRIO TREND (P) LTD VS D.C.I.T., CIRCLE-11, KOLKATA. A.YRS.2003-04 & 2004- 05 5 SHOW THAT THIS BENEFIT OF EXCLUSION OF A SMALLER FI GURE FROM PROFITS OF THE BUSINESS WILL NOT BE AVAILABLE TO AN ASSESSEE HAVING AN EXPORT TU RNOVER EXCEEDING RS.10 CRORES. 11. THEREFORE, WE FIND THAT THE QUANTUM OF DEDUCTIO N AVAILABLE TO THE ASSESSEE UNDER SECTION 80HHC IN THE LIGHT OF DEPB IS TO BE R ECOMPUTED BY THE ASSESSING AUTHORITY IN ACCORDANCE WITH THE JUDGMENT OF THE HO NBLE SUPREME COURT RENDERED IN THE CASE OF TOPMAN EXPORTS VS CIT, 342 ITR 49. THE ASSESSEE IS ENTITLED FOR THE BENEFIT TO THE EXTENT EXPLAINED BY THE HONBLE SUPR EME COURT. 12. THEREFORE, BOTH THE APPEALS ARE REMITTED BACK T O THE ASSESSING OFFICER FOR RECOMPUTATION OF QUANTUM OF DEDUCTION AVAILABLE TO THE ASSESSEE UNDER SECTION 80HHC IN ACCORDANCE WITH LAW AND IN THE LIGHT OF TH E JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS CIT, 342 ITR 49. 13. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 21.06.2013. SD/- SD/- [ .' #!' , ] [ .., ,, , ] [MAHAVIR SINGH ] [N.S.SAINI] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (3 3 3 3) )) ) DATE: 21.06.2013. R.G.(.P.S.) 5 / -##6 76'8- COPY OF THE ORDER FORWARDED TO: 1. TRIO TREND (P) LTD., P-37, C.I.T.ROAD, SCHEME 52, K OLKATA-700014. 2 D.C.I.T., CIRCLE-11, KOKATA. 3 . CIT KOLKATA 4. CIT (A)-XII, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY 51/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NOS.313 & 314/KOL/2012 TRIO TREND (P) LTD VS D.C.I.T., CIRCLE-11, KOLKATA. A.YRS.2003-04 & 2004- 05 6