Shri Chhotalal Shamjibhai Virani (HUF), RAJKOT-GUJARAT V. The Assistant Commissioner of Incom Tax, Circle-2, RAJKOT-GUJARAT

ITA 314/RJT/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62777 (ITAT-RAJKOT)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Keywords: Opportunity of being heard
• Section: 28; 80HHC

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , ,, , . .. . . .. . , ,, ,$ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. S RIVASTAVA, AM. ITA NO. 314/RJT/2011. / ASSESSMENT YEAR:-2001-02. / V/S. SHRI CHHOTALAL SHAMJI VIRANI (HUF) , RAJKOT. . ( +/ APPELLANT) THE ASSTT. C.I. T., CIRCLE-2, RAJKOT. ,-+/ RESPONDENT ./ / ASSESSEE BY SHRI D. M. RINDANI, C.A. / / REVENUE BY SHRI AVINASH KUMAR, D.R. / / DATE OF HEARING 03-04-2012 / / DATE OF PRONOUNCEMENT 04 - 04-2012 / / / / ORDER . .. . . .. . , ,, , / T. K. SHARMA, J. M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 04-05-2011 OF C IT (A)-III, RAJKOT CONFIRMING THE DISALLOWANCE OF DEDUCTION CLAIMED U/S.80HHC AMO UNTING TO RS.36,06,165/- FOR THE ASSESSMENT YEAR 2001-02. 2. .WE HAVE HEARD BOTH THE SIDES. AT THE TIME OF H EARING BEFORE US, BOTH SIDES CONCEDED THAT IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS. CIT REPORTED IN 67 DTR (SC) 1 85, THE ORDER OF LD. CIT(A) BE SET-ASIDE AND CONTROVERSY INVOLVED IN THIS APPEA L REGARDING ALLOWANCE OF DEDUCTION U/S.80HHC BE RESTORED TO THE FILE OF AO F OR REC0MPUTING THE SAME AFRESH. ITA NO 314/RJT/2011. 2 3. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THE HONBLE SUPREME COURT IN TH E CASE OF TOPMAN EXPORTS HAS HELD AS UNDER:- (I) FACE VALUE OF DEPB TAXABLE UNDER SECTION 28(II IB) IN THE YEAR IN WHICH ASSESSEE APPLIED FOR DEPB CREDIT AGAINST EXPO RTS WHILE THE EXCESS OF SALES PROCEEDS OF DEPB OVER ITS FACE VALUE IS TA XABLE UNDER SECTION 28(IIID) IN THE YEAR OF TRANSFER. (II) DEPB IN CASH ASSISTANCE RECEIVABLE BY ANY PE RSON AGAINST EXPORTS UNDER THE SCHEME OF GOVERNMENT OF INDIA AND IS TAXABLE UNDER CLAUSE (IIIB) OF SECTION 28 UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION EVEN BEFORE IT IS TRANSFERRED BY THE AS SESSEE; FACE VALUE OF DEPB IS TAXABLE UNDER SECTION 28(IIIB) IN THE YEAR IN WHICH ASSESSEE APPLIED FOR DEPB CREDIT AGAINST EXPORTS. (III) PROFIT ON THE TRANSFER OF THE DUTY ENTITLEME NT PASS BOOK SCHEME IS THE EXCESS OF SALES PROCEEDS OF DEPB OVER ITS FACE VALUE AND IS TAXABLE UNDER SECTION 28(IIID) IN THE YEAR OF TRANSFER. (IV) THE COST OF ACQUIRING DEPB IS NOT NIL AS THE PERSON ACQUIRES IT BY PAYING CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EX PORT PRODUCT AND THE FACE VALUE OF DEPB REPRESENTS ITS COST. (V) FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SE CTION 80HHC, 90% OF THE DEPB WHICH IS CASH ASSISTANCE AND COVE RED BY SECTION 28(IIIB) SHALL BE EXCLUDED FROM PROFITS OF THE BUS INESS OF THE ASSESSEE IF THE DEPB HAS ACCRUED TO THE ASSESSEE DURING THE PRE VIOUS YEAR, IF DURING THE SAME PREVIOUS YEAR, THE ASSESSEE TRANSFERS THE DEPB AND ITS SALES PROCEEDS EXCEEDS ITS FACE VALUE, 90% OF THE DIFFERE NCE BETWEEN SALES PROCEEDS AND FACE VALUE WILL GET EXCLUDED FROM THE PROFITS OF THE BUSINESS. (VI) IF DEPB ACCRUES TO ASSESSEE IN THE FIRST PREVI OUS YEAR AND IS TRANSFERRED IN THE SECOND YEAR AT A PRICE EXCEEDING ITS FACE VALUE, 90% OF THE DIFFERENCE BETWEEN SALES PROCEEDS AND FACE VALU E AND NOT 90 OF THE ENTIRE SALES PROCEEDS WILL GET EXCLUDED FROM PROFI TS OF THE BUSINESS IN THE SECOND PREVIOUS YEAR AND THE ASSESSEE GETS HIGHER D EDUCTION UNDER SECTION 80HHC AS BIGGER FIGURE OF PROFITS OF THE B USINESS BECOMES THE MULTIPLIER IN THE FORMULA UNDER SECTION 80HHC(3)(A) FOR ARRIVING AT THE FIGURE OF PROFIT DERIVED FROM EXPORTS. 4. WE THEREFORE, SET-ASIDE THE ORDER OF LD. CIT(A) ON THE ISSUE AND DIRECT THE AO TO RE-COMPUTE THE DEDUCTION U/S.80HHC OF THE I.T . ACT AFRESH IN THE LIGHT OF ITA NO 314/RJT/2011. 3 JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TO PMAN EXPORTS(SUPRA) AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, FOR THE STATISTICAL PURPOSES, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED. /5 04/04/2012 7/ THIS ORDER PRONOUNCED IN OPEN COURT ON 04/ 0 4/2012. SD/- SD/- ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 5/ ORDER DATE 04/04/2012. /RAJKOT / // / ,: ,: ,: ,: ;: ;: ;: ;: / COPY OF ORDER FORWARDED TO:- 1.+ / APPELLANT-SHRI CHHOTALAL SHAMJI VIRANI (HUF), RA JKOT 2.,-+ / RESPONDENT-THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2 RAJKOT 3.? / CONCERNED CIT-II, RAJKOT 4. ?A / CIT (A)-III, RAJKOT 5.:,, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.