SARAF EXPORT, CHURU V. ACIT, JHUNJHUNU

ITA 32/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1929 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 09-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRITHVIRAJ MEENA CIT DHK
• Keywords: Reopening of assessment; Business income; Depreciation; Opportunity of being heard; Rule of consistency; Question of law; Difference of opinion; Tax effect; Change of opinion
• Section: 143(3); 80HHC; 80IB; 10B; 147; 148; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 32/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 M/S SARAF EXPORT, RIICO INDUSTRIAL AREA, SARDARSHAHAR, DISTT. CHURU. CUKE VS. THE ACIT, CIRCLE JUNJHUNU LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AATFS 9394 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SURESH OJHA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI PRITHVI RAJ MEENA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07.09.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08/11/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEAL-5, JAIPUR DATED 04/11/2016 PERTAI NING TO THE ASSESSMENT YEAR 2006- 07. THE ASSESSEE HAS RAISED THE FOLLOWINGS GROUNDS OF A PPEAL:- 1. THAT THE ORDER PASSED BY THE COMMISSIONER OF IN COME-TAX (APPEALS)-5, JAIPUR IS ILLEGAL AND AGAINST THE LAW. 2. THAT THE CIT(A) SHOULD HAVE ACCEPTED THAT THE A CTION TAKEN BY THE ASSESSING OFFICER U/S 147 OF INCOME TAX ACT 1961 IS ILLEGAL A ND AGAINST THE LAW. 3. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) SH OULD HAVE APPRECIATED THAT THE PROVISIONS OF THE STATUTE IS BINDING ON TH E REVENUE OFFICER WHICH WAS NEITHER DECLARED UNCONSTITUTIONAL NOR STAYED BY ANY OF THE COMPETENT COURT. 4. THAT THE ORDER PASSED BY THE CIT(A) IS AGAINST T HE JUDICIAL DECORUM AND DISCIPLINE BECAUSE THE JUDGMENT OF SUPREME COURT RE FERRED IN 259 ITR PAGE 19 WAS NOT FOLLOWED BY THE AO AS WELL AS BY THE CIT (A). 2 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. 5. THAT THE CIT(A) SHOULD HAVE APPRECIATED THAT IN THE INITIAL YEAR THE DEDUCTION WAS ALLOWED CANNOT BE REJECTED IN THE SUBSEQUENT YE AR. 6. THAT THE CIT(A) SHOULD HAVE APPRECIATED THAT THE NOTICE WAS NOT IN THE PRESCRIBED FORM, THE NOTICE WAS NO NOTICE IN THE EY E OF LAW. 7. THAT THE CHARGING OF INTEREST IS ILLEGAL AND AG AINST THE LAW. 8. THAT THE COST MAY KINDLY BE AWARDED TO THE APPE LLANT. 2. BY WAY OF GROUND NO. 1 TO 6 , THE ASSESSEE HAS CHALLENGED THE CORRECTNESS AND LEGALITY OF THE REOPENING OF ASSESSMENT. 3. FACTS GIVING RISE TO THESE GROUNDS ARE THAT, IN THIS CASE THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 04-02-2008. THEREAFTER , AN ORDER U/S 154 FOR THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) W AS PASSED ON 08-02-2010 WHEREBY THE DEDUCTION CLAIMED BY THE ASSESSEE WAS WITHDRAWN IN VIEW OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF M/S LIBERTY INDIA VS. CIT 317 ITR 218. 3.1 THE ORDER PASSED U/S 154 OF THE ACT WAS CHALLEN GED AND REACHED TO THE STAGE OF THIS TRIBUNAL. THE ISSUE WAS DECIDED AGAINST THE R EVENUE. SUBSEQUENTLY, THE ASSESSING OFFICER PROCEEDED TO REOPEN THE ASSESSMENT BY ISSUI NG NOTICE U/S 148 WHICH WAS DULY SERVED UPON THE ASSESSEE. IT IS RECORDED BY THE AO THAT REASONS FOR REOPENING WERE DULY SUPPLIED TO THE ASSESSEE. THEREAFTER, CONSIDERING THE SUBMISSION OF THE ASSESSEE THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE DEDUC TION CLAIMED U/S 80IA OF THE ACT. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFO RE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE APPEAL. 4. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE TH IS TRIBUNAL. 3 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. 5. APROPOS TO GROUND NO. 1 TO 6, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. FO R THE SAKE OF CLARITY THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER:- AS REGARDS GROUND NO. 1 & 2, I WANT TO DRAW YOU KI ND ATTENTION TOWARDS ORDER OF THE CIT(A), TOWARDS REOPENING OF THE ASSESSMENT. I N THIS CONNECTION, I WANT TO DRAW YOUR KIND ATTENTION TOWARDS FACTS CONTAINED IN THE PAPER BOOK BEING SUBMITTED SEPARATELY. THE SUBMISSION PRESENTED BEF ORE THE CIT(A) IS AT PAGE 1-8 AND OBJECTION SUBMITTED BEFORE THE ASSESSING AUTHOR ITY AT PAGE 9-10. THE FIRM CAME INTO EXISTENCE FROM THE ASSESSMENT YEAR 2005-0 6. THE ASSESSMENT YEAR 2005-06 BEING THE FIRST YEAR, THE ASSESSMENT OF THE INITIAL YEAR WAS COMPLETED Y/S 143(3) OF THE INCOME TAX ACT AND THE DEDUCTION CLAI MED BY THE ASSESSEE WAS ALLOWED BY THE ASSESSING OFFICER AND ORDER OF THE I NCOME TAX OFFICER DATED 30.07.2007 IS VALID ORDER TILL DATE IS ATTACHED HER EWITH. THIS IS TO BE KEPT IN MIND WHILE CONSIDERING THE APPEAL FOR THE ASSESSMENT YEA R 06-7 THAT IS SECOND YEAR. THE IMMEDIATE QUESTION WHICH CAN BE GERMIN, WHETHE R THE ASSESSMENT CAN BE REOPENED, IF IN THE INITIAL YEAR DEDUCTION/EXEMP TION WAS ALLOWED U/S 147 OF IT ACT. THIS WAS THE ISSUE BEFORE THE ASSESSING OFFIC ER. THE ASSESSMENT OF THE YEAR 2006-07 WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT AND REOPENED BY EXERCISING THE POWERS OF SECTION 147 OF THE IT ACT. THUS, AFTER RECEIVING THE NOTICE, THE ASSESSEE OBTAINED REASONS FOR REOPENING OF THE ASSESSMENT AND SUBMITTED THE OBJECTION BEFORE THE ASSESSING OFFICER. COPY THERE OF IS AT PAGE 9-10 OF THE PAPER BOOK. THE ASSESSING AUTHORITY NOT DISPOSED OFF OBJECTION SUBMITTED BY THE ASSESSEE INSPITE OF THE JUDGMENT OF THE HONBLE SUP REME COURT, THAT IF ANY OBJECTION IS BEING SUBMITTED IN RESPONSE TO NOTICE, IT SHOULD BE DEALT WITH AND DECIDED FIRST, BUT NOTHING WAS DONE BY AO AND NOW M ATTER IS BEFORE YOUR GOOD-SELF. IN ABSENCE OF DISPOSING OFF THE OBJECTION SUBMITTE D BEFORE THE AO, THE ENTIRE ASSESSMENT COMPLETED BY THE ASSESSING OFFICER BECAM E NULL AND VOID IN VIEW OF THE JUDGMENT OF HONBLE SUPREME COURT DELIVERED IN CASE OF G.K.N. SHAFT, REPORTED IN 259 ITR PAGE 19. THIS WAS ALSO ARGUED BEFORE THE C IT(A) BUT DESPITE SPECIFIC 4 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. SUBMISSIONS, THE CIT(A) NOT THOUGHT IT FIT SO AS TO DEAL WITH THIS SUBMISSION AND SUMMARILY REJECTED. IT IS, THEREFORE, HUMBLY PRAYE D THAT ORDER PASSED BY THE ASSESSING AUTHORITY AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEAL) MAY KINDLY BE DECLARED ILLEGAL AND AGAINST THE LAW. I ALSO WANT TO SUBMIT THAT THERE IS PRESCRIBED PRO FORMA FOR GIVING NOTICE IN EACH SECTION AND THAT HAD BEEN PREPARED BY THE CENT RAL BOARD OF DIRECT TAXES. CBDT ALSO PRESCRIBED ONE PROFORMA IN CASE OF REASSE SSMENT U/S 147 OF THE INCOME TAX ACT I.E. ITNS 34. A COPY OF THE SAME IS BEING SUBMITTED IN THE PAPER BOOK ALONG WITH PRESCRIBED PROFORMA AT PAGE 11 & 12, THE NOTICE ISSUED WAS NOT IN PRESCRIBED PROFORMA. IN THIS RESPECT, I WANT TO DRA W YOUR KIND ATTENTION TOWARDS THE FACT THAT ONE SPECIFIC GROUND WAS TAKEN BUT THE CIT(A) FAILED TO ADJUDICATE IN THE PRESCRIBED NOTICE. THEREFORE, THE ORDER OF THE CIT(A) IS NOT IN ACCORDANCE WITH THE LAW AND JUDICIAL DISCIPLINE. THE ATTENTION WAS SPECIFICALLY DRAWN TOWARDS THE O RDER OF HONBLE TRIBUNAL DELIVERED IN CASE OF M/S VERMA TRACTORS. THE RATIO OF THE ORDER IS APPLICABLE IN TOTO BECAUSE IN THAT CASE ALSO PROPER LINES WERE NOT STR UCK OFF IN THE NOTICE ISSUED U/S 147 OF THE IT ACT AND THE SAME SITUATION EXISTS IN CASE OF THE ASSESSEE. FURTHERMORE, THE ATTENTION OF THE CIT(A) WAS ALSO D RAWN TOWARDS THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT WHEREIN IT WAS HEL D THAT NOTICE MUST BE IN THE PRESCRIBED PROFORMA. THE NOTICE SO ISSUED WAS NOT IN THE PRESCRIBED PROFORMA. THE JUDGMENT REFERRED ABOVE IS A JUDGMENT OF RAJAST HAN HIGH COURT REPORTED IN 88 STC PAGE 21; THEREFORE, RATIO THEREOF IS APPLICABLE . THOUGH THE JUDGMENT WAS DELIVERED IN CASE OF SALES TAX BUT THE PRINCIPLES L AY DOWN THEREIN IS APPLICABLE. UNDER THESE FACTS AND CIRCUMSTANCES, YOU WILL OBSER VE THAT THE ORDER OF THE ASSESSING AUTHORITY WAS ON THE BASIS OF ILLEGAL NOT ICE AND THE ASSESSMENT COMPLETED ON THE ILLEGAL NOTICE IS NOT AN ORDER IN THE EYES O F LAW. IT IS, THEREFORE, SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING AUTHORITY AN D SUSTAINED BY THE CIT(A) MAY KINDLY BE DECLARED AS ILLEGAL. IT WILL BE WORTHWHI LE TO SUBMIT THAT THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IS BASED ON THE JUDGME NT OF HONBLE SUPREME COURT. UNDER THESE FACTS AND CIRCUMSTANCES, IT IS HUMBLY P RAYED THAT THE GROUND NO. 1 & 2 MAY BE DECIDED IN FAVOUR OF THE ASSESSEE. 5 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. AS FAR AS GROUND OF RE-OPENING OF ASSESSMENT IS CO NCERNED, I WANT TO SUBMIT THAT THE REOPENING IS ON THE BASIS OF CHANGE OF OPI NION I.E. JUDGMENT OF HONBLE SUPREME COURT AND THE ASSESSEE RELIED UPON THE JUDG MENT OF HONBLE SUPREME COURT IN CASE OF SIMPLEX CONCRETE PIPES (I) LIMITED . THE JUDGMENT OF HONBLE SUPREME COURT ON THE ISSUE OF THE LAW THAT WHETHER ON THE BASIC OF THE JUDGMENT OF SUPREME COURT, THE ASSESSMEDNT CAN BE RE-OPENED OR NOT. THE ASSESSEE ALSO RELIED UPON THE JUDGMENT OF RAJASTHAN HIGH COURT DE LIVERED IN THE CASE OF M/S VARDHMAN INDUSTRIES WHEREIN THE HONBLE RAJASTHAN H IGH COURT ALSO HELD THAT THERE CANNOT BE RE-OPENING OF ASSESSMENT ON THE GROUND OF CHANGE OF OPINION. THE CIT(A) FAILS TO APPRECIATE AND SUSTAINED THE ORDER. IT IS ALSO SUBMITTED THAT THE REASONS FOR REOPENING OF THE ASSESSMENT MAY KINDLY BE DECLARED AS ILLEGAL AND AGAINST THE LAW. AS REGARDS GROUND NO. 3, I WANT TO DRAW YOUR KIND ATTENTION TOWARDS THE FACT THAT THERE IS PROVISION IN THE CONSTITUTION U/S 28( I) (IIIE). THE PROVISION OF THE SECTION IS STILL ON THE STATUES AND THE HONBLE RAJ ASTHAN COURT ADJUDICATED THAT THIS PROVISION IS NOT WITHDRAWN. THEREFORE, IT IS STILL APPLICABLE. IN THIS RESPECT, I WANT TO DRAW YOUR KIND ATTENTION TOWARDS THE FACT THAT T HE HONBLE RAJASTHAN HIGH COURT HAS CATEGORICALLY CONSIDERED AMENDED PROCEDURE WHIL E DELIVERING THE JUDGMENT IN THE CASE OF M/S SARAF SEASON UDYOG REPORTED IN 40 T AX WORD 196. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, YOU WILL OBSERVE THA T THIS JUDGMENT OF RAJASTHAN HIGH COURT AND CANNOT BE OVERLOOKED ALTHOUGH THE SA ME WAS OVERLOOKED BY CIT(A) WHILE PASSING THE ORDER. IT IS THEREFORE, SUBMITTE D THAT THIS GROUND MAY KINDLY ALSO BE CONSIDERED AND ALLOWED. AS REGARDS GROUND NO. 4 IS CONCERNED, IT IS STATED THAT THE JUDGMENT OF HONBLE HIGH COURT AND SUPREME COURT IS HAVING THE CHARACTER OF BINDING NATURE AND THE SAME SHOULD HAVE BEEN FOLLOWED. THE ASSESS ING OFFICER AS WELL AS CIT(A) FAILED TO FOLLOW THE SAME. THEREFORE, MAY KINDLY B E ACCEPTED AND ORDER MAY KINDLY BE DECLARED AS ILLEGAL AND AGAINST THE LAW AND ACT OF THE LOWER AUTHORITIES MAY KINDLY BE DECLARED AGAINST JUDICIAL DECORUM AND DIS CIPLINE. 6 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. AS REGARDS GROUND NO. 5, IT IS STATED THAT IF IN TH E INITIAL YEAR, DEDUCTION HAS BEEN ALLOWED, THE SAME CANNOT BE REJECTED IN THE SUBSEQU ENT YEARS. IN THIS RESPECT, IT IS STATED THAT IF ALLOWED IN THE INITIAL YEAR CANNOT REJECTED IN S UBSEQUENT YEAR AS FAR AS THE ISSUE IN RESPECT OF THE FACT IN WHIC H IF IN THE INITIAL YEAR THE DEDUCTION HAS BEEN ALLOWED IN THE SUBSEQUENT YEAR S AME CANNOT BE CHANGED. IN THIS RESPECT I WANT TO DRAW YOUR KIND ATTENTION TOW ARDS THE ORDER OF INCOME TAX APPELLATE TRIBUNAL DELIVERED IN CASE OF TYCO VALVES & CONTROLS (INDIA) VS. DEPARTMENT OF INCOME TAX ON 23 AUGUST,2012 THE RELE VANT FEW PORTION ARE BEING REPRODUCED HEREUNDER: THEREFORE, THE START POINT OF THE LIMITATION FOR CLAIMING THE BENEFIT FOLLOWING FROM SECTION 10B WOULD COMMENCE FROM THE YEAR OF MA NUFACTURE OR PRODUCTION OF THE UNDERTAKING. IF THE CONDITIONS PRESCRIBED IN T HE SECTION ARE NOT SATISFIED IN THE YEAR OF COMMENCEMENT OF PRODUCTION. WE HOLD THAT IN THE ABSENCE OF ANY DISTURBANCE IN RESPECT OF RELIEF GRANTED IN INITIAL YEAR, THERE WAS NO LEGAL JUSTIFICATION OF D ISTURB THE CONTINUOUS DEDUCTION OF SECTION 10B IN ANY OF THE SUBSEQUENT ASSESSMENT YEA R. THE ABOVE ORDER OF THE HONBLE TRIBUNAL IS CRYSTAL CLEAR IN RESPECT OF FACT THAT IF IN THE INITIAL YEAR THE DEDUCTION HAS BEEN CLAIM ED CANNOT BE DISTURBED IN THE SUCCEEDING YEAR. THE RATION OF THE ORDER OF THE TRI BUNAL IS APPLICABLE IN TOTO. I FURTHER WANT TO DRAW YOUR KIND ATTENTION TOWARDS THE ORDER OF TRIBUNAL IN CASED OF SAMRUDDHI INDUSTRIES LTD. DELIVERED BY THE ITAT PUNE BENCH IN WHICH THE HONBLE BENCH IS ALSO OF THE SAME VIEW. I AM REPRO DUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER OF TRIBUNAL (PARA 14) AS UNDER FOR YOUR READY REFERENCE: ASSESSEE AND WITHOUT ANY CHANGED CIRCUMSTANCES, T HE SAID CLAIM WAS SOUGHT TO BE DENIED IN A SUBSEQUENT YEAR, AND SUCH AN ATTEMPT WAS NEGATED BY THE HONBLE HIGH COURT. IN THE INSTANT CASE, AS WE HAV E NOTED EARLIER THE CIRCUMSTANCES HAVE CHANGED AFTER THE INITIAL ASSESS MENT YEAR AND THEREFORE, THE CLAIM IS SOUGHT TO BE DENIED ON VALID GROUNDS AND W ITHOUT DISTURBING THE CLAIM IN THE INITIAL YEAR BECAUSE THE CIRCUMSTANCES IN THE I NITIAL YEAR HAVE NOT UNDER GONE ANY CHANGE. 7 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. I WANT TO ALSO DRAW YOUR KIND ATTENTION TOWARDS TH E JUDGMENT DELIVERED BY KARNATAKA HIGH COURT IN CASE OF ACE MULTI AXES SYST EM LTD. THE RELEVANT PORTION THEREOF IS BEING REPRODUCED HEREUNDER: INDUSTRIAL GROWTH WHICH IS REQUIRED TO BE ACHIEVED , IF TWO INTERPRETATIONS ARE POSSIBLE, THE COURTS HAVE TO LEARN IN FAVOUR OF EXT ENDING THE BENEFIT OF DEDUCTION TO AN ASSESSEE WHO HAS AVAILED THE OPPORTUNITY GIVEN T O HIM UNDER LAW AND HAS GROWN IN HIS BUSINESS. THEREFORE WE ARE OF THE VIEW, IF A SMALL SCALE INDUSTRY, IN THE COURSE OF 10 YEARS, STABILIZES EARLY, MAKES FURTHER INVEST MENTS IN THE BUSINESS AND IT RESULTS IN ITS GOING OUTSIDE THE PURVIEW OF THE DE FINITION OF A SMALL SCALE INDUSTRY, THAT SHOULD NOT COME IN THE WAY OF ITS CLAIMING BEN EFIT UNDER SEC. 80IB FOR 10 CONSECUTIVE YEARS, FROM THE INITIAL ASSESSME NT YEAR. THEREFORE THE APPROACH OF THE AUTHORITIES RUNS COUNTER TO THE SCH EME AND THE INTENT OF THE LEGISLATURE. THEREBY - THEY HAVE DENIED THE LEGITIM ATE BENEFIT, AN INCENTIVE GRANTED TO THE ASSESSEE. BOTH THE SAID ORDERS CANNO T BE SUSTAINED. THEREFORE THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. HENCE WE PASS THE FOLLOWING. THE RATIO OF THE JUDGMENT IS ALSO APPLICABLE IN CA SE OF THE ASSESSEE. IN THE DECISION OF CIT VS. ART AND CRAFT EXPORT ART REPORTED IN 246 CTR PAGE 463 DELIVERED BY THE HONBLE HIGH COURT BOMBAY THE HONBLE COURT HELD THAT ONCE EXEMPTION HAS BEEN ACCEPTED IN THE E ARLIER YEAR THAN IN THE SUBSEQUENT YEAR FOR THE RULE OF CONSISTENCY SUCH DE DUCTION / EXEMPTION HAS TO BE ALLOWED. THE SAME HAS BEEN REPRODUCED AS UNDER:- AS REGARDS QUESTIONS (A) AND (B) ARE CONCERNED, C OUNSEL FOR THE REVENUE FAIRLY STATED THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE EARLIER YEARS IN , HOLDING THAT ASSESSEE IS ENGAGED IN THE MANUFACTURING ACTIVITY AND, THEREFORE, ENTITLED TO DEDUCTION UNDER SECTION 80IB OF THE IT ACT, 1961 HAS BEEN ACCEPTED BY THE REVENUE IN THE EARLIE R YEARS. NO ARGUMENT IS ADVANCED TO ESTABLISH THAT THE SAID DECISION OF THE TRIBUNAL FOR THE EARLIER YEARS IS ERRONEOUS. IN THESE CIRCUMSTANCES, QUESTION (A) AND (B) RAISED BY THE REVENUE CANNOT BE ENTERTAINED. 8 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. FROM THE PERUSAL OF ABOVE YOU WILL OBSERVE THAT IT IS A RULE OF LAW THAT IF THE EXEMPTION / DEDUCTION HAVE BEEN ALLOWED IS INIT IAL YEAR IN THAT CASE SAME CANNOT BE DISTURBED IN THE SUBSEQUENT YEAR. IT WILL BE WORTHWHILE TO MENTION HERE TH AT THE ORDER OF THE ASSESSING OFFICER IS STILL A VALID ORDER NEITHER REVERSE NOR STAYED BY ANY OF THE COMPETENT COURT THEREFORE IN THESE FACT AND CIRCUMSTANCES THE ORDER IS A GOOD ORDER AND FOLLOWING THE SAME THE DEDUCTION CLAIMED MAY KINDLY BE ALLOWE D. IT WILL BE WORTHWHILE TO MENTION AND DRAW YOUR KIND ATTENTION FURTHER TOWARD S THE FOLLOWING ORDER OF INCOME TAX APPELLATE TRIBUNAL DELIVERED IN CASE OF SMT. URMILA BHANDARI ITA NOS. 766, 2593/DEL/2013 BY THE ITAT, DELHI BENCH H NEW D ELHI WHEREIN IN THE SAME SET OF CIRCUMSTANCES THE HONBLE TRIBUNAL DISMISSED THE APPEAL OF THE DEPARTMENT. THE RELEVANT PORTION IS BEING REPRODUCED HEREUNDER: IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: H NEW DELHI BEFORE SHRI I.C. SUDHIR, J.M. AND SHRI J. SUDHAKAR REDDY, A.M. ITA NOS. 766,2593/DEL/2013 ASSESSMENT YEARS: 2009-10, 2010-11 ITO, WARD-2, ROOM NO. 210, 1ST FLOOR, INCOME TAX B UILDING, IDPL VEERBHADRA, RISHIKESH UTTRAKHAND VS. SMT. URMILA BHANDARI PROP. M/S HOTEL NARAYANA PALACE, TAPOVAN BADRINATH MARG, TEHRI GARHWAL, RISHIKESH, UTTRAKHAND 15. THE PROPOSITION LAID DOWN IN THIS JUDGMENT APPL IES TO THE FACTS OF THIS CASE. THE AO HAS EXAMINED THE CONDITION OF ALLOWABILITY OF TH E CLAIM U/S 80IC IN THE INITIAL ASSESSMENT YEAR OF THE CLAIMS I.E. A.Y. 2005-06 ITSELF IN AN ORDER PASSED U/S 143(3) OF THE ACT. THIS WAS FOLLOWED IN THE SUBSEQUENT A.Y. 9 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. THESE ASSESSMENTS ARE NOT DISTURBED TILL DATE. THER E IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ONLY FRESH VIEW, CONTRAR Y TO THE EARLIER VIEW IS TAKEN DURING THIS IMPUGNED ASSESSMENT YEAR ON THE SAME SE T OF FACTS AND EXEMPTION IS DENIED. THIS CANNOT BE PERMITTED AS HELD BY THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF DELHI PATRA PRAKASHAM LTD. (SUPRA). RESPECT FULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF THE LD. CIT (A) FOR DIFFERENT R EASONS. FROM THE PERUSAL OF ABOVE JUDGMENT YOU WILL OBSERV E THAT THE DISALLOWANCES OF CLAIM OF THE ASSESSEE ARE AGAINST THE LAW. YOU ARE REQUESTED TO KINDLY ACCEPT THE APPEAL OF THE ASSESSEE. AS REGARDS GROUND NO. 6, IT IS STATED THE SAME IS IN RESPECT OF THE PRESCRIBED PROFORMA . I HAVE ALREADY SUBMITTED MY S UBMISSION IN EARLIER PARA WHILE SUBMITTING ILLEGALITY IN RESPECT OF THE SECTION 147 OF IT ACT. 5.1 PER CONTRA LD. D/R VEHEMENTLY OPPOSED THE SUBMI SSIONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ALLOWA BILITY OF DEDUCTION IS NO MORE RES- INTEGRA. THE ISSUE HAS BEEN DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M./S LIBERTY (SUPRA) IN FAVOUR OF THE REVENUE. HE F URTHER CONTENDED THAT LD. AR HAS CONCEALED THE FACT THAT THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE AGAINST THE ASSESSEE IN THE ASSES SEES OWN CASE PERTAINING TO THE ASSESSMENT YEAR 2008-09 IN D.B. INCOME TAX APPEAL N O. 7 OF 2014. THEREFORE, HE URGED THAT THIS APPEAL DESERVES TO BE DISMISSED, WITH COS T. 5.2 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. BY WAY OF THE PRESENT APPEAL, THE ASSESSEE HAS CHALLEN GED THE CORRECTNESS OF THE ORDER PASSED BY THE AUTHORITIES BELOW. AS PER THE ASSESS EE, THE ASSESSING OFFICER HAS NOT 10 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. FOLLOWED THE DUE PROCESS OF LAW AS LAID DOWN QUA TH E REOPENING OF THE ASSESSMENT. IT IS CONTENDED THAT WHERE THE ASSESSING OFFICER HAD PASS ED AN ORDER U/S 154 OF THE ACT IN THAT EVENT REOPENING OF THE ASSESSMENT IS NOT PERMISSIBL E. IT IS STATED THAT THIS OBJECTION WAS NOT DISPOSED OF BY SEPARATE ORDERS. HE FURTHER CON TENDED THAT ANOTHER OBJECTION OF THE ASSESSEE WAS THAT ONCE A DEDUCTION IS GIVEN CANNOT BE WITHDRAWN IN SUBSEQUENT YEARS. IT IS ALSO CONTENDED THAT RE-OPENING CANNOT BE BASED U PON CHANGE OF OPINION. ANOTHER SUBMISSION OF THE ASSESSEE IS THAT THE AO WAS REQUI RED TO DISPOSE OF THE OBJECTION BY WAY OF SPEAKING ORDER IN THE CASE IN HAND AO HAS NOT DO NE SO. THEREFORE, HE URGED THAT ASSESSMENT IS VITIATED AND DESERVES TO BE QUASHED O N THIS GROUND ALONE. FIRST CONTENTIONS OF LD. COUNSEL FOR THE ASSESSEE I S THAT ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IB OF THE ACT IS REQUIRED TO BE EXAMINED IN T HE INITIAL YEAR. IT IS CONTENDED THAT YEAR 2005-06 BEING THE INITIAL YEAR, AND THE DEDUCTION W AS ALLOWED IN THAT YEAR BY AO. THEREFORE, IT CANNOT BE DISTURBED IN SUBSEQUENT YEA R. WE FIND THAT THE SIMILAR SUBMISSIONS WERE MADE BEFORE THE HONBLE HIGH COURT IN DB INCOM E TAX APPEAL NO. 7/2014 (SUPRA) SAME WAS RECORDED BY THE HONBLE HIGH COURT AS UNDE R:- 9. PER CONTRA, MR. SURESH OJHA, LEARNED COUNSEL FO R THE ASSESSEE RESPONDENT CONTENDED THAT INCENTIVES ARE PART OF THE BUSINESS INCOME AND DEDUCTION UNDER SECTION 80-IB OF THE ACT OF 1961 IS REQUIRED TO BE ALLOWED ON THE BUSINESS INCOME AND ONCE THE EXPORT INCENTIVES ARE ALSO PART OF BUS INESS INCOME/RECEIPTS THEN DEDUCTION UNDER SECTION 80-IB IS REQUIRED TO BE ALL OWED ON THE TOTAL PROFIT OF THE ASSESSEE. HE ALSO CONTENDED THAT IN THE CASE OF ASS ESSEE ITSELF FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07, THE ITAT HAD ALLOWED THE CLAIM UNDER SECTION 80-IB OF THE ACT OF 1961 AND SUCH ASSESSMENTS HAVE BECOME FI NAL AS THE SAME HAS NOT BEEN CHALLENGED BY THE REVENUE BEFORE THIS COURT, AND WH EN THE CLAIM HAS BEEN ALLOWED IN THE PAST ON SAME SET OF FACTS AND MATERIAL, DEDU CTIONS HAVING BEEN CLAIMED ON THE SAME FACTS, THE ORDER OF THE TRIBUNAL IS REQUIR ED TO BE FOLLOWED IN THE LIGHT OF 11 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. JUDGMENT RENDERED IN THE CASE OF RADHASOAMI SATSANG VS. CIT 1992 AIR 377 (SC) AND OTHER JUDGMENTS. HE ALSO CONTENDED THAT WHEN TW O REASONABLE CONSTRUCTIONS ARE POSSIBLE THEN THE ONE WHICH IS MORE FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED AND RELIED ON THE JUDGMENT IN THE CASE OF CIT VS. VEGETABLE. PRODUCTS LTD., (1973) 88 ITR 192 (SC). 10. HE FURTHER CONTENDED THAT THE INITIAL ORDER OF CLAIM U/SEC. 80-IB WAS FOR ASSESSMENT YEAR 2005-06 AND DETERMINATION IS REQUIR ED TO BE SEEN IN INITIAL YEAR AND IF CLAIM IN INITIAL YEAR IS FOUND IN ORDER, IT DESERVES TO BE SUBSEQUENTLY IN SUBSEQUENT YEAR. IN THIS REGARD, HE HAS ALSO RELIED UPON SAURASHTRA CEMENT CHEMICAL INDUSTRIES LTD. VS. CIT, GUJARAT 123 ITR 6 69. HE ALSO-CONTENDED THAT THE JUDGMENT IN LIBERTY INDIA (SUPRA) HAS NOT CONSIDERED THE AMENDED SECTION 28(IIID) AND 28(IIIE) OF THE ACT OF 1961, AND THE O RDER OF THE TRIBUNAL IS JUST AND PROPER AND IS NOT REQUIRED TO BE INTERFERED WITH. 11. WE HAVE HEARD THE COUNSEL FOR THE PARTIES AND P ERUSED THE IMPUGNED ORDER SO ALSO OTHER MATERIAL AND JUDGMENTS CITED AT THE B AR. 12. IN OUR VIEW THE ORDER OF THE TRIBUNAL IS NOT S USTAINABLE IN LAW AS WHEN THE AO AND CIT(A) RELIED UPON THE JUDGMENT OF LIBERTY I NDIA (SUPRA), WHICH, IN OUR VIEW, COVERS THE CONTROVERSY BUT SURPRISINGLY, THE TRIBUNAL HAS NOT AT ALL CARED TO DISCUSS THE JUDGMENT OF THE APEX COURT WHICH IS BIN DING ON ALL THE AUTHORITIES U/ART. 141 OF THE CONSTITUTION OF INDIA INCLUDING THE TRIB UNAL. THE TRIBUNAL RELIED UPON ITS OWN ORDER FOR THE ASSESSMENT YEAR 2005-06 AND 2006- 07 RESPECTIVELY WHICH IN OUR VIEW, IS UNSUSTAINABLE IN LAW IN THE LIGHT OF THE J UDGMENT OF LIBERTY INDIA (SUPRA) WHICH WAS AVAILABLE BEFORE THE ITAT EVEN WHEN THE E ARLIER APPEALS WERE DECIDED. 13. IT WOULD BE APPROPRIATE TO QUOTE RELEVANT PARA OF THE IMPUGNED ORDER OF THE TRIBUNAL: 2.7 IT IS AN UNDENIABLE AND UNDISPUTED FACT THAT AS SESSING OFFICER HAS PASSED THE IMPUGNED ORDER BASED ON THE VERDICT GIVEN IN THE LI BERTY INDIA (SUPRA). THE PERUSAL 12 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. OF THE JUDGMENT REVEALS THAT THEIR LORDSHIPS HAVE N OT CONSIDERED THE AMENDED PROVISION. AS AGAINST WHICH IS RIGHTLY POINTED OUT BY THE LD. AR, THE HON'BLE RAJASTHAN HIGH COURT IN THE DECISION OF SARAF SEASO NING UDHYOG (SUPRA) HAVE DISCUSSED AND RELIED ON EVEN THE AMENDED PROVISION . FURTHER IT IS TRITE THAT WHEN ANY AMENDED PROVISION IS NOT CONSIDERED OR FOR THAT MATTER, ANY RELEVANT PROVISION OF THE ACT IS NOT CONSIDERED WHILE GIVING A JUDGMEN T, IT IS TREATED AS IN PER CURIUM. 2.8 THE HON'BLE HIGH COURT HAS TAKEN ITS VIEW WHILE DECIDING THE CASE OF CHOKSHI CONTRACTS (P) LTD. IN 251 ITR 587 (RAJ.) THAT IN CA SE AMENDED PROVISIONS OF THE ACT: ARE NOT CONSIDERED THE JUDGMENT LOOSES THE CHARACT ER OF A BINDING NATURE. THE COURT HAS ALSO HELD AS UNDER:- 'COMING TO THE JUDGMENT RELIED ON BY THE ID. COUNSE L FOR THE REVENUE IN SHREE ENGINEER'S CASE (SUPRA), WE ARE OF THE OPINIO N THAT THE ANSWER QUESTION NO.3 WHICH WAS REFERRED BY THE TRIBUNAL HA S BEEN RENDERED SOLELY WITH THE REFERENCE TO THE EARLIER DECISION OF THE C OURT IN 'VISHNU OIL AND DAL MILLS' CASE (1996) 218 ITR 71 (RAJ.) ONLY WITHOUT N OTICING THE RELEVANT PROVISIONS OF SECTION 80A AND 80AB AND SECTION 80B( 5) AND ALSO SECTION 80HH(9). IT MAY BE NOTICED THAT THE DECISION IN VIS HNU OIL AND DAL MILLS CASE (1996), 218 ITR 71 (RAJ.) DEALT WITH THE QUESTION W HETHER IN COMPUTING THE GROSS TOTAL INCOME FOR THE PURPOSE OF CHAPTER VI-A REQUIRES ADJUSTMENTS OF UNABSORBED CARRY FORWARD LOSS OR UNABSORBED CARRY F ORWARD DEPRECIATION IN TERMS OF PART D OF CHAPTER IV OR IN TERMS OF CHAPTE R VI OF THE ACT, WHICH AS SEEN ABOVE HAS TO BE COMPUTED WITHOUT TAKING INTO A CCOUNT THE PROVISIONS OF CHAPTER VI-A, BUT AFTER TAKING INTO ACCOUNT THE PRO VISIONS OF THE ACT-WHETHER UNDER CHAPTER IV OR CHAPTER VI. HOWEVER, THE COURT WAS NOT DEALING WITH THE INTERACTION OF THE VARIOUS SECTIONS CONTAINED IN CH APTER VI-A ON THE ISSUE OF DEDUCTION OF ANY AMOUNT WHICH IS TO BE ALLOWED UNDE R CHAPTER VI-A. THUS THE DECISION RENDERED IN SHREE ENGINEERS' CASE WITH OUT REFERENCE TO THE RELEVANT PROVISIONS OF THE ACT MERELY BY REFERENCE TO VISHNU OIL MILLS CASE (1996), 218 FIR 71 (RAJ.) WAS PER INCURIAM AND CANN OT BE TAKEN AS A BINDING PRECEDENT AND DOES NOT ASSIST THE REVENUE IN ANY MA NNER.' 13 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. 2.9 SIMILAR VIEW HAS BEEN TAKEN BY THE JODHPUR BENC H IN THE CASE OF M/S BOTHRA INTERNATIONAL, JODHPUR IN ITA NO. 37/JU/2011- A.Y. (2002-03) DATED 21.9.2012. THEREFORE, THE DECISION OF LIBERTY INDIA WILL NOT R ULE THE FIELD AFTER AMENDMENT. MOREOVER IN ANY OTHER CASE, THE ISSUE BECOMES A DEB ATABLE ONE IN THE LIGHT OF THE ABOVE DECISION. IT IS SETTLED POSITION OF LAW THAT WHERE ANY ISSUE IS DEBATABLE, IT CANNOT BE CORRECTED U/S 154 OF THE ACT. IN THIS REG ARD, THE HONBLE APEX COURT IN THE CASE OF T.S. BALARAM (ITO) VS. VOLKART BROTHERS AND OTHERS REPORTED IN 82 ITR 50 (SC) IS RELEVANT WHEREIN AN ACTION TAKEN BY ASSESSING OF FICER U/S 154 OF THE. ACT WAS FOUND TO BE ILLEGAL. THE HON'BLE APEX COURT HAS HEL D THUS:- 'IN SATYANARAYN LAXMINARAYAN HEDGE VS. MALIKARJUN B HAVANAPPA TIRUMALE, THIS COURT WHILE SPELLING OUT THE SCOPE O F THE POWER OF `A HIGH. COURT UNDER ARTICLE 226 OF THE CONSTITUTION RULE TH AT AN ERROR WHICH HAS TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY BE TWO OPINIONS CANNOT BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD- SEE SIDHRAMAPPA ANDANNAPP A MANVI V. COMMISSIONER OF INCOME-TAX (2). THE POWER OF THE OF FICERS MENTIONED IN SECTION 154 OF THE INCOME-TAX ACT, 1961, 'TO CORREC T 'ANY MISTAKE APPARENT FROM THE RECORD.' IN THIS CASE, IT IS NOT NECESSARY FOR US TO SPELL OUT THE DISTINCTION BETWEEN THE EXPRESSIONS 'ERROR APPARENT ON THE FACE OF THE RECORD' AND 'MISTAKE APPARENT FROM THE RECORD.' BUT SUFFICE IT TO SAY THAT THE INCOME-TAX OFFICER WAS WHOLLY WRONG IN HOLDING THAT THERE WAS A MISTAKE APPARENT FROM THE RECORD OF THE ASSESSMENTS OF THE FIRST RESPONDENT.' WE HAVE FOUND THAT THE ALLOWANCE OF DEDUCTION IS NO T A DARING, OBVIOUS, PATENT AND APPARENT FROM RECORD. HENCE, IT CANNOT BE RECTIFIED, IN VIEW OF OUR ABOVE DISCUSSION. ACCORDINGLY, WE ACCEP T THE APPEAL OF THE ASSESSEE AND SET ASIDE THE FINDING OF THE LD. CIT ( A) BY REVERSING THE SAME AND ALLOW THIS APPEAL.'.... SD/ SD/- (HARI OM MARATHA) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER 14 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. JAIPUR DATED 17/12/2013 [UNDERLINING BY US] 14. ON PERUSAL OF PARA 2.7 AND 2.9 OF THE TRIBUNAL' S ORDER IT IS CLEAR THAT THE TRIBUNAL FINDS JUDGMENT OF LIBERTY INDIA IS PER INC URIUM AND FURTHER FOUND THAT THE ISSUE ON FACTS IS DEBATABLE AND HOLDS THAT WHERE TH E ISSUE IS DEBATABLE IT CANNOT BE CORRECTED UNDER SECTION 154 OF THE ACT OF 1961. IT IS TO BE NOTICED THAT THE YEAR UNDER APPEAL IS NOT AN ORDER U/SEC. 154 AND THE ASS ESSING OFFICER HAS PASSED AN ORDER UNDER SECTION 143 (3) FROM THE STAGE OF PASSI NG OF THE ASSESSMENT O DER AND HAS NOT PASSED A RECTIFICATORY ORDER UNDER SECTION 154 OF THE ACT OF 1961 WHICH HAS BEEN CONSIDERED IN THE CASE OF BOTHRA INTERNATIONAL (SUPRA). 15. WE HAVE REPRODUCED PARA 2.9 OF THE ORDER OF THE TRIBUNAL. AND WE FIND THAT THE INSTANT CASE- IS 'NOT A CASE OF A RECTIFICATORY ORDER OR MISTAKE APPARENT FROM RECORD RATHER IT IS A CASE OF REGULAR SCRUTINY ASSE SSMENT AND NOT AN ORDER UNDER SECTION 154 OF THE ACT OF 1961. THEREFORE, THE VERY FOUNDATION AND PREMISE ON WHICH THE ITAT HAS PROCEEDED IS WHOLLY PERVERSE. 16. COUNSEL FOR THE ASSESSEE CONTENDED THAT SINCE IN THE INITIAL YEAR, THE CLAIM HAS BEEN ALLOWED BY THE TRIBUNAL AND ATTAINED FINAL ITY, THEREFORE THE VIEW IN THE SUBSEQUENT YEARS WAS REQUIRED TO BE FOLLOWED AND TH OUGH THE PRINCIPLES OF LAW OF PRECEDENCE MAY NOT APPLY BUT EXPECTED TO MAINTAIN C ONSISTENCY. BE THAT AS IT MAY, IN THE APPEAL MEMO IT IS OBSERVED BY THE APPELLANT THAT THE TAX EFFECT WAS LOW IN ASSESSMENT YEAR 2005-06 AND 2006-07 AND IN THE LIGH T OF THE CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES, NO APPEAL WAS PREFERRED. LAW OF CONSISTENCY DOES NOT MEAN THAT AN ORDER NOT SUSTAINABLE IN LAW IS ALSO REQUIR ED TO BE FOLLOWED. ONE WRONG CANNOT MAKE SUBSEQUENT ACT CORRECT AND THEREFORE IN OUR VIEW SUCH A CLAIM OF THE COUNSEL FOR THE ASSESSEE DESERVES TO BE OUTRIGHTLY REJECTED. 17. WE MAY REITERATE AND ALSO HASTEN TO ADD THAT I F THE INITIAL ASSESSMENT ORDER IS LEGALLY UNSUSTAINABLE & PERVERSE, IT NEED NOT BE FOLLOWED THOUGH FOR DIVERSE 15 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. REASONS MAY HAVE ATTAINED FINALITY. IT MAY BE TRUE THAT CONSISTENCY IN ORDER IS REQUIRED TO BE MAINTAINED BUT IN OUR VIEW THE CLAIM ALLOWED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2005-06 AND 2006-07 IS NOT SUSTAINA BLE AND TRIBUNAL HAS DECIDED , CONTRARY TO THE LAW LAID DOWN BY APEX COURT IN LI BERTY INDIA (SUPRA) AND AS THE SAID JUDGMENT WAS AVAILABLE BEFORE THE ITAT WHO DEC IDED , THE APPEALS FOR THE ASSESSMENT. YEAR 2005-06 AND 2006-07. THIS ALSO-: H IGHLIGHTS THAT IT REQUIRES EXTRA CAUTIOUS APPROACH BY THE AUTHORITIES (REVENUE) AND STANDING COUNSELS WHICH SHOULD NOT SWEEP THE MATTERS. UNDER THE CARPET TAKING ADVA NTAGE OF MONETARY LIMITS FIXED BY CBDT. THIS COURT IN COMMISSIONER OF INCOME TAX VS. M/S. GARMENT CRAFTS IN DB ITA NO.42/2008 DECIDED ON 12.1.2016 HELD THAT IF A SUBSTANTIAL QUESTION IS COVERED BY THE JUDGMENT OF THE APEX COURT AND THIS COURT AND IS NO MORE RES INTEGRA THEN THE CIRCULAR OF CENTRAL BOARD OF DIREC T TAXES ABOUT TAX EFFECT MAY NOT BE BINDING TO NON-SUIT THE REVENUE. 18. HAVING SAID SO, WE WILL DEAL WITH QUESTION OF DEDUCTION UNDER SECTION 80-IB AS TO WHETHER THE SAME IS ALLOWABLE OR NOT AS HELD IN M/S. GARMENT CRAFT (SUPRA):- SEC. 80-IB OF THE INCOME TAX ACT PROVIDES FOR DEDU CTION AT A SPECIFIED PERCENTAGE IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE ELIGI BLE INDUSTRIAL UNDERTAKINGS AND OTHER INFRASTRUCTURE DEVELOPMENT UNDERTAKING ON FUL FILLMENT OF .SPECIFIED CONDITIONS FOR A PERIOD OF 10 OR 12 CONSECUTIVE ASSESSMENT YEA RS FROM INITIAL ASSESSMENT YEAR, AS THE CASE MAY BE. ON PERUSAL OF SEC. 80-IB, IN OUR VIEW, IT POSTULATE S THAT THE DEDUCTION U/SEC. 80-IB IS AVAILABLE TO THE ELIGIBLE INDUSTRIAL UNDERTAKING WH ERE THE GROSS TOTAL INCOME OF THE ELIGIBLE ASSESSEE INCLUDES ANY 'PROFITS AND GAINS D ERIVED FROM ANY ELIGIBLE BUSINESS' REFERRED TO IN THE SECTION (EMPHASIS SUPPLIED). WHA T HAS TO BE SEEN IS 'DERIVED FROM' AND NOT 'ATTRIBUTABLE TO'. THE EXPRESSION 'DERIVED FROM' IS RESTRICTIVE AS AGAINST 'ATTRIBUTABLE TO', WHICH IS WIDER. THERE SHOULD BE IMMEDIATE NEXUS AND NOT DISTANT NEXUS. IN OUR VIEW DEPB/DUTY DRAW BACK BENEFITS DO NOT FORM PART OF NET PROFIT OF 16 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. UNDERTAKING AS THEY ARE RIOT DERIVED FROM THE ELIGI BLE BUSINESS BUT ARE INCENTIVES UNDER A PARTICULAR SCHEME. THE HON'BLE APEX COURT IN THE CASE OF CIT VS. STERL ING FOODS (SUPRA), WHERE THE CONTROVERSY WAS RELATING TO DEDUCTION U/SEC. 80-HH OF THE ACT, HAD AN OCCASION TO CONSIDER ABOUT THE PROFITS FROM SALE OF IMPORT ENTI TLEMENTS, ITS NATURE AND OBSERVED AD-INFRA:- 'WE DO NOT THINK THAT, THE SOURCE OF THE IMPORT ENT ITLEMENTS CAN BE SAID TO BE THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. THE SOURCE OF THE IMPORT ENTITLEMENTS CAN, IN THE CIRCUMSTANCES, ONLY BE SAID TO BE THE EXPORT PR OMOTION SCHEME OF THE CENTRAL GOVERNMENT WHERE UNDER THE EXPORT ENTITLEMENTS BECO ME AVAILABLE. THERE MUST BE, FOR THE APPLICATION OF THE WORDS 'DERIVED FROM', A DIRECT NEXUS BETWEEN THE PROFITS AND GAINS AND ONLY INDUSTRIAL UNDERTAKING. IN THE I NSTANT CASE, THE NEXUS IS NOT DIRECT AND ONLY INCIDENTAL. THE INDUSTRIAL UNDERTAKING EXP ORTS PROCESSED SEA FOOD. BY REASON OF SUCH EXPORT, THE EXPORT PROMOTION SCHEME APPLIES. THEREUNDER, THE ASSESSEE IS ENTITLED TO IMPORT ENTITLEMENTS, WHICH IT CAN SELL. THE SALE CONSIDERATION THERE FROM CANNOT, IN OUR VIEW, BE HELD TO CONSTITU TE A PROFIT AND GAIN DERIVED FROM THE ASSESSEE'S INDUSTRIAL UNDERTAKINGS. THUS, HON'BLE APEX COURT IN THE IDENTICAL CIRCUMSTA NCES RELATING TO IMPORT ENTITLEMENTS CLEARLY HELD THAT IT DOES NOT CONSTITU TE PROFIT AND GAINS DERIVED FROM ASSESSEE'S INDUSTRIAL UNDERTAKING. 15. THE JUDGMENT OF THE HON'BLE APEX COURT IN THE C ASE LIBERTY INDIA VS. CIT (SUPRA) , IN OUR VIEW, IS ALSO DIRECTLY ON THE ISSU E AS IN THE INSTANT CASE U/SEC. 80-IB OF TO ACT. THE HON'BLE APEX COURT, IN PARA 14 HAS OBSE RVED: ANALYZING CHAPTER VI-A, WE FIND THAT SECTION 8018/80-IA ARE A CODE BY THEMS ELVES AS THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THERE FORE, WE NEED TO EXAMINE WHAT THESE PROVISIONS PRESCRIBE FOR 'COMPUTATION OF PROF ITS OF THE ELIGIBLE BUSINESS'. IT IS EVIDENT THAT SECTION 80-IB PROVIDES FOR ALLOWING OF DEDUCTION IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. THE W ORDS 'DERIVED FROM' ARE NARROWER IN CONNOTATION AS COMPARED TO THE WORDS 'ATTRIBUTAB LE TO'. IN OTHER WORDS, BY USING THE EXPRESSION 'DERIVED FROM', PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. IN THE PRESENT BATCH OF CASES, THE CO NTROVERSY WHICH ARISES FOR 17 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. DETERMINATION IS : WHETHER THE DEPB CREDIT/DUTY DRA WBACK RECEIPT COMES WITHIN THE FIRST DEGREE SOURCES ? ACCORDING TO THE ASSESSEE(S) , DEPB CREDIT/DUTY DRAWBACK RECEIPT REDUCES THE VALUE OF PURCHASES (COST NEUTRA LIZATION), HENCE, IT COMES WITHIN FIRST DEGREE SOURCE AS IT INCREASES THE NET PROFIT PROPORTIONATELY. ON THE OTHER HAND, ACCORDING TO THE DEPARTMENT, DEPB CREDIT/DUTY DRAWB ACK RECEIPTS DO NOT COME WITHIN FIRST DEGREE SOURCE AS THE SAID INCENTIVES F LOW FROM THE INCENTIVE SCHEMES ENACTED BY THE GOVERNMENT OF INDIA OR FROM SECTION 75 OF THE CUSTOMS ACT, 1962. HENCE, ACCORDING TO THE DEPARTMENT, IN THE PRESENT CASES, THE FIRST DEGREE SOURCE IS THE INCENTIVE SCHEME/PROVISIONS OF THE CUSTOMS ACT. IN THIS CONNECTION, THE DEPARTMENT PLACES HEAVY RELIANCE ON THE JUDGMENT OF THIS COURT IN STERLING FOODS [1999] 237 ITR 579. THEREFORE, IN THE PRESENT CASES , IN WHICH WE ARE REQUIRED TO EXAMINE THE ELIGIBLE BUSINESS OF AN INDUSTRIAL UNDE RTAKING, WE NEED TO TRACE THE SOURCE OF THE PROFITS TO MANUFACTURE. (SEE CIT V KI RLOSKAR OIL ENGINES LTD. REPORTED IN [1986] 157 ITR 762.' THE HON'BLE COURT ANALYSED DU TY EXEMPTION REMISSION SCHEME AND HELD DEPB AS AN INCENTIVE. IT HELD IN PARA 18 A S UNDER: 'ANALYSING THE CONCEPT OF REMISSION OF DUTY DRAWBAC K AND DEPB, WE ARE SATISFIED THAT THE REMISSION OF DUTY IS ON ACCOUNT OF THE STA TUTORY/POLICY PROVISIONS IN THE CUSTOMS ACT/SCHEME(S) FRAMED BY THE GOVERNMENT OF I NDIA. IN THE CIRCUMSTANCES, WE HOLD THAT PROFITS DERIVED BY WAY OF SUCH INCENTI VES DO NOT FALL WITHIN THE EXPRESSION 'PROFITS DERIVED FROM INDUSTRIAL UNDERTA KING' IN SECTION 80-IB.' IT HELD IN PARA 24 AS UNDER: 'IN THE CIRCUMSTANCES, WE HOLD THAT DUTY DRAWBACK R ECEIPT/DEPB BENEFITS DO NOT FORM PART OF THE NET PROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF SECTION 80-I/80-IA/80-IB OF THE 1961 ACT' THUS, IN OUR VIEW, THE JUDGMENT IS DIRECTLY AND SQU ARELY ON THE ISSUE AND THE ISSUE IS NO MORE RES INTEGRA. IT MAY ALSO BE RELEVA NT TO OBSERVE THAT THE JUDGMENTS RENDERED BY THIS COURT IN THE CASE. OF SARAF SEASON ING UDYOG (SUPRA) AND CIT VS. CHOKSHI CONTACTS (P) LTD. (SUPRA) ARE JUDGMENTS PRI OR TO THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SU PRA) AND THUS ARE PER INCURIUM. THE JUDGMENTS IN THE CASE OF TOPMAN EXPORTS VS. CIT (SU PRA) AND VIKAS KALRA VS. CIT : (2012) 247 CTR 0382, IN OUR VIEW, ARE IN CONTEXT OF SEC. 80HHC READ WITH 18 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. EXPLANATION (BAA) OF THE INCOME TAX ACT, AND ACCORD INGLY ARE DISTINGUISHABLE. THE OTHER JUDGMENTS, RELIED UPON BY COUNSEL FOR THE ASS ESSEES, ARE ALSO DISTINGUISHABLE IN VIEW OF WHAT WE HAVE NOTICED HEREINABOVE AND THE ARGUMENTS OF THE COUNSEL FOR THE ASSESSEES FIND NO FORCE AND ARE HEREBY REJECTED .' RESPECTFULLY, FOLLOWING THE SAME, THE OBJECTION OF LD. COUNSEL FOR THE ASSESSEE THAT ISSUE OF DEDUCTION IS REQUIRED TO EXAMINED IN THE INITIAL YEAR AND ONCE THE ORDER OF EARLIER ATTAINS FINALITY IT CANNOT BE DISTURBED IS DISMISSED. NOW, COMING TO THE CONTENTION OF LD. COUNSEL THAT ITS OBJECTIONS AGAINST RE-OPENING WAS NOT DISP OSED OF BY WAY OF SPEAKING ORDER. WE FIND MERIT INTO THIS CONTENTION OF LD. COUNSEL FOR THE ASSESSEE. THE AO HAS NOT PASSED ANY SPEAKING ORDER, EVEN IN THE ASSESSMENT ORDER TH ERE IS NO WHISPER ABOUT THE OBJECTIONS RAISED BY AO THAT ASSESSMENT CANNOT BE R E-OPENED WHERE THE AO HAD INVOKED PROVISION OF SECTION 154 OF THE ACT. MOREOVER, AO HAS DISCUSSED THE REPLY OF THE ASSESSEE RAISED DURING THE COURSE OF RE-ASSESSMENT PROCEEDIN G. LD. COUNSEL HAS RELIED UPON THE ORDER OF HONBLE SUPREME COURT RENDERED IN THE CASE OF G.K.N DRIVESHAFTS (INDIA) LTD. VS. ITO 259 ITR 19, WHEREIN THE HONBLE SUPREME COURT H AS OBSERVED AS UNDER:- HOWEVER, WE CLARIFY THAT WHEN A NOTICE UNDER SECTI ON 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE A RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEI PT OF REASONS, THE NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE A ND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. I N THE INSTANT CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, T HE ASSESSING OFFICER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A S PEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVESAID FIV E ASSESSMENT YEARS. 19 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. FROM THE ABOVE OBSERVATION, IT CAN BE INFERRED THAT AO WAS REQUIRED TO DISPOSE OF OBJECTIONS BY WAY OF SPEAKING ORDER BEFORE PROCEEDI NG WITH THE ASSESSMENT. NOW QUESTION ARISES WHETHER THE ASSESSMENT CAN BE ANNUL LED ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT DISPOSED OF THE OBJECTION IN THE MA NNER HE WAS EXPECTED TO DO. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ALLAN COLD STORAGE LTD. VS. INCOME TAX OFFICER AND OTHERS [2006] 287 ITR 1 (BOM), CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF G.K.N. DRIVESHAFTS (INDIA) LTD. VS. IT O (SUPRA) UNDER THE IDENTICAL FACTS HAS HELD AS UNDER:- 8. HAVING NOTED THIS SCENARIO, IN OUR VIEW THE PROPER COURSE WILL BE TO INTERFERE WITH THE ASSESSMENT ORDER PASSED IN ALL FOUR MATTER S BY THE CONCERNED OFFICER. WE ARE AWARE THAT WHEN AN ALTERNATIVE REM EDY IS RESORTED TO, THE WRIT JURISDICTION IS NOT TO BE EXERCISED, BUT THAT IS A RULE OF SELF-LIMITATION. THE ORDERS CHALLENGED IN THE PRESENT MATTER ARE CLEARLY AGAINST THE LAW LAID DOWN BY THE APEX COURT AND, THEREFORE, THE EXERCISE OF W RIT JURISDICTION IS CALLED FOR. THAT BEING SO, WE ALLOW ALL THESE PETITIONS A ND QUASH AND SET ASIDE THE ORDERS OF ASSESSMENT PASSED IN ALL THESE FOUR PETIT IONS. INASMUCH AS THE ASSESSMENT ORDERS ARE SET ASIDE, THE APPEALS FILED BY THE PETITIONERS NO LONGER REQUIRED TO BE PROSECUTED. THE SAME WILL ST AND DISPOSED OF. 9. NOW THAT THE IMPUGNED ORDERS ARE SET ASIDE, THE FIRST RESPONDENT, AFTER HEARING THE PETITIONERS, WILL SEPARATE SPEAKING ORD ERS ON THE OBJECTIONS WHICH THE PETITIONERS HAVE FILED. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE BOMA BY HIGH COURT IN THE JUDGMENT DATED 2 ND MARCH 2010 IN THE CASE OF IOT INFRASTRUCTURE & ENE RGY SERVICES LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX & ANR. (2010) 233 CTR (BOM) 175, WHEREIN THE HONBLE COURT HELD AS UNDER:- 20 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. 4. IN THE CIRCUMSTANCES, THE PETITION SHALL STAND DISPOSED OF IN THE FOLLOWING TERMS: (I) THE ORDER OF REASSESSMENT DT. 23 RD DEC. 2009 AND THE ORDER ISSUED BY A NOTHING DT. 21 ST DEC. 2009 DISPOSING OF THE OBJECTIONS OF THE ASSES SEE ARE QUASHED AND SET ASIDE: (II) THE AO SHALL PASS A FRESH ORDER ON THE OBJECTIONS R AISED BY THE ASSESSEE TO THE PROPOSED REASSESSMENT WITHIN A PERIOD OF FOU R WEEKS FROM TODAY AFTER FURNISHING AN OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE AND SERVE A COPY OF THE SAID ORDER UPON THE PETITIONER. (III) IN THE EVENT THAT AN ORDER ADVERSE TO THE ASSESSEE IS PASSED, EFFECT SHALL NOT BE GIVEN TO THE ORDER FOR A PERIOD OF FOUR WEEK S THEREAFTER TO ENABLE THE ASSESSEE TO SEEK RECOURSE TO ITS REMEDIES AGAIN ST THE ORDER. (IV) IF WITHIN THE PERIOD SPECIFIED IN CL. (III) ABOVE, THE ORDER PASSED AS PER CL. (II) ABOVE IS NOT STAYED BY A COURT AND THERE IS NO ORDER RESTRAINING THE AO FROM PASSING A REASSESSMENT ORDER, THE AO WOULD BE AT LIBERTY TO PASS AN ORDER OF REASSESSMENT WITHIN A PERIOD OF TW O WEEKS FROM THE EXPIRY OF THE PERIOD SET OUT IN CL. (III) ABOVE. (V) IN ORDER TO FACILITIATE COMPLETION OF THE ENTIRE EX ERCISE SET OUT HEREIN ABOVE, FOR A PERIOD OF TEN WEEKS FROM TODAY, THE NO TICE DT. 16 TH MARCH, 2009 SHALL REMAIN STAYED; (VI) ALL THE RIGHTS AND CONTENTIONS OF THE PARTIES ARE K EPT OPEN AND THIS ORDER SHALL NOT BE CONSTRUCTED AS THE EXPRESSION OF ANY O PINION BY THE COURT ON THE MERITS OF RIVAL CONTENTIONS. RESPECTFULLY, FOLLOWING THE JUDGMENTS OF THE HONBL E BOMBAY HIGH COURT, WE HEREBY SET ASIDE THE ASSESSMENT ORDER, AND DIRECT THE AO TO DI SPOSE OF THE OBJECTION BY WAY OF SEPARATE SPEAKING ORDER AND IN CASE, IF THE OBJECTI ONS ARE REJECTED HE WOULD MAKE 21 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU. ASSESSMENT AFRESH AS PER LAW. THE GROUNDS RAISED I N THIS APPEAL ARE DISPOSED IN THE TERMS INDICATED HEREIN ABOVE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, THE 08 TH DAY OF NOVEMBER 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 08/11/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S SARAF EXPORT, CHURU. 2. THE RESPONDENT- THE ACIT, CIRCLE JHUNJHUNU. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 32/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 22 ITA NO. 32/JP/2017. M/S SARAF EXPORTS, CHURU.