The ACIT, Central Circle-2, Surat V. M/s. Pratibha Syntex Ltd., Surat

ITA 3371/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9163 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-07-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 25-11-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K VYAWAHARE
• Keywords: Opportunity of being heard
• Section: 80HHC; 115JB; 80HH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER & SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER ITA NO. 3371/AHD/2004 ASSESSMENT YEAR : 2001-02 ACIT, CENTRAL CIRCLE-2, VS M/S PRATHIBHA SYNTEX L TD., SURAT SURAT PAN NO./GIR NO. AABCP4207C (APPELLANT) (RESPONDENT) APPELLANT BY : SH K.K.VYAWAHARE, CIT RESPONDENT BY : NONE (WRITTEN SUBMISSIONS) ORDER PER T.K.SHARMA, J.M. THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER DAT ED 29.9.2004 OF CIT(A) AHMEDABAD FOR THE ASSESSMENT YEAR 2001-02. THE REVENUE IN ITS GROUNDS. 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRE CTING TO ALLOW DEDUCTION CLAIMED BY THE ASSESSEE U/S 80HHC OF THE INCOME TAX ACT OF AN AMOUNT OF RS.3,64,777,519/-. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRE CTING THAT THE COMMISSION INCOME OF RS. 2,13,90,296/- DECLARED BY THE ASSESSEE SHOULD BE ASSESSED IN ITS HANDS ON SUBSTANTIVE BASIS AS AGAINST THE AFORESAID INC ASSESSED ON PROTECTIVE BASIS BY THE ASSESSING OFFICER. 2 2. ON THE DATE OF HEARING, NONE WAS PRESENT ON BEH ALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS WERE FILED. WE THER EFORE, PROCEED TO DECIDE THIS APPEAL ON THE BASIS OF WRITTEN SUBMISSIONS AND SUBMISSIONS OF THE LEARNED DR. THE BRIEF FACTS ARE THAT IN THE ASSESS MENT ORDER, THE ASSESSING OFFICER HELD THAT ASSESSEE IS NOT ENTITLED FOR DEDU CTION U/S 80HHC OF THE ACT UNDER NORMAL PROVISIONS. HOWEVER, WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT, THE ASSESSEE CLAIMED DEDUCTION U/S 80HH C AT RS. 3,64,77,519/-. ON APPEAL, LEARNED CIT(A) IN THE IMPUGNED ORDER DIR ECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION CLAIMED BY THE ASSESSEE U/S 80HHC AMOUNTING TO RS. 3,64,77,519/-. AGGRIEVED BY THIS THE REVENUE I S IN APPEAL BEFORE US. 3. ASSESSEE IN THE WRITTEN SUBMISSIONS CONTENDED TH AT SUBSEQUENT TO THE ORDER OF LEARNED CIT(A), SECTION 80HHC IS RETROSPEC TIVELY AMENDED BY TAXATION LAW (AMENDMENT ACT 2005) WHEREBY (A) THE NEGATIVE FIGURES (LOSS) IN THE FIRST PART O F THE FORMULA OF DEDUCTION U/S 80HHC CANNOT BE TAKEN AT NIL BUT HAS TO BE SET OFF AGAINST THE EXPORT INCENTIVES; AND (B) ACCORDINGLY, THE CONTROVERSY THAT IN CASE OF LO SS, DEDUCTION U/S 80HHC IS NOT ALLOWABLE HAS ALSO BEEN SET TO RES T. IN VIEW OF THIS, IT WAS SUBMITTED THAT NEITHER THE DEDUCTION U/S 80HHC AVAILABLE WOULD BE RS. 2,36,61,019/- AS PER THE TABLE GIVEN B ELOW. NET PROFIT AS PER PROFIT AND LOSS ACCOUNT 7,42,84 ,740 LESS :- 90 % OF EXPORT INCENTIVES: DUTY DRAWBACK / EXCISE REFUND 4,72,24,735 PREMIUM ON SALE OF IMPORT LICENCES 2,84,50,097 7,56,74,832 X 90% 6,81,07,349 3 LESS :- 90 % OF OTHER INCOME: DIVIDEND 62,080 COMMISSION 2,13,90,296 LEASE RENT 1,20,00,000 3,34,52,376 X 90% 3,01,07,138 (222,39,29,747) A = (2,39,29,747) X 104,19,21,334 (1,60,20,625) 155,63,00,993 /- II EXPORT TURNOVER: EXPORT SALES FOB VALUE 104,19,21,334 III TOTAL TURNOVER: LOCAL SALES 42,91,30,626 EXPORT SALES 104,19,21,334 HIGH SEA SALES 8,52,49,033 155,63,00,993 IV. EXPORT INCENTIVES; DUTY DRAWBACK/EXCISE REFUND 4,72,24,735 PREMIUM ON SALE OF IMPORT LICENCES 2,84,50,097 7,56,74,832 X 90% 6,81.07,349 B = 1 6,81,07,349 X 04,19,21,334 155,63,00,993 4,55,96,899 DEDUCTION U/S. 80HHC (A + B) (A) + (B) (1,60,20,625) + 4,55,96,899 = 2, 95,76,274 X 80% DEDUCTION U/S 80HHC 2,36,61,019 IN THE WRITTEN SUBMISSIONS, IT WAS ALSO SUBMITTED T HAT AFTER ALLOWING DEDUCTION U/S 80HHC BOOK PROFIT WORKS OUT TO RS. 5,05,72,891/ - AS UNDER:- BOOK PROFIT U/S 115JB OF THE ACT . PARTICULARS RS. NP AS PER P&L A/C ADDITIONS: (J) DIVIDEND EX. U/S 10(33) (II) DEDUCTION U/S 80HHC BOOK PROFIT 7,42,84,740 NIL 50,830 2,36,61,019 5,05,72,891 4 IN THE WRITTEN SUBMISSIONS, ASSESSEE ALSO CONCEDED THAT UNDER NORMAL PROVISIONS DEDUCTION U/S 80HHC WILL BE NIL. THE AS SESSEE ACCORDINGLY REQUESTED THAT THE ASSESSING OFFICER BE DIRECTED TO REWORK THE BOOK PROFIT U/S 115JB AS COMPUTED AT RS. 5,05,72,891/-. 4. ON THE OTHER HAND, LEARNED DR APPEARED FOR THE R EVENUE CONTENDED THAT WHILE COMING BOOK PROFIT U/S 115JB OF THE ACT DEDUCTION U/S 80HHC IS REQUIRED TO BE COMPUTED BY RESTRICTING THE DEDUCTIO N U/.S 80HHC TO 80% AS IS HELD BY HON'BLE BOMBAY HIGH COURT JUDGEMENT DELIVER ED ON 07-05-2009 IN THE CASE OF CIT VS M/S AJANTA PHARMA LTD (INCOME TAX APPEAL NO. 1005 OF 2008). 5. RIVAL SUBMISSIONS WERE CONSIDERED. WE FOUND CONS IDERABLE FORCE IN THE SUBMISSIONS OF THE LEARNED DR. AT THE SAME TIME , AFTER THE AMENDMENT IN SECTION 80HHC RETROSPECTIVELY BY TAXATION LAW (AMEN DMENT ACT 2005), THE ASSESSING OFFICER IS REQUIRED TO RECOMPUTE THE DEDU CTION U/S 80HHC. IN VIEW OF THIS THE ISSUE REGARDING COMPUTING OF DEDUCTION U/S 80HHC IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TH AT HE WILL VERIFY THE COMPUTATION U/S 80HHC SUBMITTED BY THE ASSESSEE AFT ER TAKING INTO CONSIDERATION THE AMENDED PROVISIONS OF SECTION 80H HC BY TAXATION LAW (AMENDMENT ACT 2005). HE WILL ALSO CONSIDER THE J UDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS M/S AJANTA PHARMA LTD (SUPRA) AND RECOMPUTE THE DEDUCTION IN ACCORDANCE WITH LAW AFTE R GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 6. WITH REGARD TO GROUND NO. 2, LEARNED DR RELYING UPON THE REASONING GIVEN BY ASSESSING OFFICER SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS RESTORED. IN THE WRITTEN SUBMISSIONS, I T IS STATED THAT ASSESSEE COMPANY EARNED COMMISSION INCOME OF RS. 2,13,90,296 /- FROM VARIOUS PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, COMPLETE DETAILS WERE FURNISHED. LEARNED ASSESSING OFFICER ASSESSED THE COMMISSION INCOME ON PROTECTIVE BASIS. THE LEARNED CIT(A) DIRECTED T HE ASSESSING OFFICER TO ASSESS THE SAME ON SUBSTANTIVE BASIS BECAUSE ASSESS ING OFFICER WITHOUT MAKING INDEPENDENT ENQUIRY ASSESSED THE COMMISSION INCOME ON PROTECTIVE BASIS. IN OUR OPINION, LEARNED CIT(A) HAS GIVEN CO GENT REASON FOR DELETING THE SAME, THEREFORE, WE DECLINE TO INTERFERE AND THIS GROUND OF APPEAL IS REJECTED. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. SD/- SD/- (D.C.AGRAWAL) (T.K.SHARMA) ACCOUNTNT MEMBER JUDICIAL MEMBER DATED: 4TH SEPT 2009 RKK COPY FORWARDED TO :- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A). 4. THE CIT 5. DR 6. GUARD FILE BY ORDER TRUE COPY DY./ASSTT. REGISTRAR, ITAT, AHMEDABAD.