D.C.I.T CC - II,kolkata., Kolkata V. M/s Patton International Ltd., Kolkata

ITA 345/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99861 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 19-02-2013
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Assessee Lawyers: DEV KUMAR KOTHARI; MANOH
• Keywords: Retrospective amendment
• Section: 143(3); 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO.345/KOL/2013 ASSESSMENT YEAR: 2002-03 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. PATTON INTERNATIONAL LTD. CENTRAL CIRCLE-II, KOLKATA. (PAN: AABCP7901M) ( APPELLANT ) ( RESPONDENT ) & I.T.A NO.351/KOL/2013 ASSESSMENT YEAR: 2002-03 M/S. PATTON INTERNATIONAL LTD. VS. DEPUTY COMMISSI ONER OF INCOME-TAX, CENTRAL CIRCLE-II, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 14.09.2015 DATE OF PRONOUNCEMENT: 07.10.2015 FOR THE REVENUE : MD. GHAYAS UDDIN, JCIT, SR. DR FOR THE ASSESSEE : SHRI DEV KUMAR KOTHARI, FC A & SHRI MANOHAR AGARWAL ORDER PER MAHAVIR SINGH, JM: THESE CROSS APPEALS BY REVENUE AND ASSESSEE ARE ARI SING OUT OF ORDER OF CIT(A), CENTRAL-III, KOLKATA IN APPEAL NO. 111/CC-I I/CIT(A)C-III/07-08/KOL DATED 20.11.2012. ASSESSMENT WAS FRAMED BY ACIT, CC-II, KOLKATA U/S. 263/143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR AY 2002-03 VIDE ITS ORDER DATED 31.12.2007. 2. THE ONLY INTER CONNECTED ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE DEDUCTION OF EXPORT INCEN TIVE U/S. 80HHC(3) OF THE ACT FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS. CIT (2012) 342 ITR 49 (SC) AND RETROSPECTIVITY OF AMENDMENT OF TAXATION LAWS (SECOND AMENDMENT) ACT,2005. FOR THIS, REVENU E HAS RAISED FOLLOWING GROUND NOS. 1 AND 2: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN ALLOWING APPELLANT'S APPEAL AGAINST DISALLOWANCE OF 90% OF EXPORT INCENTIVE AS DEDUCTION U/S 80HHC (3) BY CONSIDERING THE JUDGMENT IN THE CASE OF TOPMAN 2 ITA NOS.345 & 351/KOL/2013 M/S. PATTON INTERNATIONAL LTD. AY 2002-03 EXPORTS VS. CIT 342 ITR 49, WHEREAS ASSESSEE DID NO T FULFILL THE CONDITIONS LAID DOWN IN 3RD AND 4TH PROVISOS OF SECTION 80HHC(3) OF THE I T ACT. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN ALLOWING APPELLANT'S APPEAL AGAINST DISALLOWANCE OF 90% OF EXPORT INCENTIVE AS DEDUCTION U/S 80HHC (3) OF THE I T ACT, WHEREAS WRI T PETITION FILED BY THE APPELLANT CHALLENGING THE VALIDITY OF AMENDMENTS OF TAXATION LAWS ( SECOND AMENDMENT) ACT, 2005 WITH RETROSPECTIVE EFFECT, IS YET TO BE DISPOSED OF BY THE JURISDICTIONAL HIGH COURT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A MERCHANT EXPORTER ENGAGED IN THE BUSINESS OF EXPORTING OF TRADING GOODS. THE AS SESSEE CLAIMED DEDUCTION U/S. 80HHC OF THE ACT BUT THE AO WHILE COMPLETING ASSESS MENT U/S. 143(3) R.W.S. 263 OF THE ACT REDUCED THE CLAIM OF DEDUCTION IN RESPEC T TO 10% OF EXPORT INCENTIVE WHILE COMPUTING TOTAL COST FOR THE PURPOSE OF COMPU TATION OF DEDUCTION U/S. 80HHC OF THE ACT. THE AO DISALLOWED 90% EXPORT INCENTIVE ON THE GROUND THAT THE ASSESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN I N 3 RD AND 4 TH PROVISO TO SECTION 80HHC(3) OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONSIDERING THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF TOPMAN EXPORTS, SUPRA, AND THE DECISION OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF AVNI EXPORTS & ORS. VS. CIT (2012) 348 ITR 391 (GUJ) ALLOWED THE CLAIM OF ASSESSEE BY OBSERVING AS UNDER: EVEN DURING THE APPELLATE PROCEEDINGS THE APPELLAN T HAS NOT ADDUCED NECESSARY AND SUFFICIENT EVIDENCE TO PROVE THAT IT FULFILLED THE CONDITIONS LAID DOWN IN THE 3 RD AND THE 4 TH PROVISO TO SECTION 80HHC(3), THEREFORE, HE DOES NO T GET THE BENEFIT OF ADDITION OF NINETY PERCENT OF EXPORT INCENTIVE UNDE R CLAUSE (IIID) OF SECTION 28 TO HIS EXPORT PROFITS. HOWEVER, AS HELD BY THE HONBLE SU PREME COURT IN TOPMAN EXPORTS V. CIT (SUPRA), EVEN THOUGH THE APPELLANT DOES NOT FULFILL THE CONDITIONS LAID DOWN IN THE 3 RD AND 4 TH PROVISO BUT IT WILL GET THE BENEFIT OF EXCLUSION O F A SMALLER FIGURE FROM PROFITS OF THE BUSINESS UNDER EXPLANATION (BAA) T O SECTION 80HHC OF THE ACT. HENCE, THE AO IS DIRECTED REDUCE THE PROFITS OF THE BUSINESS AS COMPUTED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION B Y NINETY PERCENT OF ANY SUM REFERRED TO IN CLAUSE (IIIA), (IIIB), (IIIC), (IIID ) AND (IIIE) OF SECTION 28 OF THE ACT OR OF ANY RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTER EST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE INCLUDED IN SUCH PROFIT S WHILE COMPUTING DEDUCTION U/S. 80HHC. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS ISSUE STANDS COVERE D IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TO PMAN EXPORTS, SUPRA, WHEREIN INCENTIVES ARE TO BE CONSIDERED FOR CLAIM OF DEDUCT ION U/S. 80HHC OF THE ACT 3 ITA NOS.345 & 351/KOL/2013 M/S. PATTON INTERNATIONAL LTD. AY 2002-03 WHEREIN ASSESSEE HAVING TURNOVER OF MORE THAN RS. 1 0 CR. DEDUCTION UNDER EXPLANATION (BAA) OF SEC. 80HHC OF THE ACT CANNOT D ENIED. SECONDLY, HONBLE GUJARAT HIGH COURT IN THE CASE OF AVNI EXPORTS & OR S., SUPRA, HAS HELD THAT THE SECOND AMENDMENT TO TAXATION LAWS (SECOND AMENDMENT ) ACT, 2005 WHEREIN 3 RD AND 4 TH PROVISO WAS INSERTED WHEREIN THE CONDITIONS IN RES PECT OF EXPORT TURNOVER OF MORE THAN RS. 10 CR. IS TO BE CONSIDERED FOR CLAIMI NG DEDUCTION U/S. 80HHC OF THE ACT. HONBLE GUJARAT HIGH COURT ON THE DIRECTION O F HONBLE SUPREME COURT HAS HEARD THIS MATTER AND HELD THE AMENDMENT TO BE RETR OSPECTIVE AND CLASSIFICATION BASED ON EXPORT TURNOVER FOR CAPPING RS. 10 CR. LI MIT IS HELD TO BE INVALID. HONBLE GUJARAT HIGH COURT HELD THAT THE AMENDMENT HAS BEEN MADE AT A POINT OF TIME WHEN APPLICATION OF SECTION 80HHC OF THE ACT HAS ALREADY BEEN EXHAUSTED AND IT WAS NOT EVEN IN THE STATUTE BOOK. ACCORDING TO HONBLE HIG H COURT, IN SUCH A SITUATION, IT IS NOT PERMISSIBLE TO TAKE AWAY THE BENEFIT ALREADY GR ANTED THROUGH A CLUBBED SCHEME BY INTRODUCING A FRESH AMENDMENT BY VIRTUE OF WHICH AN EXPIRED HAS BEEN REVIVED WITH BENEFIT CONFERRED UPON ONLY A LIMITED SECTION AND SNATCHING IT AWAY FROM SOME OTHER SECTIONS. THE AMENDMENT WAS QUASHED TO THE EX TENT THAT THE OPERATION OF THE SECTION COULD BE GIVEN EFFECT FROM THE DATE OF AMEN DMENT AND NOT IN RESPECT OF EARLIER ASSESSMENT YEARS IN THE CASE OF ASSESSEE WH OSE TURNOVER IS ABOVE RS. 10 CR. IN TERM OF THE ABOVE, WE UPHOLD THE ORDER OF CIT(A) AND HENCE, THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. COMING TO ASSESSEES APPEAL IN ITA NO. 315/KOL/2 013, WHICH IS ONLY SUPPORTING OF THE ORDER OF CIT(A) AND HENCE, NEEDS NO ADJUDICATION. THIS APPEAL OF ASSESSEE IS DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED AN D THAT OF THE ASSESSEE IS ALSO DISMISSED AS INFRUCTUOUS. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 07.10.2 015 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07TH OCTOBER, 2015 JD. SR. P.S 4 ITA NOS.345 & 351/KOL/2013 M/S. PATTON INTERNATIONAL LTD. AY 2002-03 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CENTRAL CIRCLE-II, KOLKATA. 2 RESPONDENT M/S. PATTON INTERNATIONAL LTD., 3C, CA MAC STREET, KOLKATA- 700 016.. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .