The Dy. Commissioner of Income Tax, Circle-2(1)(1), Baroda V. M/s. Sun Pharmaceuticals Industries Limited, Vadodara

ITA 346/AHD/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3920 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 1999-2000
• Appeal Filed On: 09-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Competent authority; Tax effect
• Section: 80HHC; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ./ I.T.A. NO. 346/AHD/2017 ( / ASSESSMENT YEAR : 1999-2000) DCIT, CIR-2(1)(1), BARODA. / VS. M/S. SUN PHARMACEUTICALS INDUSTRIES LTD., SPARC, AKOTA ROAD, AKOTA, VADODARA 390 020. ./ ./ PAN/GIR NO. : AADCS 3124 K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MUDIT NAGPAL, SR. D.R. / RESPONDENT BY : MS. URVASHI SODHAN, A.R. / DATE OF HEARING 26/07/2018 / DATE OF PRONOUNCEMENT 03/10/2018 !' / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL)-IV, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)IV /CC.1B/49/02-03 DATED 05.07.2002 ARISING IN THE MATTER OF ASSESSMEN T ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 28.03.2002 RELEVANT TO ASSESSMENT YEAR (AY) 1999-2000. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AR E AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S. 80HHC A MOUNTING TO - 2 - RS.30,84,905/- ON EXPORT SALES OF RS.1,94,65,349/- WITHOUT APPRECIATING THAT THE ASSESSEE IN THE COMPUTATION O F INCOME HAD MENTIONED IT HAD MADE CLAIM OF DEDUCTION U/S. 80HHC OF THE ACT ON THE BASIS OF SUBMISSION OF APPLICATION FOR EXTEN SION OF TIME TO THE COMPETENT AUTHORITY THROUGH BANKERS AND DID NOT MAKE ANY REFERENCE REGARDING NON RECEIPT OF COMMUNICATION FR OM THE COMPETENT AUTHORITY, AND HENCE THE ASSESSEE'S CONTE NTION THAT IT DID NOT RECEIVE ANY COMMUNICATION FROM THE COMPETEN T AUTHORITY REGARDING TIME ALLOWED FOR RECEIVING SALE PROCEEDS OF GOODS OR MERCHANDISE EXPORTED IN INDIA IN CONVERTIBLE FOREIG N EXCHANGE WAS AN AFTER THOUGHT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S. 80HHC M OUNTING TO RS.30,84,905/- ON EXPORT SALES OF RS.1,94,65,349/- WITHOUT APPRECIATING THAT THE ASSESSEE HAD NOT FULFILLED TH E CONDITIONS FOR CLAIMING DEDUCTION U/S. 80HHC OF THE ACT AS IS EVID ENT FROM THE FACT THAT ASSESSEE DID NOT RECEIVE OR BROUGHT INTO INDIA SALE PROCEEDS OF GOODS OR MERCHANDISE EXPORTED IN INDIA IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF RELEVANT ASSESSMENT YEAR NOR HAD PLACED ANY EVIDENCE IN SUPPORT OF THE FACT THAT THE COMPETENT AUTHORITY I.E. R.B.I, HAD ALLOWED THE ASSESSEE TO RECEIVE OR BRING INTO INDIA SALE PROCEEDS OF GOODS OR MERCHANDISE EXPORTED IN INDIA IN CONVER TIBLE FOREIGN EXCHANGE WITHIN THE PRESCRIBED TIME LIMIT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S. 80HHC A MOUNTING TO RS.30,84,905/- ON EXPORT SALES OF RS.1,94,65,349/- WITHOUT APPRECIATING THAT NO EXCEPTION HAS BEEN PROVIDED TO SECTION 80HHC(2)(A) OF THE ACT TO THE EFFECT THAT DEDUCTION U/S. 80HHC OF THE ACT SHALL BE ALLOWED EVEN IF THE COMMUNICATI ON OF THE COMPETENT AUTHORITY ACCORDING TIME LIMIT FOR RECEIV ING OR BRINGING INTO INDIA SALE PROCEEDS OF GOODS OR MERCH ANDISE EXPORTED IN INDIA IN CONVERTIBLE FOREIGN EXCHANGE I S NOT RECOVERED ,AND THERE IS NO SCOPE OF INTERPRETING TH E PROVISION OF THE ACT OTHER THAN THE MANNER PRESCRIBED BY THE STA TUE, WHICH IS SUPPORTED DECISION OF HON'BLE SUPREME COURT IN THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF SMT. TARULATA SHYAM V. COMMISSIONER OF INCOME TAX REPORTED IN (1977) 108 I TR 345(SC) HAS HELD 'THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE W ORDS - 3 - WHICH ARE NOT THERE. SUCH IMPORTATION WOULD, BE NOT TO CONSTRUE, BUT TO AMEND THE STATUE. EVEN IF THERE IS A CASUS O MISS US, THE DEFECT CAN BE REMEDIED ONLY BY LEGISLA TION AND NOT BY JUDICIAL INTERPRETATION. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S. 80HHC O F THE ACT AMOUNTING TO RS.30,84,905/- ON EXPORT SALES OF RS. 1,94,65,349/- WITHOUT 'APPRECIATING THAT THE ASSESSEE HAD FURNISH ED INACCURATE PARTICULARS OF INCOME, AS IS EVIDENT FROM THE FACT THOUGH THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80HHC, IT HAD WILLFULLY CLAIMED DEDUCTION U/S. 80HHC OF THE ACT B Y MISINTERPRETING THE PROVISION OF THE ACT FOR REDUCI NG ITS TAXABLE INCOME AND CONSEQUENTLY EVADED TAX THEREON, AND MISINTERPRETATION OF THE PROVISION OF THE ACT CANNO T BE CONSTRUED TO BE A BONAFIDE BELIEF FOR CLAIMING DEDUCTION U/S. 80HHC OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. C.I.T. (A) ERRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE DISALLOWANCE OF DEDUCTION U/S. 80IA OF THE ACT ON PROFIT FROM DEPB OF THE ACT BY HOLDING THAT NO PENALTY IS IMPOS ABLE IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S. 80IA ON P ROFIT ARISING FROM DEPB, IGNORING THE LD. C.I.T. (A)-V, BARODA'S DECISION IN ORDER DATED 05-07-2002 IN APPEAL NO. CIT (AJ-V/CC-I B/49/02- 03 DATED 05-07-2002, WHEREIN THE LD C.I.T. (A) HELD THAT 'THE APPELLANT HAS NOT BEEN ABLE TO BRING ON RECORD ANY EVIDENCE THAT THE SALE OF DEPB LICENSEE PERTAINED TO SPECIFIC EXP ORT OF SILVASA UNIT. MERELY BY CITING THE FIGURES OF EXPORTS AND S TATING THAT THERE WAS NO EVIDENCE THAT THE LICENCE DID NOT PERT AIN TO SILVASA UNIT, THE APPELLANT CANNOT CLAIM TO HAVE DISCHARGED ITS ONUS, AND IGNORING THE FACT THAT ABOVE REFERRED FINDING OF LD . C.I.T. (A)-V, BARODA HAD BEEN CONFIRMED BY HON'BLE I,.T.A.T. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, E RRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE DISALLOWAN CE OF DEDUCTION U/S. 80IA OF THE ACT ON PROFIT FROM DEPB OF THE ACT BY RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETROPRODUCTS (SUPRA), WITHOUT APPRECIATING THAT TH E CASE OF RELIANCE PRODUCTS IS DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE IN AS MUCH IN THAT CASE THE PENALTY WAS LEVIED ON THE ISSUE OF DISALLOWANCE OF INTEREST EXPENDITURE U/S. 36(1)( VII) OF THE ACT, WHEREAS IN THE INSTANT CASE, PENALTY WAS LEVIED ON DISALLOWANCE - 4 - OF DEDUCTION U/S. 80IA OF THE ACT ARISING OUT OF WR ONG INTERPRETATION OF SECTION 80IA OF THE ACT AND THAT DISALLOWANCE OF EXPENDITURE IS DISTINCT FROM DISALLOWANCE OF DEDUCT ION SINCE DISALLOWANCE OF EXPENDITURE HAS EFFECT ON COMPUTATI ON OF INCOME FROM BUSINESS/PROFESSION AND DISALLOWANCE OF _DEDUC TION HAS EFFECT ON COMPUTATION OF TAXABLE INCOME. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, E RRED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE DISALLOWAN CE OF DEDUCTION U/S. 80IA OF THE ACT ON PROFIT FROM DEPB OF THE ACT , WITHOUT APPRECIATING THAT THE A,O HAD CORRECTLY LEVIED PENA LTY U/S. 271(1)(C) OF THE ACT, SINCE THE ASSESSEE BY CLAIMIN G DEDUCTION U/S. 80IA OF THE ACT WITHOUT MENTIONING JUSTIFIABLE REASONS FOR CLAIMING DEDUCTION U/S. 80IA OF THE ACT ON PROFIT F ROM SALE OF IMPORT/LICENCE/DEPB IN THE NOTES TO COMPUTATION OF INCOME, HAD CONCEALED THE PARTICULARS OF INCOME. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ER RED IN DELETING PENALTY U/S. 271(1)(C) OF THE ACT ON THE DISALLOWAN CE OF DEDUCTION U/S. 80IA OF THE ACT ON PROFIT FROM DEPB , WITHOUT APPRECIATING THAT THE A,.O. HAD CORRECTLY LEVIED PENALTY U/S. 27 1(1)(C) OF THE ACT SINCE THERE WAS NO AMBIGUITY IN THE LANGUAGE OF THE TEXT USED IN SECTION 80IA OF THE ACT, AND HON'BLE SUPREME COU RT IN THE CASE OF LIBERTY INDIA LTD. VS. CIT (2009)( 317 ITR 349 HELD THAT CONNOTATION OF THE WORDS 'DERIVED FROM' IS NARROWER AS COMPARED TO THAT OF THE WORDS ATTRIBUTABLE TO. BY U SING THE EXPRESSION ' DERIVED FROM'' PARLIAMENT INTENDED TO COVER BEYOND FIRST DEGREE' AND THE HON'BLE . THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF SMT. TARULATA SHYAM V. COMMISS IONER OF INCOME TAX REPORTED IN (1977) 108 ITR 345(SC) HAS H ELD 'THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE WORDS WH ICH ARE NOT THERE. SUCH IMPORTATION WOULD, BE NOT TO CONSTRUE, BUT TO AMEND THE STATUE. EVEN IF THERE IS A CASUS OMISSUS, THE DEFECT CAN BE REMEDIED ONLY BY LEGISLATION AND NOT BY JUDI CIAL INTERPRETATION. 9. THE APPELLANT CRAVES TO ADD TO AMEND OR ALTER T HE ABOVE GROUNDS AS /NAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE LD. C.I.T. (A) ON THE ISSUE S RAISED IN THE AFORESAID GROUNDS BE SET ASIDE AND THAT OF THE ASSE SSING OFFICER BE RESTORED. - 5 - 3. AT THE TIME OF THE HEARING, WE OBSERVE THAT THE TAX EFFECT IN THE APPEAL FILED BY THE REVENUE IS LESS THAN RS. 20 LAC S. AS PER THE CIRCULAR NO. 3 OF 2018 DATED 11/07/2018 ISSUED BY CBDT RECEN TLY ALL PENDING APPEALS FILED BY REVENUE ARE LIABLE TO BE DISMISSED / WITHDRAWN/ NOT PRESSED TO REDUCE THE LITIGATION WHERE THE TAX EFFE CT DOES NOT EXCEED THE PRESCRIBED MONETARY LIMIT, I.E., RS.20 LACS. THE R ELEVANT EXTRACT OF THE CIRCULAR IS REPRODUCED BELOW: 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MER ITS BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND S LPS/ APPEALS BEFORE SUPREME COURT KEEPING IN VIEW THE MO NETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVE N HEREUNDER: S. NO. APPEALS/ SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS.) 1. BEFORE APPELLATE TRIBUNAL 20,00,000 2. BEFORE HIGH COURT 50,00,000 3. BEFORE SUPREME COURT 1,00,00,000 THE MONETARY LIMIT FOR FILING THE APPEALS BY THE RE VENUE BEFORE THE TRIBUNAL HAS BEEN INCREASED TO RS. 20 LACS. IT IS A LSO CLARIFIED IN THE SAID CIRCULAR THAT THE SAID MONETARY LIMIT IS APPLICABLE RETROSPECTIVELY EVEN TO THE APPEALS PENDING BEFORE THE TRIBUNAL. THE CBDT H AS ALSO INSTRUCTED THAT SUCH PENDING APPEALS BELOW THIS SPECIFIED TAX LIMIT OF RS.20 LACS MAY BE WITHDRAWN / NOT PRESSED . - 6 - IN THE CASE ON HAND, IT WAS NOTICED THAT THE TAX EF FECT ON THE DISPUTED ISSUE RAISED BY THE REVENUE IS CLAIMED TO BE LESS R S.20 LACS. THEREFORE APPEAL OF THE REVENUE IS REQUIRED TO BE DISMISSED IN LIMINE IN TERMS OF THE ABOVE CIRCULAR. 4. THE LD. DR FOR THE REVENUE FAIRLY AGREED ON THE APPLICABILITY OF THE CBDT CIRCULAR NO. 3 OF 2018. ACCORDINGLY, THE A PPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. HOWEVER, THE REVENUE IS AT THE LIBERTY TO MOVE THE MISCELLANEOUS APPLICATION T O RECALL THE ORDER IF THE TAX EFFECT EXCEEDS THE THRESHOLD LIMIT OR THE CASE OF THE REVENUE FALLS IN ANY OF THE EXCEPTION PROVIDED IN THE AFORESAID CBDT CIRCULAR IN ANY MANNER. THE MA SHALL BE FILED WITHIN THE PRESCRIBED TIME. HENCE THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/10/2018 SD/- SD/- (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/10/2018 PRITI YADAV, SR.PS - 7 - !' #$% &% /COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. '() * / CONCERNED CIT 4. * ( ) / THE CIT(A) 5. %+ , ##() , () / DR, ITAT, 6. , -. / / GUARD FILE. !' / BY ORDER , TRUE COPY 0 / 1 (DY./ASSTT.REGISTRAR) () , 12! ' ! / ITAT, AHMEDABAD