ACIT 21(3), MUMBAI V. TEXPORT INDIA, MUMBAI

ITA 3553/MUM/2010

• Counselvise Citation: 355319914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 07-09-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 06-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: TARUN GHIA
• Keywords: Business income
• Section: 2; 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI. RAJENDRA SINGH (A.M.) ITA NO.3553 TO 3555/MUM/2010 ASSESSMENT YEAR : 1999-2000 TO 2001-2002 OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-21(3), ROOM NO.501, C-11 BLDG, 5 TH FLR., PRATYAKSH KAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051. VS. M/S. TEXPORT (INDIA), 49/50, SAMHITA COMPLEX, A-9, ANIL CHAMBERS, ANDHERI KURLA ROAD, SAKI NAKA, MUMBAI 400 072. PAN : AABFT 6330 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.S. SUNDER SINGH RESPONDENT BY : SHRI TARUN GHIA DATE OF HEARING : 07.09.2011 DATE OF PRONOUNCEMENT : 16.09.2011 O R D E R PER RAJENDRA SINGH, A.M. THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST T HE COMMON ORDER DATED 02.03.2010 OF THE LD. CIT(A)-32 FOR THE ASSESSMENT YEARS 1999-2000 TO 2001-2002. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS WHETHER THE ENTIRE AMOUNT RECEIVED FROM S ALE OF DEPB CREDIT HAS TO BE TREATED AS PROFIT U/S. 28(IIID), OR THE SALE PROCEEDS MINUS THE FACE VALUE OF DEPB. 2. BRIEFLY STATED, FACTS OF THE CASE ARE THAT THE A SSESSEE IN THE RELEVANT YEARS HAD DECLARED INCOME FROM SALE OF DEPB CREDIT. THE AO TREATED THE ENTIRE SALE PROCEEDS AS INCOME U/S. 28(IIID) AND COMPUTED THE DEDUCTION U/S.80HHC ACCORDINGLY. UNDER THE PROVISIONS OF EXPL ANATION (BCA), 90% OF ITA NO.3553 TO 3555/MUM/2010 M/S. TEXPORT (INDIA) 2 RECEIPTS U/S. 28(IIID) IS REQUIRED TO BE REDUCED FR OM THE PROFIT OF BUSINESS AND UNDER THE PROVISO TO SECTION 80HHC, 90% OF RECE IPTS U/S. 28(IIID) IN THE RATIO OF EXPORT TURNOVER TO TOTAL TURNOVER IS R EQUIRED TO BE ADDED TO THE PROFITS. BUT IN CASE THE TURNOVER OF BUSINESS EXCEE DS `. 10 CRORES, THE ASSESSEE SAID ADJUSTMENT UNDER THE THIRD PROVISO TO SECTION 80HHC CAN BE MADE ONLY WHEN THE TWO CONDITIONS MENTIONED IN THE PROVISO ARE SATISFIED. ONE OF THE CONDITIONS IS THAT THE RATE OF DUTY DRAW BACK IS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER DEPB SCHEME. THE AO OBSERVED THAT THE ASSESSEE WAS EXPORTING FABRICS AND THE DEPB RATE IN SUCH CASE WAS HIGHER THAN THE DUTY DRAW BACK RATE, AND THUS THE CONDITIO N MENTIONED IN THE THIRD PROVISO WAS NOT FULFILLED. ACCORDINGLY, HE DI D NOT ALLOW THE CLAIM OF DEDUCTION U/S.80 HHC IN RESPECT OF DEPB INCOME, AS THE ENTIRE RECEIPTS HAD BEEN TREATED BY HIM U/S. 28(IIID). IN APPEAL, T HE CIT(A) FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN CASE O F TOPMAN EXPORT VS. ITO (318 TTJ 87) HELD THAT THE FACE VALUE OF DEPB HAS T O BE TREATED AS INCOME U/S.28(IIIB) AND THE SALE PRICE IN EXCESS OF FACE V ALUE HAS TO BE TREATED AS INCOME U/S. 28(IIID). HE, THEREFORE, DIRECTED THE A O TO COMPUTE THE DEDUCTION ACCORDINGLY, AGGRIEVED BY WHICH, THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. BOTH THE PARTIES AGREED THAT THE ISSUE WAS COVERED BY THE JUDGEMENT OF HON'BLE HIGH COURT OF BOMBAY IN CA SE OF KALPATARU COLOURS & CHEMICALS (328 ITR 451) IN WHICH IT HAS B EEN HELD THAT ENTIRE SALE PROCEEDS INCLUDING THE FACE VALUE HAS TO BE TR EATED AS INCOME U/S. 28(IIID). RESPECTFULLY, FOLLOWING THE SAID JUDGEMEN T WE HOLD THAT THE ENTIRE SALE VALUE ARE DEPB CREDIT INCLUDING THE FACE VALUE WILL BE TAKEN AS PROFIT U/S.28 (IIID) AND THE ASSESSEE WILL NOT BE ENTITLED TO ADJUSTMENT UNDER THE THIRD PROVISO TO SEC.80HHC, AS THE CONDITIONS MENTI ONED IN THE SAID PROVISO ARE NOT FULFILLED. WE ACCORDINGLY, SET ASID E THE ORDER OF THE CIT(A) IN ALL THE THREE YEARS ON THIS ISSUE AND CONFIRMED THE ORDER OF THE AO ITA NO.3553 TO 3555/MUM/2010 M/S. TEXPORT (INDIA) 3 5. IN THE RESULT, ALL THE THREE APPEALS OF THE REVE NUE ARE ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16.09.2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, J - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI