DCIT, New Delhi V. M/s Samtel India Ltd., New Delhi

ITA 3769/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9736 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 04-01-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 04-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAJANAND MEENA
• Assessee Lawyers: S JOLLY
• Section: 80HHC; 2; 11

Judgement Text

ITA NO. 3769/DEL/2009 A.Y. 2004-05 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3769/DEL/2009 A.Y. : 2004-05 DCIT, CIRCLE-7(1), VS. M/S SAMTEL INDIA LTD., ROOM NO. 312, 3 RD FLOOR, PLOT NO. 7, 6 TH FLOOR, CR BUILDING, IP ESTATE, NEW DELHI TDI, CENTRE, J ASOLA DISTRICT COMPLEX, NEAR SARITA VIHAR, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI AJAY VOHRA, ADV. & S. JOLLY DEPARTMENT BY : SHRI GAJANAND MEENA, CIT(DR) O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDERS OF THE LD. CIT(A) DATED 11.6.2009 PERTAINING TO ASSESS MENT YEAR 2004-05. 2. THE ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE AO TO CALCULATE THE DEDUCTION UNDER SECTION 80HHC ON THE ADJUSTED BOOK PROFIT. 3. IN THIS CASE THE AO HAD DENIED THE CLAIM OF DEDU CTION UNDER SECTION 80HHC FOR THE PURPOSE OF SECTION 115JB, AS THE DEDUCTION UNDER SECTION 80HHC WAS NOT ALLOWABLE UNDER THE REG ULAR ITA NO. 3769/DEL/2009 A.Y. 2004-05 2 PROVISIONS OF THE INCOME TAX ACT AS THE INCOME OF T HE ASSESSEE COMPANY HAS BEEN COMPUTED AS LOSS. 3.1 UPON ASSESSEES APPEAL LD. CIT(A) REFERRED THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF DCIT VS. S YNCOME FORMULATIONS (I) LTD. 106 ITD 193, WHEREIN IT WAS H ELD THAT DEDUCTION UNDER SECTION 80HHC IN THE CASE OF MAT AS SESSMENT IS TO BE WORKED OUT ON THE BASIS OF ADJUSTED BOOK PROF IT AND NOT ON THE BASIS OF PROFIT COMPUTED UNDER THE REGULAR PROV ISIONS OF LAW APPLICABLE TO THE COMPUTATION OF PROFITS AND GAINS OF BUSINESS AND PROFESSION. ACCORDINGLY, LD. CIT(A) DIRECTED THE AO TO COMPUTE THE BOOK PROFIT IN ACCORDANCE WITH ABOVE. 4. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 5. LD. DR CONTENDED THAT THE DECISION OF THE SPECIA L BENCH IN THE CASE OF SYNCOME FORMULATIONS (I) LTD. (SUPRA) HAS B EEN REVERSED BY THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT VS. AJANTA PHARMA LTD. 223 CTR 441. LD. DR FURTHER CLAIMED TH AT FOLLOWING THIS DECISION ITAT, DELHI BENCH IN THE CASE OF ACI T VS,COSMO FERRITES LTD. IN ITA NO. 3565/DEL/2008 FOR ASSESSME NT YEAR 2004- 05 VIDE ORDER DATED 30.09.2009, THE TRIBUNAL HAD FO UND THAT M/S SYNCOME FORMULATIONS DECISION HAS BEEN OVERRULED BY THE HONBLE MUMBAI HIGH COURT IN THE DECISION OF THE CIT VS. AJ ANTA PHARMA LTD. (SUPRA) AND ACCORDINGLY HAD REMITTED THE MATTE R TO THE FILES OF THE AO TO COMPUTE THE BOOK PROFIT CONSIDERING THE D ECISION OF CIT VS. AJANTA PHARMA LTD.. ITA NO. 3769/DEL/2009 A.Y. 2004-05 3 5.1 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND S UBMITTED THAT THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT VS . AJANTA PHARMA (SUPRA) HAS NOT TOTALLY OVERRULED THE DECI SION OF SYNCOME FORUMULATIONS (I) LTD. HE FURTHER REFERRED TO THE D ECISION OF THE HONBLE MADRAS HIGH COURT, WHEREIN IT WAS HELD THAT IN CASE OF MAT ASSESSMENT DEDUCTION UNDER SECTION 80HHC IS TO BE W ORKED OUT ON THE BASIS OF ADJUSTED BOOK PROFIT UNDER SECTION 11 5JA. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THAT ON THE POINT IN DISPUTE IN THIS C ASE, WE HAVE A HONBLE MUMBAI HIGH COURT DECISION WHICH IS AGAINST THE ASSESSEE AND ALSO HAVE THE DECISION OF HONBLE MADRAS HIGH C OURT WHICH IS IN FAVOUR OF THE ASSESSEE. IT IS TO BE NOTED THAT IN THE TRIBUNAL DECISION REFERRED BY THE LD. DR, THE HONBLE MADR AS HIGH COURT DECISION WAS NOT CITED. HENCE THE SAME IS NOT APPL ICABLE HERE. 6.1 WE FIND THAT IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ITA NO. 3505/DEL/2008 (AY 2003-04) IN THE CASE OF A CIT VS. M/S TELETUBE ELECTRONICS LTD. THE TRIBUNAL HELD AS UND ER:- 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORD S. NONE APPEARED ON BEHALF OF THE ASSESSEE. IT TRANSPI RES THAT HONBLE BOMBAY HIGH COURT IN 318 ITR 252 HAD OVERRULED THE DECISION OF THE SPECIAL BENCH IN THE SYNCOME FORMULATIONS (I) LTD. AND HELD THAT IT WAS NOT POSSIBLE TO ACCEPT THE CONSTRUCTION THAT THE MAT COMPANIES SHOULD BE TREATED ON A DIFFERENT FOOTING IN ITA NO. 3769/DEL/2009 A.Y. 2004-05 4 COMPUTING EXPORT PROFITS UNDER SECTION 80HHC FOR TH E PURPOSE OF SECTION 115JB. 6.1 IN THIS REGARD, WE ALSO FIND THAT HONBLE MADRA S HIGH COURT IN THE CASE OF CIT VS. MEGNA ELECTRO CASTINGS LTD. 184 TAXMAN 79 AND CIT VS. KG DENIN LTD. 180 TAXMAN 590 HAS HELD THAT IN CASE OF MAT ASSESSMENT DEDUCTION UNDER SECTION 80 HHC IS TO BE WORKED OUT ON THE BASIS OF ADJUSTED BOOK PROFIT UND ER SECTION 115JA AND NOT ON THE BASIS OF PROFIT COMPUT ED UNDER REGULAR PROVISIONS OF LAW APPLICABLE TO COMPUTATION OF PROFITS AND GAINS OF BUSINESS AND PROFESSION. 6.2 NOW CONSIDERING THE ABOVE, WE FIND THAT THERE I S HONBLE MUMBAI HIGH COURT DECISION IN WHICH THE ISSUE IS DECIDED AGAINST THE ASSESSEE AND THERE ARE ALSO DECISIONS OF THE HONBLE MADRAS HIGH COURT WHICH ARE IN FAVOUR OF THE ASSESSEE. NO DECISION, DIRECT ON THE POINT, OF HONBLE JURISDICTIONAL HIG H COURT HAS BEEN BROUGHT TO OUR NOTICE. UNDER SUCH CIRCUMSTANCES, WE REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF M/S VEGETABLE PRODUCTS LTD. 88 ITR 192, THAT IN THE TAXING PROVISION IF TWO CONSTRUCTIONS ARE POSSIBLE, ONE FAVOURING ASSESSEE SHOULD BE ADOPTED. ITA NO. 3769/DEL/2009 A.Y. 2004-05 5 6.3 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT AND FOLLOWING THE HONBLE MADRAS HIGH COURT DECISION, W E DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. 6.2 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT FROM HONBLE APEX COURT, WE FOLLOW THE HONBLE MADRAS HIGH COUR T DECISION AND HOLD THAT ASSESSEE IS ENTITLED FOR DEDUCTION UN DER SECTION 80HHC ON ADJUSTED BOOK PROFIT FOR THE PURPOSE OF S ECTION 115JB. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD . CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/01/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:04/01/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES