AYAZ KHURSHID AHMED SIDDQUE, MUMBAI V. ACIT CIR 19(2), MUMBAI

ITA 3874/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7719 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 03-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHUA SARKAR
• Assessee Lawyers: DHIRENDRA M SHAH
• Section: 80HHC; 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI. BEFORE SHRI R.K. GUPTA, J.M. AND SHRI J. SUDHAKAR REDDY, A.M. I.T.A. NO. 38 74/MUM/2008 ASSESSMENT YEAR : 2004-05. AYAZ KHURSHID AHMED SIDDIQUE, ASSTT. COMMISSIONER OF STALL NO.16/17, SUPER BAZAR, VS. INCOME TAX, CIR. 19(2), STATION ROAD, SANTACRUZ (W), MUMBAI. MUMBAI 54. PAN ABEPS1995F APPELLANT RESPONDENT APPELLANT BY : SHRI DHIRENDRA M. SHAH. RESPONDENT BY : MS. MAHUA SARKAR. O R D E R PER J. SUDHAKAR REDDY, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-XIX, MUMBAI DATED 02-01-2 008 FOR ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS : 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN NOT ALLOWING FULL DEDUCTION U/S 80H HC OF THE ACT AS CLAIMED WHICH BE ALLOWED IN FULL. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED ASSESSING OFFICER ERRED IN NOT CONSIDERING THE INCO ME RECEIVABLE FROM DEPB LICENCE AMOUNTING TO RS.8,54,885/- WHICH IS CO NTRARY TO THE FACTS AND LAW. THE APPELLANT PRAYS THAT, THE INCOME FROM DEPB BE CONSIDERED FOR CALCULATION OF DEDUCTION U/S 80HHC O F THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED ASSESSING OFFICER AND THE CIT(A) ERRED IN NOT CONSIDERIN G THE EXPORT SALES AMOUNTING TO RS.51,33,745/- HAVING BEEN REALIZ ED IN NOT CONSIDERING AS EXPORT SALE WHILE CALCULATING DEDUCTION U/S 80HHC. 2 3. WITHOUT PREJUDICE, IF THE AFORESAID EXPORT SALE IS NOT CONSIDERED THEN RELEVANT COST OF PURCHASES OF SUCH EXPORT SALE BE R EDUCED FROM THE DIRECT COST. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER ERRED IN LEVYING PENAL INTEREST U/S 234B AN D 234C WHICH IS BAD IN LAW AND AGAINST THE INSTRUCTIONS ISSUED BY T HE CBDT. THE APPELLANT PRAYS THAT SUCH PENAL INTEREST CHARGED BE CANCELLED. 2. WE HAVE HEARD MR. DHIRENDRA M. SHAH, LEARNED CO UNSEL FOR THE ASSESSEE AND MS. MAHAU SARKAR, LEARNED DR. 3. AFTER HEARING RIVAL CONTENTIONS, WE HOLD AS FOL LOWS. 4. GROUND NO. 1 IS ON THE ISSUE OF COMPUTING RELIE F U/S 80HHC IN RESPECT OF DEPB LICENCE. THIS ISSUE IS COVERED B Y THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS VS. ITO (2009) 318 ITR (AT) 87 (MUM) (SB). THUS, AS SUBMITT ED BY BOTH THE PARTIES, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN LINE WITH THE PROPOSITIONS LAID DOWN BY THE SPEC IAL BENCH IN THE CASE OF TOPMAN EXPORT (SUPRA). 5. COMING TO GROUND NO. 2, THE ASSESSEE SUBMITS TH AT CERTAIN EXPORT SALES WERE NOT CONSIDERED WHILE COMPUTING RE LIEF U/S 80HHC, FOR THE REASON THAT THE SALE PROCEEDS FROM THESE EXPORT S, COULD NOT BE REALISED WITHIN THE STIPULATED TIME. UNDER THESE CIRCUMSTANC ES, HE SUBMITS THAT THE DIRECT COST ATTRIBUTABLE TO SUCH EXPORT SALES, SHOU LD ALSO BE ELIMINATED, FOR THE PURPOSE OF COMPUTING RELIEF U/S 80HHC. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE F-BENCH OF THE TRIBUNAL IN ITA NO. 1525/MUM/2002 IN THE CASE OF AC IT-13(1), MUMBAI VS. M/S NIMEX TRADING CORPORATION, ORDER DATED 16 TH SEPT., 2005 WHEREIN AT PARA 10 PAGE 4, IT IS OBSERVED AS FOLLOWS: 3 IN OUR CONSIDERED VIEW AS PER SECTION 80HHC(3)(B) THE PROFITS DERIVED FROM EXPORT SHALL BE EXPORT TURNOVE R AS REDUCED BY THE DIRECT COST ATTRIBUTABLE TO SUCH EXPORT WHICH I MPLIES THAT DIRECT COST PROPORTIONATE TO SUCH EXPORT TURNOVER ONLY IS TO BE REDUCED. IT IS LOGICAL AND REASONABLE THAT IF THE SALE IS NOT C ONSIDERED AS EXPORT SALE BECAUSE OF NON-REALIZATION OF FOREIGN EXCHANGE THEN COST DIRECTLY ATTRIBUTABLE TO SUCH SALE SHOULD ALSO NOT BE CONSIDERED S DIRECT TAX. THE JURISDICTIONAL HIGH COURT IN THE CA SE OF KANTILAL CHHOTELAL, CITED SUPRA, ALSO SUPPORTS THE CASE OF T HE ASSESSEE, IN WHICH IT IS HELD THAT THE NUMERATOR AND THE DENOMIN ATOR SHOULD HAVE A COMMON ELEMENT. WE AGREE WITH THE FINDINGS O F LD. CIT(A). IN VIEW OF THE ABOVE DISCUSSION, THE DECISION OF LD . CIT(A) IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 6. WE RESPECTFULLY FOLLOW THIS DECISION OF THE COO RDINATE BENCH AND SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR V ERIFICATION OF THE COST OF PURCHASES ATTRIBUTABLE TO THE EXPORT SALE IN QUESTI ON AND TO RECOMPUTE THE DEDUCTION U/S 80HHC. 7. IN THE RESULT, GROUND NO. 2 AND 3 ARE ALLOWED. 8. COMING TO GROUND NO.4, THIS IS WITH REGARD TO L EVY OF INTEREST U/S 234B AND 234C. AS LEVY OF INTEREST IS CONSEQUENTIAL, WE SET ASIDE THE SAME TO THE FILE OF THE AO. THE AO SHALL CONSIDER CIRCULAR NO. 2/2006 DATED 17-01-2006 ISSUED BY THE C.B.D.T. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. ORDER PRONOUNCED ON THIS 24 TH DAY OF FEBRUARY, 2010. SD/- SD/- (R.K. GUPTA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 24 TH FEBRUARY, 2010. WAKODE 4 COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, A-BENCH.` (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI.