M/s. Shaym Industries, Ahmedabad V. The ACIT., Ahmedabad Circle-3, Ahmedabad

ITA 397/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6681 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 24-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR HRISHIKESH
• Assessee Lawyers: T P HEMANI
• Section: 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:.01/04/2010 DRAFTED ON: 01/04 /2010 ITA NO.397/AHD/2007 ASSESSMENT YEAR : 2003-2004 M/S. SHYAM INDUSTRIES, PLOT NO.402/403, GIDC, PHASE-IV, NARODA, AHMEDABAD. VS. ACIT, CIRCLE-3, AHMEDABAD. PAN/GIR NO. AAFFS4338E (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI T. P. HEMANI AD. RESPONDENT BY: SHRI KUMAR HRISHIKESH SR.D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VII, 3 .10.2006. 2. THE GROUNDS OF THE APPEAL READS AS FOLLOWS. 1. THAT THE ORDER OF HONORABLE CIT(A)-VII IS AGAI NST LAW, FACTS AND EVIDENCE ON RECORD. 2. THE HONORABLE CIT(A)-VII HAS COMMITTED A MISTA KE IN TREATING PROFIT ON SALE OF DEPB LICENSE NOT TO BE A PART OF EXPORT INCENTIVES AS DEFINED U/S 28 (IIIA), BECAUSE - I. SECTION 28(IIIA) INCLUDE PROFITS ON SALES OF L ICENSES GRANTED UNDER IMPORTS ( CONTROL) ORDER , 1955 MADE UNDER IMPORTS AND EXPORTS( CONTROL ) ACT, 1947(18 OF 1947 ) WHICH HAS BEEN REPEALED BY THE FOREIGN TRADE ( DEVELOPMEN T & RESOLUTION ) ACT, 1992 AND SINCE, THE ASSESSEE HAD MADE PROFIT ON SALE OF DEPB SHOULD BE CONSIDERED AT PAR WITH ITA NO .397 /AHD/2007 - 2 - PROFIT ON SALE OF LICENSE GRANTED UNDER THE OLD ACT , IMPORTS AND EXPORTS ( CONTROL) ACT, 1947. II. INCLUSION OF PROFIT ON SALE OF DEPB LICENSE I N SECTION 28(IIIA) HAS BEEN FAVORED BY THE JUDGMENTS OF DIFFE RENT HIGH COURTS AND TRIBUNALS AS WELL AS CIRCULARS ISSUED BY THE HONORABLE CENTRAL BOARD OF DIRECT TAXES. III. AS PER RECENT AMENDMENT. ' PROVIDED ALSO THAT IN CASE OF ASSESSEE HAVING EXP ORT TURNOVER EXCEEDING RUPEES TEN CRORES DURING THE PRE VIOUS YEAR, THE PROFITS COMPUTED UNDER CLAUSE (A) OR CLAU SE (B) OR CLAUSE (C) OF SUB SECTION 3 OF SECTION 80 HHC OR AF TER GIVING EFFECT TO THE FIRST PROVISO, AS THE CASE MAY BE, SH ALL BE FURTHER INCREASED BY THE AMOUNT WHICH BEARS TO NINETY PERCE NT OF ANY SUM REFERRED TO IN CLAUSE ( IIID) OF SECTION 28, TH E SAME PROPORTION AS THE EXPORT TURNOVER OF THE BUSINESS C ARRIED OUT BY THE ASSESSEE , IF THE ASSESSEE HAS NECESSARY AND SUFFICIENT EVIDENCE TO PROVE THAT: 1. HE HAD AN OPTION TO CHOOSE EITHER THE DUTY DRAWBACK OR THE DUTY ENTITLEMENT PASSBOOK SCHEME, BEING THE DUTY REMISSION SCHEME AND 2. THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO TH E CUSTOM DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER THE DUTY ENTITLEMENT PASSBOOK BOOK SCHEME, BEING THE DUTY REMISSION SCHEME.' 3. IN VIEW OF WHAT IS STATED HEREINABOVE AND FURT HER GROUNDS THAT MAY BE ARGUED AT THE TIME OF HEARING, THAT APPELLAN T PRAYS THAT ORDER OF HONORABLE CIT(A)-VII BE ALSO MODIFIED AS T O CONSIDER THE PROFIT ON SALE OF DEPB LICENSE BE A PART OF EXPORT INCENTIVE. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R AND /OR MODIFY OR CHANGE ALL OR ANY OF THE ABOVE GROUNDS AFORESAID , AS AND WHEN IT IS NECESSARY TO DO SO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING OF SESAME SEEDS & SESAME OIL. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME AT RS.1,54,12,690/- AFTER CLAIMING DEDUCTION UNDER SECTION 80HHC OF RS.1,40,7 1,827/-. THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UN DER SECTION 80HHC ON PROFIT FROM SALE OF DEBP. ACCORDING TO THE AO, THE ASSESSEE WAS REQUIRED TO FURNISH EVIDENCES TO SHOW THAT IT FULFILLED THE CONDITIONS AS LAID DOWN IN ITA NO .397 /AHD/2007 - 3 - THE FORTH PROVISO TO SECTION 80HHC(3) WHICH THE ASS ESSEE FAILED TO PRODUCE AND THEREFORE, THE AO DID NOT ALLOW THE DED UCTION OF RS11,05,351/- UNDER SECTION 80HHC ON PROFIT ON SALE OF DEBP. 4. ON APPEAL, THE LD.CIT(A) HELD THAT THE AO WAS JU STIFIED IN MAKING DISALLOWANCE IN VIEW OF THE AMENDED PROVISIONS OF S ECTION 80HHC. HE OBSERVED THAT IT WAS LAID DOWN IN THE AMENDED PROVI SION UNDER SECTION 80HHC TO EXCLUDE THE INCOME OF DEBP LICENSE WHILE W ORKING OUT DEDUCTION UNDER SECTION 80HHC OF THE ACT IF THE REQ UIRED CONDITION ARE NOT FULFILLED BY THE ASSESSEE. HENCE, HE REJECTED T HE GROUND OF APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE AO DISALLOWED DEDUCTION OF RS11,05,351/- TO THE ASSESSEE UNDER SECTION 80HHC ON PROFIT DERIVED FROM SALE OF DEBP. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. THE LD. A.R. HAS RELIED ON THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF TOPMAN EXPORTS 92009) 125 TTJ (MUMBAI)(SB) 289, AND SUBMITTED THAT THE ISSUE OF DEDUCTION UNDER SECTION 80HHC ON PROFIT FROM SALE O F DEBP IS COVERED BY THE SAID DECISION. HE CONTENDED THAT AS THE DEC ISION OF THE SPECIAL BENCH WAS RENDERED SUBSEQUENT TO THE DECISION IN TH E INSTANT CASE BY THE LOWER AUTHORITIES AND THEREFORE THE LOWER AUTHORITI ES COULD NOT TAKE INTO CONSIDERATION THE SAID DECISION. THEREFORE HE SUBMI TTED THAT THE ISSUE SHOULD BE RESTORED TO THE FILE OF THE LEARNED ASSES SING OFFICER FOR READJUDICATION AFTER CONSIDERING THE DECISION OF TH E SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS(SUPRA). THE LEARNED DEPARTME NTAL REPRESENTATIVE ALSO AGREED WITH THE ABOVE SUBMISSIO NS OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AND SUBMI TTED THAT HE HAD NO ITA NO .397 /AHD/2007 - 4 - OBJECTION ON RESTORING THE ISSUE BACK TO THE FILE O F THE LEARNED ASSESSING OFFICER. WE THEREFORE RESTORE THIS MATTER BACK TO T HE FILE OF THE LEARNED ASSESSING OFFICER FOR ADJUDICATION AFRESH AFTER CON SIDERING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TO PMAN EXPORTS(SUPRA) AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 01/04/2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCO UNTANT MEMBER AHMEDABAD; DATED 01/04/2010 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS) 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD