ACIT 23(2), MUMBAI V. MAHALAXMI CHEMICAL WORKS, MUMBAI

ITA 4072/MUM/2010

• Counselvise Citation: 407219914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 19-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: K SHIVARAM
• Keywords: Business income; Difference of opinion; Change of opinion
• Section: 143(3); 80HHC; 147; 263; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH (AM) AND SHRI S.S. GODAR A (JM) ITA NO.4559/M/2010 ASSESSMENT YEAR: 2002-03 M/S. MAHALAXMI CHEMICAL WORKS, 3, MANGAL VIHAR, 811, MAHATMA GANDHI ROAD, MULUND (WEST), MUMBAI 400 080. PAN: AAAFM1978M VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 23 (2), C-10, 2 ND FLOOR, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051. (APPELLANT) (RESPONDENT) ITA NO.4072/M/2010 ASSESSMENT YEAR: 2002-03 DY. COMMISSIONER OF INCOME-TAX, CIRCLE 23 (2), C-10/202, 2 ND FLOOR, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051. VS. M/S. MAHALAXMI CHEMICAL WORKS, 3, MANGAL VIHAR, 811, MAHATMA GANDHI ROAD, MULUND (WEST), MUMBAI 400 080. PAN: AAAFM1978M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SHIVARAM & AJAY SING H REVENUE BY : SHRI V.V. SHASTRI DATE OF HEARING: 12.4.2012 DATE OF PRONOUNCEMENT:20.04.2012 O R D E R PER S.S. GODARA, J.M: THE INSTANT CROSS APPEALS HAVE BEEN PREFERRED BY TH E REVENUE AS WELL AS ASSESSEE AGAINST THE IMPUGNED ORDER DATED 26.2.2010. 2 ITA NO.4559 & 4072/M/2010 2. ITA NO.4072/M/2010 (AY: 2002-03): IN THIS APPEAL FILED BY THE REVENUE TOTAL THREE GROUNDS ARE THERE. GROUND NO.3 IS GENERAL IN NATURE. GROUND NOS. 1 & 2 ARE REGARDING DEDUCTION CLAIMED BY THE ASSESSEE U/S 80HHC AND 80H HC(3) OF THE INCOME TAX ACT (HEREINAFTER REFERRED TO AS THE ACT). 3. SIMILARLY, IN ITA NO.4559/M/2010 , THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT (A) REGARDING VALIDITY OF THE REOPENING IN QUESTION . TOTAL GROUNDS IN THE ASSESSEES APPEAL ARE A (I) TO (III). GROUND NO. A(III) IS GENERAL IN NA TURE. SINCE, THE GROUNDS CONTAINED IN BOTH THE APPEALS ARE INTER-CONNECTED, THEY ARE BEING DECIDED TOGETHER. 4. FACTS GIVING RISE TO THE INSTANT APPEAL BEFORE U S ARE THAT IN ASSESSMENT PROCEEDINGS DATED ON 31.1.2005, THE ASSESSING OFFICER PASSED AS SESSMENT ORDER QUA THE ASSESSEE IN HAND. ALLOWED DEDUCTION U/S 80HHC TO THE TUNE OF RS. 1,85 ,05,902/- AS THE ASSESSEE IS INVOLVED IN THE BUSINESS OF EXPORT. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A). VIDE ORDER DATED 18.12.2006, THE LD. CIT (A) PARTLY ACCEPTED THE ASSESSEES CONTENTION TO THE FACT THAT SALE OF DEPB LICENSE BE NOT CONSIDERED U/S 80HHC. ACCORDINGLY, REMITTED THE MATTER BACK TO THE ASSESSING OFFICER F OR RE-COMPUTATION. 5. IN FURTHERANCE TO THE RE-CALCULATION DIRECTION I SSUED BY THE LD. CIT (A), THE ASSESSING OFFICER AGAIN PASSED CONSEQUENTIAL ORDER ALLOWING D EDUCTION U/S 80HHC TO THE EXTENT OF RS. 1,81,74,956/- VIDE ORDER DATED 19.2.2007. 6. THE MATTER DID NOT END THERE. ON 20.3.2007, THE ASSESSING OFFICER ISSUED REOPENING NOTICE TO THE ASSESSEE ON THE GROUND THAT EXCESS RE LIEF HAD BEEN GRANTED U/S 80HHC IN ORIGINAL ASSESSMENT BY TREATING THE EXCISE DUTY REFUND AS BU SINESS INCOME U/S 28 (IIIC) THEREBY TREATING THE SAID AMOUNT AS EXPORT INCENTIVE. 3 ITA NO.4559 & 4072/M/2010 7. THEREAFTER, THE ASSESSING OFFICER FINALIZED REAS SESSMENT VIDE ORDER DATED 20.12.2007 DETERMINING TOTAL INCOME AS RS. 1,42,28,360/- U/S 1 43(3). IN CLAIM U/S 80HHC, ALLOWED DEDUCTION OF RS. 1,70,57,083/- INSTEAD OF 1,85,05,9 02/- ALLOWED AT THE TIME OF INITIAL ASSESSMENT FOR THE REASON THAT EXCISE REFUND IN QUESTION WAS N OT REDUCED FROM BUSINESS INCOME AND OCTROI DUTY ON EXPORT WAS EXCLUDED. 8. IN APPEAL AGAINST THE REASSESSMENT ORDER, THE LD . CIT (A) VIDE IMPUGNED ORDER UPHELD THE VALIDITY OF REOPENING IN QUESTION ASSAILED BY T HE ASSESSEE. ALSO UPHELD THE COMPUTATION OF DEDUCTION U/S 80HHC BUT AT THE SAME TIME DIRECTED T HE ASSESSING OFFICER TO RECALCULATE THE BENEFIT U/S 80HHC IN VIEW OF ORDER OF ITAT IN THE C ASE OF TOPMAN EXPORTS. THE RELEVANT EXTRACT OF THE LD. CIT (A) ORDER IS REPRODUCED AS U NDER: I FIND THAT THE GROUNDS OF APPEAL AS REPRODUCED EAR LIER RAISED BY THE APPELLANT ARE SAME AS WHAT WAS RAISED FOR ASSESSMENT YEAR 2000-01 AGAI NST THE ORDER DATED 21.7.2008. I FIND THAT THE SAID ORDERS OF THE ASSESSING OFFICER HAS AT PRESENT BECOME FINAL WITH THE PASSING OF THE ORDER OF LD. CIT (A)-33, MUMBAI DATE D 25.2.2010 ON THE GROUND THAT AS THE APPELLANT HAS HIMSELF ACCEPTED THE ORDER U/S 26 3 PASSED IN THE CASE OF THE APPELLANT FOR ASSESSMENT YEAR 2000-01 BY THE LD. CIT-23, MUMB AI ON THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80HHC, THERE STANDS NO REASON TO INTE RFERE WITH THE ORDER OF THE ASSESSING OFFICER PASSED ON THE BASIS OF THIS ORDER . AS THE MATTER IS SETTLED AND AS THE PRESENT ASSESSMENT ORDER PASSED U/S 143(3) RWS 147 OF THE INCOME TAX ACT, 1961 IS BASED ON THE SAME GROUNDS THAT WERE RAISED IN THE O RDER U/S 263 IN RESPECT OF DEDUCTION U/S 80HHC IN THE CASE OF THE APPELLANT. I FIND THAT THERE IS NO REASON TO INTERFERE WITH THE WORKING OF THE ASSESSING OFFICER REGARDING ALLOWABILITY OF DEDUCTION U/S 80HHC. THE DETAILED WORKING OF THE ASSESSING O FFICER, I FIND IS, TAKING INTO ACCOUNT THE FINDING OF THE LD. CIT-23, MUMBAI IN HIS ORDER U/S 263 DATED 7.9.2007 AND WHICH HAS NOT BEEN CHALLENGED BY THE APPELLANT. THEREFOR E, THE GROUND OF APPEAL REGARDING THE CALCULATION OF DEDUCTION U/S 80HHC RAISED BY TH E APPELLANT STANDS DISMISSED AND THE ACTION OF THE ASSESSING OFFICER IS UPHELD. I FIND THAT THE APPELLANT IS IN APPEAL BEFORE THE HONBLE ITAT IN RESPECT OF THE ORDER OF THE LD. CIT (A) DATED 18.12.2006 IN ITS CASE FOR ASSESSMENT YEAR 2000-01, 2002-03 AND 2003-04 REGARD ING THE ISSUE OF GRANT OF DEDUCTION U/S 80HHC. THE ORDER OF THE LD. CIT (A) DATED 18.12.2006 WAS IN RESPECT OF APPEAL FILED AGAINST ORDER U/S 143(3) RWS 147 AND U /S 143(3) OF THE ACT. DUE TO THE MULTIPLICITY OF APPEALS FILED AND AS THE CASE IS AL SO SUB JUDICE BEFORE A HIGHER FORUM, KEEPING IN VIEW THE REASONS GIVEN EARLIER IN THIS O RDER, I DO NOT REGARD THIS FORUM AS THE CORRECT FORUM FOR THE CONCERNED APPEAL. HOWEVER, T HE ASSESSING OFFICER IS DIRECTED TO ENSURE THAT THE DEDUCTION U/S 80HHC IS CALCULATED A S PER DIRECTION GIVEN BY THE HONBLE ITAT, MUMBAI IN THE CASE OF M/S. TOPMAN EXPORTS IN ITA NO. 5769/M/2006 IN RESPECT OF 4 ITA NO.4559 & 4072/M/2010 THE ISSUE OF SALE OF DEPB LICENSE AS THE DIRECTION ON THIS ISSUE HAS BEEN GIVEN BY THE HONBLE ITAT AFTER THE FINALIZATION OF THE ORDER U/ S 143 (3) AND ORDER U/S 263 REFERRED TO ABOVE IN THE CASE OF THE APPELLANT AND AS SUCH WERE NOT CONSIDERED BY THE AUTHORITIES CONCERNED. TO THIS EXTENT, A RECALCULATION WOULD B E NEEDED AS THE ISSUE STANDS DECIDED BY THE TRIBUNAL. FOR THE REST OF THE ISSUE THE ACT ION OF THE ASSESSING OFFICER IS UPHELD. 8.1. HENCE, THE REVENUE HAS FILED THE INSTANT APPEA L AGAINST THE RE-COMPUTATION DIRECTION OF LD. CIT (A). ON THE OTHER HAND, THE ASSESSEE HAS A LSO FILED THE INSTANT APPEAL REGARDING CONFIRMATION OF VALIDITY OF RE-ASSESSMENT BY THE LD . CIT (A). 9. IN SUPPORT OF THE APPEAL, THE LEARNED DR HAS ARG UED THAT ONCE THE LD. CIT (A) HAS ACCEPTED THE LEGALITY OF RE-ASSESSMENT PROCEEDINGS SO AS THE ORDER OF THE ASSESSING OFFICER U/S 80HHC, THEREFORE, INSTEAD OF DIRECTING THE ASSESSIN G OFFICER, THE ASSESSEES APPEAL DESERVED TO BE DISMISSED BY THE LD. CIT (A). THEREFORE, TO THI S EXTENT, HE PRAYED FOR SETTING ASIDE THE DIRECTIONS OF RE-COMPUTATION MADE BY THE LD. CIT (A ) TO THE ASSESSING OFFICER. 10. ON THE OTHER HAND, THE LEARNED AR HAS SUBMITTED BEFORE US THAT IN THE INSTANT CASE, NO INCOME HAD ESCAPED THE ASSESSMENT AT THE HANDS OF A SSESSING OFFICER AT THE TIME OF INITIAL ASSESSMENT. THEREFORE, THE RE-ASSESSMENT IN QUESTI ON IS ONLY CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE ACT. HE RE LIED ON THE CASE OF KELVINATOR INDIA LTD., 320 ITR 561 (SC). 11. LEARNED AR HAS FURTHER ARGUED THAT SINCE THE AS SESSMENT ORDER HAD BEEN MODIFIED BY THE LD. CIT (A) IN THE FIRST APPEAL ON 18.12.2006 ( SUPRA), THEREFORE, THE INSTANT CASE IS COVERED BY THE DOCTRINE OF MERGER. STRESSED THAT WHEN THE ORDER OF ASSESSING OFFICER I S UPHELD IN APPEAL BY THE LD. CIT (A) THEN THE ASSESSING OFFICE R LOSES JURISDICTION TO REOPEN THE SAME. HENCE, PRAYED FOR ACCEPTANCE OF THE ASSESSEES APPE AL. 5 ITA NO.4559 & 4072/M/2010 12. REGARDING LEARNED DRS PLEA OF RE-COMPUTATION I SSUED BY THE LD. CIT (A) IN THE IMPUGNED ORDER, LEARNED AR SUBMITTED THAT THE LD. C IT (A) HAS RIGHTLY PASSED THE ORDER OF DIRECTING THE AO TO RECALCULATE THE DEDUCTION U/S 8 0HHC AS PER THE DIRECTION OF ITAT, MUMBAI IN THE CASE OF M/S. TOPMAN EXPORTS WHICH HAS BEEN UPHE LD BY THE HONBLE SUPREME COURT (342 ITR 0049). 12.1. THE LEARNED DR HAS ALSO SUBMITTED BEFORE US T HAT THE REOPENING IN QUESTION WAS PERFECTLY JUSTIFIED. HE RELIED ON THE ORDER OF LD. CIT (A). 13. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES. WE HAVE ALSO PERUSED THE RELEVANT FINDINGS AND RECORD WITH THEIR ABLE ASSISTANCE. IN OUR OPINION, SO FAR AS REVENUES APPEAL IS CONCERNED, THE SAME IS NOT MAINTAINABLE. THE REASO N BEING THAT IN PRINCIPLE, THE LD. CIT (A) HAS DISMISSED BOTH THE PLEAS OF THE ASSESSEE I.E., VALIDITY OF REOPENING PROCEEDINGS IN QUESTION AS WELL AS CHALLENGED THE FINDINGS OF ASSESSING OFF ICER REGARDING DEDUCTION U/S 80HHC. THE ONLY DIRECTION WHICH HAS BEEN ISSUED TO THE ASSESSI NG OFFICER IS TO RE-CALCULATE THE BENEFITS AS PER THE EARLIER ORDER OF THE ITAT FOR AYS 2000-01, 2002-03 AND 2003-04 ON THE ISSUE OF DEDUCTION U/S 80HHC. THE SAME, IN OUR OPINION, DOE S NOT GIVE A LOCUS STANDI TO REVENUE TO FILE THE INSTANT APPEAL. HENCE, THE INSTANT APPEAL IS H EREBY REJECTED BEING NOT MAINTAINABLE. 14. SIMILARLY, IN OUR CONSIDERED OPINION, SO FAR AS ARGUMENTS OF THE LEARNED AR QUA REOPENING IN QUESTION THAT IT IS AGAINST THE LAW SE TTLED BY THE HONBLE SUPREME COURT IN KELVINATOR CASE (SUPRA) ARE CONCERNED, WE FIND THAT SINCE THE LD. CIT (A) HAS DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE DEDUCTION U/S 8 0HHC WHICH IN FACT AMOUNTS GIVING RELIEF TO THE ASSESSEE IN VIEW OF THE ITAT ORDER IN THE CASE OF M/S. TOPMAN EXPORTS WHICH HAS BEEN UPHELD EVEN NOW BY THE HONBLE SUPREME COURT (SUPRA ), WE FIND THAT THERE IS NO NEED FOR US TO RE-EXAMINE THE VALIDITY OF THE REASSESSMENT. 6 ITA NO.4559 & 4072/M/2010 15. THERE IS ANOTHER ASPECT OF THE MATTER. THE LD. CIT (A) HAS NOT ACCEPTED THE ASSESSEES APPEAL AND IN VIEW OF THE FACT THAT THIS IS THIRD R OUND OF LITIGATION QUA THE SAME VERY ASSESSMENT I.E., FIRST ONE WAS U/S 143(3), SECOND U/S 143(3) R .W.S. 263 AND THIRD U/S 147 AND FURTHER KEEPING IN MIND THE FACTUAL POSITION THAT EARLIER A PPEALS ARE PENDING AS WELL AS THE ORDER OF ITAT MUMBAI, THEREFORE, WE ARE REFRAINING OURSELVES FROM DECIDING THE MERITS OF THE REOPENING IN QUESTION. 16. IN THE RESULT, ITA NO.4559/M/2010 AND ITA NO.40 72/M/2010 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF APRIL, 2012. SD/- SD/- (B. RAMAKOTAIAH) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER DATE : 20.04.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CONCERNED 5. THE DR H BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI.