MMTC Ltd., New Delhi V. DCIT, New Delhi

ITA 4122/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0249 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1997-1998
• Appeal Filed On: 24-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIMA NEB
• Keywords: Business income; Opportunity of being heard
• Section: 143(3); 80HHC; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER , AND SHRI N.K. CHOUDH A RY , JUDICIAL MEMBER ITA NO. 41 22 / DEL/201 5 [ASSESSMENT YEAR: 1997 - 98 ] M/S MMTC LIMITED VS. THE D .C.I.T CORE - 1, SCOPE COMPLEX CIRCLE 1 6 ( 2 ) 7, INSTITUTIONAL AREA NEW DELHI LODHI ROAD, NEW DELHI PAN : AA ACM 1433 E [APPELLANT] [RESPONDENT] DATE OF HEARING : 1 9 .0 9 .2018 DATE OF PRONOUNCEMENT : 2 0 .0 9 .2018 ASSESSEE BY : SHRI ROHIT JAIN , ADV MS. DEEPASHREE RAO, CA SHRI VIBHU GUPTA, CA REVENUE BY : MS. ASIMA NEB , SR. DR ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER, T HIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 6 , DELHI DATED 3 0 . 03 .201 5 PERTAINING TO A.Y 1997 - 98. 2 2. THE GRIEVANCE S RAISED BY THE ASSESSEE READ AS UNDER: 1. THAT THE ORDER DATED 30/03/2015 IN APPEAL NO. 265/14 - 15 PASSED BY LEARNED CIT(A) - 6, NEW DELHI U/S 250/154 OF THE ACT IS BAD IN LAW AND WRONG ON FACTS. 2. THAT ON FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THE ISSUE OF RESTRICTING DEDUCTION U/S 80HHC OF THE ACT AT RS.83.43 LAKHS (DONE BY THE AO) AS AGAINST THE CLAIM OF THE APPELLANT FOR RS.32.44 CRORES. 3. THAT ON FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THE ISSUE THAT DEDUCTION, AS COMPUTED, U/S 80HHC READ W I TH SECTION 80AB OF THE ACT, IS ADMISSIBLE TO THE APPELLANT IN ACCORDANCE WITH SECTION 80A(1) OF THE ACT OUT OF GT1 AND CAN NOT BE RESTRICTED TO BUSINESS INCOME FOLLOWING THE HONBLE SUPREME COURT JUDGEMENT (305 ITR 276). 4. THAT ON FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C1T(A) ERRED IN REAFFIRMING THE RELIANCE UPON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF KANTI LA L CHHOTE LA L (246 ITR 439) RELIED UPON BY HIS PREDECESSOR, WHICH DEALS WITH THE ISSUE OF REASSORTMENT CHARGES FORMING PART OF BUSINESS PROFIT S/TURNOVER AND NOT WITH REGARD TO THE GROUND OF THE APPELLANT PERTAINING TO CONSIDERING NET INTEREST EXPENDITURE (IF ANY) AND PRIOR PERIOD EXPENDITURE FORMING PART OF INDIRECT COST FOR COMPUTING DEDUCTION U/S 80HHC OF THE ACT. 3 3. BRIEFLY STATED, THE FA CTS OF THE CASE ARE THAT THE ASSESSEE IS A GOVERNMENT OF INDIA ENTERPRISE AND IS ENGAGED IN THE BUSINESS OF TRADING/MANUFACTURING OF VARIOUS COMMODITIES , WHICH ARE EXPORTED AND SOLD IN DOMESTIC MARKET AS WELL. THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 143(3) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] VIDE ORDER DATED 16.03.2000 , WHICH WAS ASSAILED BEFORE THE LD. CIT(A). VIDE ORDER DATED 26.04.2001, THE LD. CIT(A) DECIDED THE APPEAL OF THE ASSESSEE. 4. SUBSEQUENTLY, THE ASSESSEE MOVED AN APPLICATION U/S 154 OF THE ACT IN RESPECT OF APPELLATE ORDER PASSED BY THE LD. CIT(A) VIDE ORDER DATED 26.04.2001 AND BROUGHT TO THE NO TICE OF THE FIRST APPELLATE AUTHORITY THAT WHILE ADJUDICATING GROUND NO. 1, HE HAS NOT CONSIDERED ALL THE ISSUES RAISED BY THE ASSESSEE AND, THEREFORE, A MISTAKE HAS CREPT AS IS APPARENT FROM RECORD, WHICH DESERVES RECTIFICATION U/S 154/155 OF THE ACT. TH E CLAIM OF THE ASSESSEE WAS DENIED BY THE LD. CIT(A) BY HOLDING THAT THERE IS NO MISTAKE APPARENT FROM RECORD WHICH NEEDS TO BE RECTIFIED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE CONTENTS OF THE APPLICATION FILED U/S 15 4 /1 55 OF THE ACT AND 4 POINTED OUT THE ISSUES WHICH WERE RAISED BEFORE THE FIRST APPELLATE AUTHORITY WHICH HAVE NOT BEEN CONSIDERED BY HIM WHILE DISPOSING THE GROUND NO. 1 OF THAT APPEAL. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT NON - ADJUDICATION OF THE ISSUES RAISED BEFORE THE APPELLATE AUTHORITY IN ITSELF IS A MISTAKE APPARENT FROM RECORD , WHICH DESERVES RECTIFICATION U/S 154/155 OF THE ACT. 6. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE LD. CIT(A). 7 . WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUES RAISED BEFORE THE FIRST APPELLATE AUTHORITY QUA GROUND NO. 1 IN THE APPEAL FILED BY THE ASSESSEE PERTAINED TO : (I) INFLATING THE FIGURE OF IN DIRECT COST BY THE ASSESSING OFFICER BY INCLUDING GROSS FIGURE OF INTEREST INSTEAD OF NET FIGURE WHICH WAS SUPPORTED BY VARIOUS JUDICIAL DECISIONS ; (II) ADDITION OF PRIOR PERIOD EXPENDITURE IN THE CALCULATION OF INDIRECT COST BY THE ASSESSING OFFICER WAS A LSO CHALLENGED ON THE 5 PLEA THAT NO PORTION OF PRIOR PERIOD EXPENDITURE IS RELATABLE TO THE EXPORT ACTIVITY OF THE YEAR AND, LASTLY ; (III) SECTION 80HHC IS A COMPLETE CODE IN ITSELF AND NO T CONTROLLED BY SECTION 80AB OF THE ACT AS DECIDED BY VARIOUS COURTS . 8. THEREFORE , THE ACTION OF THE ASSESSING OFFICER IN RESTRICTING THE DEDUCTION U/S 80HHC BY APPLYING SECTION 80AB OF THE ACT FOR EXCLUDING THE DIVIDEND INCOME FROM BUSINESS INCOME IS ERRONEOUS IN LAW. 9. WE HAVE CAREFULLY PERUSED THE ORDER OF THE FIR ST APPELLATE AUTHORITY DATED 26.04.2001. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. THE ISSUES MENTIONED HEREINABOVE HAVE NOT BEEN ADDRESSED BY THE FIRST APPELLATE AUTHORITY WHILE ADJUDICATING GROUND NO. 1 OF THE APPEAL. IT IS SETTLED POSITION OF LAW THAT NON - ADJUDICATION OF ISSUES I S A MISTAKE APPARENT FROM RECORD AND THE FIRST APPELLATE AUTHORITY OUGHT TO HAVE CONSIDERED THE RECTIFICATION APPLICATION IN TRUE SPIRIT AND DECIDED THE ISSUE AFRESH. 6 10. WE, ACCORDINGLY, REMIT THE MATTER TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO DECIDE ALL THE ISSUES AFRESH AFTER GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE I N ITA NO. 41 22/DEL/201 5 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PR ON O UNCED IN THE OPEN COURT ON 2 0 .0 9 .2018. SD/ - SD/ - [ N.K. CHOUDH A RY ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 0 T H SEPTEMBER , 2018 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI 7 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER