Sri. R.Chandra Babu, Alappuzha V. ITO, Alappuzha

ITA 417/COCH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52294 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 23-06-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: R SREENIVASAN
• Keywords: Depreciation
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORESHRI N.R.S. GANESAN, JM I.T.A NO. 417 /COCH/2010 ASSESSMENT YEAR:1997-98 SHRI R. CHANDRA BABU, M/S. NATIONAL COIR MILLS, ALLEPPEY. [PAN: ABXPR 4122J] VS. THE INCOME TAX OFFICER, WARD-1, ALLEPPEY. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI R.SREENIVASAN, CA REVENUE BY MS. S. VIJAYAPRABHA, DR DATE OF HEARING 31/10/2011 DATE OF PRONOUNCEMENT 25/11/2011 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV DATED 19.5.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2003- 04. 2. THE FIRST ISSUE THAT ARISES FOR CONSIDERATION IS THE NON SERVICE OF THE ORDER U/S. 154 OF THE INCOME TAX ACT. ACCORDING TO THE LD. CHARTE RED ACCOUNTANT-REPRESENTATIVE, THE ASSESSING OFFICER PASSED THE ORDER U/S. 154 OF THE ACT ON 31.12.2008. HOWEVER, THE ORDER U/S. 154 DATED 31.12.2008 WAS SERVED ON THE A SSESSEE ON 12.6.2009 WHICH IS BEYOND A PERIOD OF SIX MONTHS. THEREFORE, THE ORDE R WAS NOT PROPERLY SERVED ON THE ASSESSEE. HENCE, THE ENTIRE PROCEEDINGS INITIATED B Y THE ASSESSING OFFICER IS INVALID. 2. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT MERELY BECAUSE THE ORDER WAS RECEIVED ON 12.6. 2009, WILL NOT INVALIDATE THE I.T.A. NO. 417/COCH/2010 2 PROCEEDINGS U/S. 154. THE LD. DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THE PROCEEDINGS U/S. 154 WERE INITIATED WITHIN A PERIOD OF FOUR YEARS FROM THE DATE OF THE ASSESSMENT ORDER AND IT WAS COMPLETED WITHIN FOUR Y EARS.. THERE IS NO INFIRMITY IN THE PROCEEDINGS INITIATED U/S. 154. 3. RIVAL CONTENTIONS WERE CONSIDERED IN THE LIGHT O F THE MATERIAL AVAILABLE ON RECORD. IT IS NOT DISPUTED THAT THE PROCEEDINGS WERE INITIA TED WITHIN FOUR YEARS AND IT WAS COMPLETED WITHIN FOUR YEARS. MERELY BECAUSE THERE WAS A DELAY IN THE SERVICE OF THE ORDER PASSED U/S. 154 OF THE ACT, THAT WILL NOT VITIATE T HE ORDER. THE ORDER OF THE LOWER AUTHORITIES IS CONFIRMED. 4. THE NEXT GROUND IS WITH REGARD TO THE DISALLOWAN CE OF DEDUCTION U/S. 80HHC OF THE INCOME TAX ACT MADE BY THE ASSESSING OFFICER. BOTH THE LD. DEPARTMENTAL REPRESENTATIVE AND THE LD. REPRESENTATIVE FOR THE A SSESSEE ADMITTED THAT THE I.T.O. PASSED THE ASSESSMENT ORDER. THE PROCEEDINGS U/S. 154 EN ABLES THE AO TO RECTIFY THE ORDER WHICH IS PRIMA FACIE APPARENT ON RECORD. THE CONTE NTIONS OF THE ASSESSEE APPEAR TO BE THAT THE JURISDICTION OF THE ASSESSEE WAS CHANGED TO DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1, ALLEPPEY. ONCE THE ASSESSMENT WAS COMPLE TED BY THE I.T.O., WARD-1, ALLEPPEY, THE SUBSEQUENT TRANSFER OF THE JURISDICTI ON TO THE DY. COMMISSIONER FOR THE SUBSEQUENT YEAR WILL NOT INVALIDATE THE PROCEEDINGS INITIATED BY THE AO U/S. 154 OF THE ACT FOR THE SUBSEQUENT YEAR. DUE TO THE HIGH INCOM E OF THE ASSESSEE, THE DY. COMMISSIONER MIGHT HAVE ASSUMED JURISDICTION OR IT MIGHT HAVE BEEN TRANSFERRED BY THE HIGHER AUTHORITIES. THAT, HOWEVER, DOES NOT MEAN T HAT THE ASSESSMENT ORDER BY THE ORIGINAL AUTHORITY WOULD LOSE HIS JURISDICTION OF R ECTIFYING THE ORDER U/S. 154. UNLESS AND UNTIL IT IS SHOWN THAT THE ENTIRE ASSESSMENT DURING THE YEAR UNDER CONSIDERATION WAS TRANSFERRED TO THE DY. COMMISSIONER OF INCOME-TAX, IT CANNOT BE SAID THAT THE PRESENT ASSESSING OFFICER HAS ALSO JURISDICTION. I.T.A. NO. 417/COCH/2010 3 5. THE NEXT ISSUE IS WITH REGARD TO THE RECTIFICATI ON OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. SHRI R. SREENIVASAN, THE LD. CHA RTERED ACCOUNTANT-REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ORIGINALLY ALLOWED DEDUCTION U/S. 80HHC WHILE CONSIDERING THE LOSS SUFFERED BY THE AS SESSEE. ACCORDING TO THE THE LD. CHARTERED ACCOUNTANT-REPRESENTATIVE FOR THE ASSESSE E, THE ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNTS. THEREFORE, THE PROFIT FROM EXPORT CAN BE COMPUTED U/S. 80HHC ON THE BASIS OF THE SEPARATE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THEREFORE, THE LOSS SAID TO BE SUFFERED BY THE ASSE SSEE CANNOT BE SET OFF WHILE COMPUTING THE DEDUCTION U/S. 80HHC. 6. ON THE CONTRARY, MS. S. VIJAYAPRABHA, THE LD. DE PARTMENTAL REPRESENTATIVE SUBMITTED THAT THE PROFIT OF THE ASSESSEE HAS TO BE COMPUTED UNDER THE OTHER PROVISIONS OF THE ACT AS 80AB. THE LD. REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT S. 80HHC FALLS UNDER CHAPTER VIA AND THEREFORE, THE PROVISIO NS OF SECTION 80AB WOULD BE APPLICABLE. SECTION 80AB CLEARLY SAYS THAT THE INC OME OF THE ASSESSEE HAS TO BE COMPUTED UNDER THE OTHER PROVISIONS OF THE ACT. TH EREFORE , WHEN THE ASSESSEE SUFFERS LOSS , IT HAS TO BE SET OFF BEFORE ALLOWING ANY DED UCTION UNDER SECTION 80HHC OF THE ACT. 7. RIVAL CONTENTIONS OF EITHER SIDE WERE HEARD IN T HE LIGHT OF THE MATERIAL ON RECORD. THE ASSESSEE CONTENDED THAT IT IS MAINTAINING SEPA RATE BOOKS OF ACCOUNTS FOR EXPORT BUSINESS. FROM THE ORIGINAL ASSESSMENT ORDER, IT AP PEARS THAT THE ASSESSEE ITSELF PREPARED A CONSOLIDATED P&L ACCOUNT WHICH SHOWS DOMESTIC SAL ES AT ` 16,250/- AND THE ASSESSEE HAS ALSO CLAIMED DEPRECIATION TO THE EXTENT OF ` 3,43,871/-. THE EXPORT PROFIT WAS COMPUTED AT `11, 22,768/-. WHEN THE ASSESSEE ITSELF COMPUTED THE INCOME ON THE BASIS OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT, IT CAN NOT CLAIM TO HAVE MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR EXPORT BUSINESS. SECTION 80A B CLEARLY SAYS THAT THE PROFIT OF THE ASSESSEE FOR THE PURPOSE OF DEDUCTION UNDER CHAPTE VIA INCLUDING S. 80HHC IS TO BE COMPUTED UNDER THE OTHER PROVISION OF THE ACT. THE LOSS SUFFERED BY THE ASSESSEE CANNOT BE IGNORED WHILE COMPUTING THE DEDUCTION U/S. 80HHC . SINCE THERE IS AN APPARENT ERROR I.T.A. NO. 417/COCH/2010 4 IN THE ORDER OF THE ASSESSMENT, THE AO HAS RIGHTLY RECTIFIED THE ORDER AND ACCORDINGLY, THE SAME IS CONFIRMED. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. SD/- (N.R.S.GANESAN) JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 25TH NOVEMBER, 2011 GJ COPY TO: 1. SHRI R. CHANDRA BABU, M/S. NATIONAL COIR MILLS, ALLEPPEY. 2. THE INCOME TAX OFFICER, WARD-1, ALLEPPEY. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .