ACIT CIR 21(3), MUMBAI V. UMC EXPORT CORPORATION, MUMBAI

ITA 4233/MUM/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72021 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 31-12-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 10-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN
• Keywords: Cost of acquisition

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI I.P.BANSAL & SHRI D.KARUNAKARA RAO, AM ITA NO S . 4 233 & 4236 / MUM/20 09 ( ASSESSMENT YEAR S : 1999 - 2000 & 2002 - 20 03 ) ACIT, CIR 21(3), BANDRA (E), MUMBAI - 400 051 VS. M/S UMC EXPORT CORPORATION, 6, MARWAH INDUSTRIAL ESTATE, OFF. SAKI VIHAR ROAD, ANDHERI EAST, MUMBAI - 400 072 . PAN/GIR NO. : A A A FV 0857 G ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR . RAVI PRAKASH /ASSESSEE BY : MR. R.C.JAIN DATE OF HEARING : 3 1 ST DECEMBE R , 201 3 DATE OF PRONOUNCEMENT : 3 1 ST DECEMBER, 2013 O R D E R PER I.P.BANSAL ( J .M.) : THIS ORDER SHALL GOVERN THE DISPOSAL OF TWO APPEALS , WHICH HAVE BEEN PREFERRED BY THE REVENUE AGAINST TWO SEPARATE ORDER S DATED 24 - 4 - 2009 , PASSED BY THE LEARNED CIT(A) - XXI, MUMBAI FOR THE ASSESSMENT YEAR S 1999 - 2000 & 2002 - 03 . 2 . THE REVENUE HAS RAISED ONLY ONE GROUND IN ITA NO.4233/M/2009, WHICH IS COMMON TO THE GROUND NO.1(I) RAISED IN ITA NO.4236/M/2009. THEREFORE, FOR THE SAKE OF CO NVENIENCE, THE GROUNDS RAISED IN APPEAL FOR ASSESSMENT YEAR 2002 - 03 ARE REPRODUCED HERE UNDER : - ITA NO S . 4233 & 4236 /20 09 2 1. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE BE TREATED AS MANUFACTURER/MIX ED EXPORTER FOR THE PURPOSE OF CALCULATION OF DEDUCTION AVAILABLE U/S.80HHC(3)(A) AND 80HHC(3)(C) INSTEAD OF TRADER EXPORTER AS TREATED BY THE AO. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT(A) HAS ERRED IN DIRECTI NG THE AO TO ALLOW THE DEDUCTION U/S.80HHC AFTER RE - COMPUTING IN THE MANNER THAT THE FACE VALUE OF DEPB I.E. CREDIT ALLOWED SHOULD BE CONSIDERED AS THE COST OF DEPB AND ONLY 90% OF PROFIT ON TRANSFER OF DEPB SHOULD BE EXCLUDED AND NOT THE ENTIRE SALE PROCE EDS OF DEPB, WHILE COMPUTING THE PROFITS OF THE BUSINESS UNDER EXPLANATION (BAA) OF SECTION 80HHC. (III) THE LD. CIT(A) ALSO ERRED IN HOLDING THE FACT THAT THE COST OF ACQUISITION IN THE CASE OF DEPB/DFRC HAS TO BE TAKEN AT NIL AS THE SAME ARE RECEIVED BY THE ASSESSEE IN THE FORM OF INCENTIVES WITHOUT INCURRING ANY COST. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3 . EARLIER BOTH THE APPEALS FILED BY THE REVENUE, WERE DISPOSED OF BY THIS TRIBUNAL VIDE ITS ORDER DATED 30 - 9 - 2010 , WHEREBY THE APPEAL IN RESPECT OF ASSESSMENT YEAR 1999 - 2000 WAS DECIDED AGAINST THE REVENUE FOLLOWING EARLIER YEARS DECISION IN THE CASE OF ASSESSEE ITSELF WHICH W AS RENDERED FOR ASSESSMENT YEARS 1992 - 93, 19 93 - 94 & 1998 - 99, RESPECTIVELY IN ITA NOS. 5502 TO 5504/M/2007. SO FAR AS THE ANOTHER ISSUE WHICH PERTAINS TO ASSESSMENT YEAR 2002 - 03, THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE REVENUE BY FOLLOWING THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KA L PATARU CHEMICALS, 192 TAXMANN.COM 435 . IN THIS MANNER, APPEALS FILED BY THE REVENUE WERE DISPOSED OF. 4 . LATER ON, MISCELLANEOUS APPLICATIONS WERE FILED BY THE ASSESSEE CONTENDING THAT THE DECISION OF HON BLE BOMBAY HIGH C OURT IN THE CASE ITA NO S . 4233 & 4236 /20 09 3 OF CIT VS. KALPATARU CHEMEICALS (SUPRA) WAS REVERSED BY THE HON BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS, (2012) 342 I TR 49 AND, THUS, IT WAS CONTENDED THAT A MISTAKE HAD CREPT IN THE ORDER OF THE TRIBUNAL , WHICH REQUIRES TO BE RECT IFIED. ANOTHER MISTAKE POINTED OUT WAS IN THE LAST PARA OF THE AFOREMENTIONED ORDER DATED 30 - 9 - 2010, APPEAL FOR ASSESSMENT YEAR 1999 - 2000 WAS REQUIRED TO BE DISMISSED AND APPEAL FOR ASSESSMENT YEAR 2002 - 03 WAS REQUIRED TO BE PARTLY ALLOWED AS ON THE ISSUE RAISED IN THE ASSESSMENT YEAR 1999 - 2000, FOLLOWING EARLIER YEARS DECISION THE ISSUE WAS TO BE DECIDED AGAINST THE REVENUE . IT WAS POINTED OUT THAT THE S E ARE THE MISTAKE S APPARENT FROM THE RECORD. 5. ACCEPTING THE RECTIFICATION APPLICATION FILED BY THE A SSESSEE, THE AFOREMENTIONED ORDER DATED 30 - 9 - 2010 WAS RECALLED FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA) . ACCORDINGLY, THESE APPEALS WERE FIXED FOR HEARING. 6. IT WAS POINTED OUT BY THE LEARNED AR THAT COMMON ISSUE RAISED BY THE REVENUE IN BOTH THE APPEALS IS TO BE DECIDED FOLLOWING EARLIER YEARS DECISION WHICH HAS BEEN QUOTED IN THE EARLIER YEARS ORDER OF THE TRIBUNAL . THEREFORE, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 1999 - 20 00 IS REQUIRED TO BE DISMISSED. ITA NO S . 4233 & 4236 /20 09 4 7 . ON THE OTHER ISSUE, WHICH IS RAISED IN ASSESSMENT YEAR 2002 - 03, IT WAS SUBMITTED BY THE LEARNED AR THAT THE SAME MAY BE RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO RECALCULATE THE DEDUCTION UNDER SECTION 80 HHC IN ACCORDANCE WITH THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA) . 8 . ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER PASSED BY THE AO. 9 . WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. SO FAR AS THE APPEAL RELATES TO ASSESSMENT YEAR 1999 - 2000, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED DECISION OF THE TRIBUNAL DATED 7 - 9 - 2009 PASSED IN ITA NOS. 5502 TO 5504/M/2007 , FOR ASSESSMENT YEARS 1992 - 93, 1993 - 9 4 & 1998 - 99 . THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER : - 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. WE FIND THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THAT IT HAS PURCHASED RAW - MATERIAL, MAKING DRAWINGS AND DESIGNS ETC. ASSESSEE HA S FILED VARIOUS DETAILS OF EVIDENCES INCLUDING COPIES OF PURCHASE BILLS, COPIES OF DRAWINGS, SALE INVOICES ETC. AS PER THE DIRECTIVE OF THE TRIBUNAL BEFORE THE ASSESSING OFFICER. THE ASSEMBLING OF PARTS WERE CARRIED OUT AT SISTER CONCERN'S INDUSTRIAL PREMI SES UNDER THE AGREEMENT DT.01.04.89 WITH THE ASSESSEE COMPANY THROUGH WORKERS OF SISTER CONCERN, UNDER THE DIRECT SUPERVISION AND CONTROL OF TH E ASSESSEE COMPANY. THE CIT(A) HAS DETAILED THE VARIOUS ACTIVITIES UNDERTAKEN BY ,THE ASSESSEE TO CONVERT THE RAW MATERIAL PURCHASED BY IT INTO THE FINAL PRODUCT THROUGH ITS SISTER CONCERN UNDER THE ASSESSEE'S OWN SUPERVISION AND CONTROL AT EACH STAGE IN THE CAPACITY OF MANUFACTURER. THE CIT(A) HAS GIVEN A FINDING THAT RAW MATERIAL I.E. INDIVIDUAL PARTS PROCURED BY T HE ASSESSEE COMPANY ARE DIFFERENT THAN THE FINAL PRODUCTS EXPORTED BY THE ASSESSEE. THE CIT(A) HAS FURTHER OBSERVED THAT THE OUTCOME OF THE PROCESS RESULTS INTO DISTINCT PRODUCT DIFFERENT THAN ITS INDIVIDUAL COMPONENTS. WE FIND THAT THE REVENUE COULD NOT C ONTROVERT THE FINDINGS OF THE CIT(A) THAT THE ASSESSEE HAS FURNISHED DETAILS OF PURCHASE OF MATERIALS, DETAILS OF DRAWINGS AND DESIGNS NECESSARY TO CARRY OUT MANUFACTURING AND HAS COMPLIED WITH THE DIRECTION OF THE TRIBUNAL. THE CASE LAW RELIEF ON BY THE L D. COUNSEL FOR THE ASSESSEE CITED SUPRA SUPPORTS THE CASE OF THE ITA NO S . 4233 & 4236 /20 09 5 ASSESSEE. IN THESE FACTS OF THE CASE, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO TREAT THE ASSESSEE AS MANUFACTURE/MIXED EXPORTER AND CA LCULATE THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.80HHC BY APPLYING THE PROVISIONS OF SEC.80HHC(3)/80HHC(3)(C) IN TERMS OF TRIBUNALS DIRECTION. IN THIS VIEW OF THE MATTER, WE CONFIRM THE ORDER OF THE CIT(A) AND THE GROUND OF APPEAL OF REVENUE IN ALL THESE THREE APPEALS IS DISMISSED. 10 . ACCORDINGLY, RESPECTFULLY FOLLOWING THE AFOREMENTIONED ORDER OF THE TRIBUNAL, WE DISMISS THE DEPARTMENTAL APPEAL FOR ASSESSMENT YEAR 1999 - 2000. 11 . FOR ASSESSMENT YEAR 2002 - 03, GROUND NO. 1(I) RAISED BY THE REVENUE IS ALS O DISMISSED FOLLOWING THE AFOREMENTIONED ORDER. 1 2 . THE ISSUES RAISED BY THE REVENUE IN RESPECT TO ASSESSMENT YEAR 2002 - 03 AS PER GROUNDS NO. 1(II) & (III) , ARE RESTORED BACK TO THE FILE OF THE AO FOR READJUDICATION AS PER AFOREMENTIONED DECISION OF HON BL E SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA) AND THESE GROUNDS ARE CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AS AFORESAID. 1 3 . IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 1999 - 2000(I.E ITA NO.4233/M/2009) IS D ISMISSED AND APPEAL FOR ASSESSMENT YEAR 2002 - 03 (I.E. ITA NO.4236/M/2009) IS PARTLY ALLOWED. 1999 - 2000(I.E ITA NO.4233/M/2009) (I.E ITA NO.4236/M/2009) - ITA NO S . 4233 & 4236 /20 09 6 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 1 ST DEC . 201 3 . 3 1 ST DEC 201 3 SD/ - SD/ - ( ) ( D.KARUNAKARA RAO ) ( ) ( I.P.BANSAL ) / ACCOUNTANT MEMBER / JUDICIALMEMBER MUMBAI ; DATED 3 1 /12/ 2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//