ITO, JODHPUR V. M/s. Angira Art Exports, JODHPUR

ITA 426/JODH/2013

• Counselvise Citation: 42623314 RSA 2013
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: C S GANG
• Section: 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 426/JODH/2013 (A.Y. 2009-10) INCOME TAX OFFICER VS. M/S ANGIRA ART EXPORTS, WARD 3(1) JODHPUR. E-97, MANDORE INDUSTRIAL AREA, JODHPUR. PAN NO. AALFA8687L ASSESSEE BY : SHRI C.S. GANG DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 20/08/2013. DATE OF PRONOUNCEMENT : 22 /08/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER OF LD. CIT (A), JODHPUR DATED 08/05/2013. THE FOLLOWING GROUNDS HA VE BEEN RAISED IN THIS APPEAL: 1. FOLLOWING THE DECISION OF HON'BLE ITAT WHEREIN I T IS HELD THAT RECEIPT OF DDB AND DEPB ARE DERIVED FROM EXPORT BUSINESS AN D ARE ELIGIBLE FOR DEDUCTION U/S 10BA BY RELYING ON HON'BLE SUPREME CO URT JUDGMENT IN THE CASE OF TOPMAN EXPORTS (67 DTR 185) THUS, IGNOR ED THE FACT THAT THE JUDGMENT IN CASE OF TOPMAN EXPORTS WAS IN THE C ONTEXT OF SECTION 80HHC IN WHICH THERE IS SPECIFIC PROVISIONS (PROVIS OS TO SUB SECTION (3) THAT THE ELIGIBLE PROFITS COMPUTED HAS TO BE FURTHE R INCREASED BY 90% 2 OF THE RECEIPTS SUCH AS DDB, DEPB ETC. AND WHEN THE RE IS NO SIMILAR PROVISION IN SECTION 10BA. 2. NOT CONSIDERING THE PRINCIPLE LAID DOWN BY THE H ON'BLE SUPREME COURT IN THE LIBERTY INDIA (225 CTR 233) THAT DEPB/DDB AR E INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY THE CENTRAL GOVT. O R SECTION 75 OF THE CUSTOM ACT, 1962, HENCE, INCENTIVE PROFITS ARE NOT DERIVED FROM THE ELIGIBLE BUSINESS. 2 FROM THE ABOVE GROUNDS IT IS GATHERED THAT ONLY GR IEVANCE OF THE DEPARTMENT RELATES TO THE DEDUCTION UNDER SECTION 1 0BA OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS ACT, FOR SHORT) ON THE DUTY DRAWBACK AND DEPB RECEIVED BY THE ASSESSEE, WHICH WAS DENIED BY THE AO. HOWEVER, LD. CIT(A) DIRECTED THE AO TO ALLOW BY FOL LOWING THE DECISION OF ITAT, JODHPUR BENCH, JODHPUR IN ASSESSEES OWN CASE . 3. DURING THE COURSE OF HEARING, LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN ITA NO. 360/JODH /2012 FOR THE ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 31/01/2013 . COPY OF THE SAID ORDER WAS FURNISHED. IN HIS RIVAL SUBMISSIONS, LD. D.R. ALTHOUGH, SUPPORTED THE ORDER OF AO, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING 3 SIMILAR FACTS HAS ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE ITAT IN THE CASE OF ASSESSEE ALONG WITH OTHER ASSESSEE IN I TA NO. 360/JODH/2012 AND OTHERS VIDE ORDER DATED 30/01/2013, WHEREIN REL EVANT FINDINGS HAVE BEEN GIVEN IN PARA 11 TO 13, WHICH ARE REPRODUCED A S UNDER:- 11. WE HAVE NOTICED THAT SECTION 10BA(4) TAKES IT S SHAPE AND FORM FROM ERSTWHILE SECTION 10B(4) WHICH WAS AMENDE D VIDE THE FINANCE ACT, 2001 W.E.F. 01.04.2001. PRIOR TO 0 1.04.2001, THIS SECTION 10B(4) READ AS UNDER :- 10B(4) FOR THE PURPOSE OF S.S. (1), PROFITS DER IVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE S HALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS, THE SAME PROPORTION AS THE EXPORT TURNOVE R OF THE BUSINESS CARRIED ON BY THE ASSESSEE. CLARIFICA TIONS ON NOTES OF CLAUSES OF THE FINANCE ACT, 2001 CLARIF IES THE PURPOSE OF THIS AMENDMENT THAT UNDER THE EXISTING PROVISION CONTAINED IN S.S. (4), THE PROFITS DERIVE D FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE S HALL BE THE AMOUNT WHICH BEARS TO THE PROFIT OF THE BUSI NESS, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPE CT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE AS SESSEE. SUB CLAUSE (B) SEEKS TO CLARIFY THAT SUCH PROPORTIO NS SHALL BE CALCULATED WITH REFERENCE TO THE PROFITS AND GAI NS OF THE BUSINESS OF THE UNDERTAKING AND NOT FROM ANY OT HER BUSINESS CARRIED ON BY THE ASSESSEE. THUS PRIOR TO AMENDMENT THE PROFITS DERIVED FROM EXPORT OF ARTICL ES WAS MEANT THE AMOUNT WHICH BORE TO THE PROFITS OF T HE BUSINESS, THE SAME PROPORTION AS EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES BEAR TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE, WHEREAS, AFTER THE AMENDMENT, THE PROFITS DERIVED FROM EXPORT OF ARTIC LES OR THING MEANS THE AMOUNT WHICH BEARS TO THE PROFIT S AND GAINS OF THE BUSINESS OF THE UNDERTAKING AND NO T FROM ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE. SO, BY THIS AMENDMENT ONLY THE PROFITS OF THE BUSINESS OF 4 THE UNDERTAKING ONLY IS TO BE CONSIDERED FOR WORKIN G OUT THE PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAK ING FROM EXPORT OUT OF INDIA OF ELIGIBLE ARTICLES OR TH INGS. THE PROFITS AND THE GAINS OF THE BUSINESS OF THE UNDERT AKING IS TO BE WORKED OUT AS PER THE PROVISIONS OF SECTIO N 28(I). THIS DOES NOT INCLUDE THE PROFITS OF ITEMS DOES NOT INCLUDE THE PROFITS OF ITEMS UNDER S.S. (IIIA), (II IB), (IIIC), (IIID) AND (IIIE) ETC. DUTY DRAW BACK AND ANY PROFI T ON TRANSFER OF DEPB. SECTION 28 ITSELF MAKES IT ABUNDA NTLY CLEAR THAT THE PROFIT ON ACCOUNT OF DUTY DRAW BACK OR ON TRANSFER OF DEPB WILL NOT FORM PART OF PROFIT AND G AINS OF THE BUSINESS OR PROFESSION WHICH WAS CARRIED ON BY THE ASSESSEE AS DISCUSSED ABOVE. THE PLAIN READING OF SECTION 10BA WHICH DEALS WITH EXPORT OF CERTAIN ART ICLES OR THINGS WILL MAKE IT CLEAR THAT SUCH PROFITS AS ARE DERIVED FROM THE EXPORT OUT OF INDIA SHALL BE ALLOW ED FROM THE TOTAL INCOME OF THE ASSESSEE. SUB SECTION (1) OF SECTION 10BA IS SUBJECT TO THE PROVISIONS OF S.SS. 2, 3, 5, 6 AND 7 BUT S.S. 4 LAYS DOWN A METHOD OF COMPUTATIO N FOR THE PURPOSE OF SUB SECTION (1). LIKEWISE, THE S ALE PROCEEDS OF DEPB CANNOT BE CONSIDERED AS PART OF TURNOVER AS IT IS NOT THE SALE PROCEEDS OF THE ARTI CLES OR THINGS MANUFACTURED AND SOLD BY THE ASSESSEE, THEN THE PROFITS FROM SALE OF DEPB CANNOT APPORTIONED ON TRE ATED ON PROFIT DERIVED BY THE UNDERTAKING FROM EXPORT OU T OF INDIA. THE EXEMPTION PROVISIONS IN 10BA HAVE TO BE LIBERALLY INTERPRETED UNLESS THE CREDIT OF DEPB AND DDB IS EXPRESSLY TAKEN AWAY. 12. ACCORDINGLY, WE ARE LEFT WITH NO OPTION BUT TO DECIDE THE IMPUGNED COMMON ISSUE, IN FAVOUR OF THE APPELLANT/A SSESSEE. AS A RESULT, WE HOLD THAT THE MANUFACTURING ACTIVITIES O F THE ASSESSEE ARE ELIGIBLE FOR DEDUCTION PROVIDED U/S 10BA OF THE ACT . THE FACTS AND ISSUE INVOLVED IN OTHER APPEALS ARE EXACTLY SIMILAR TO TH E MAIN APPEAL, EXCEPT FOR THE QUANTUM OF CLAIM MADE U/S 10BA OF THE ACT. THER EFORE, WITH SIMILAR REASONING, WE ALLOW THESE APPEALS BY HOLDING THAT A LL THE ASSESSEES BEFORE US ARE ELIGIBLE FOR DEDUCTION U/S 10BA OF TH E ACT. NO OTHER GROUND(S), IF RAISED, WERE PRESSED BY THEIR RESPECT IVE ID. A.RS. 5 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED ON THE COMMON ISSUE OF ALLOWABILITY OF DEDUCTION U/S 10BA OF THE ACT WHEREAS THE APPEALS OF THE REVENUE ARE DISMISSED . 5. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 30/01/2013 IN I.T. NO.360/JODH/2012 AND OTHERS IN A SSESSEES OWN CASE ((SUPRA)), WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT. 6. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISS ED. (ORDER PRONOUNCED IN THE COURT ON 22 ND AUGUST, 2013). (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22 ND AUGUST, 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.