GANGOTRI INTERNATIONAL, Jaipur V. ITO, Jaipur

ITA 46/JPR/2011

• Counselvise Citation: 4623114 RSA 2011
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 20-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDRA KUMAR
• Section: 80HHC; 80IB

Judgement Text

1 ITA 46(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 46 & 47/JP/2011 ASSTT. YEAR : 2003-04 & 04-05. GANGOTRI INTERNATIONAL, VS. THE INCOME-TAX OFFICE R, 77, SUDERSHANPURA IND. AREA, JAIPUR. WARD 2(1), J AIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEVENDRA KUMAR & SHRI DINESH KUMAR RESPONDENT BY : SHRI SANJAY KUMAR ORDER DATE OF ORDER : 10/06/2011. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY ASSESSEE AGAINST THE ORDE R OF LD. CIT (A) RELATING TO ASSESSMENT YEARS 2003-04 AND 2004-05. 2. SIMILAR ISSUES ARE INVOLVED IN BOTH THESE APPEAL S BY THE ASSESSEE, THEREFORE, THEY ARE BEING DISPOSED OFF BY THIS SINGLE ORDER. 3. FIRST AND SECOND ISSUE IN BOTH THESE APPEALS ARE AGAINST REDUCING DEDUCTION UNDER SECTION 80HHC AND 80IB. FOR ASSESSMENT YEAR 2003-0 4 ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80HHC AND 80IB AT RS. 32,52,846/- AND RS. 16,26,423/- RESPECTIVELY. THE AO ALLOWED DEDUCTION OF RS. 26,24,442/- AND RS. 12, 56,809/- UNDER BOTH THE SECTIONS RESPECTIVELY. 2 3.1. SIMILARLY FOR ASSESSMENT YEAR 2004-05, ASSESSE E CLAIMED DEDUCTION UNDER SECTION 80HHC AND 80IB FOR RS. 11,63,735/- AND RS. 9,69,779 /- RESPECTIVELY. THE AO ALLOWED DEDUCTION OF RS. 9,63,369/- AND RS. 6,67,887/- UNDE R BOTH THE SECTIONS RESPECTIVELY. THE DEDUCTION UNDER SECTION 80HHC WAS REDUCED ON ACCOUN T OF REDUCING THE AMOUNT OF DEDUCTION UNDER SECTION 80IB FROM THE TOTAL INCOME, THEREAFTER DEDUCTION UNDER SECTION 80HHC WAS COMPUTED BY THE AO IN VIEW OF PROVISIONS OF SECTION 80IB (13) READ WITH SECTION 80IA(9). THE AO WHILE REDUCING THE DEDUCTI ON UNDER SECTION 80HHC HAS PLACED RELIANCE ON THE ORDER OF SPECIAL BENCH IN THE CASE OF ACIT VS. HINDUSTAN MINT &AGRO PRODUCTS P. LTD. 119 ITD 107 (DEL.). THE LD. CIT ( A) CONFIRMED THE ACTION OF THE AO. 4. SIMILARLY DEDUCTION UNDER SECTION 80IB WAS REDUC ED ON ACCOUNT OF DUTY DRAW BACK AS THE AO HELD THAT ON AMOUNT OF DUTY DRAW BAC K THE DEDUCTION UNDER SECTION 80IB CANNOT BE ALLOWED, AS THE AO WAS OF THE VIEW THAT I NCOME ON ACCOUNT OF DUTY DRAW BACK IS NOT AN INCOME DERIVED FROM THE INDUSTRIAL UNDERT AKING. THE LD. CIT (A) CONFIRMED THE ACTION OF THE AO IN THIS RESPECT ALSO FOR BOTH THE YEARS. 5. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL. 6. THE LD. COUNSEL OF THE ASSESSEE FILED COPY OF WR ITTEN SUBMISSIONS AND STATED THAT NOW THE HONBLE BOMBAY HIGH COURT IN THE CASE OF AS SOCIATED CAPSULES, 237 CTR 408 HAVE OVER RULED THE DECISION OF SPECIAL BENCH IN TH E CASE OF HINDUSTAN MINT &AGRO PRODUCTS P. LTD. 119 ITD 107 (DEL.) AND IN THE CASE OF ROGINI GARMENTS, 108 ITD 49 (SB). IT WAS FURTHER SUBMITTED THAT DECISION OF HO NBLE DELHI HIGH COURT IN THE CASE OF GREAT EASTERN EXPORTS, 237 CTR 264 AND DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF OLAM EXPORTS INDIA LTD. 229 CTR 206 HAVE BE EN DISSENTED. ACCORDINGLY, IT WAS SUBMITTED THAT NOW IN VIEW OF THE DECISION OF HOMB LE BOMBAY HIGH COURT, ASSESSEE IS 3 ENTITLED FOR DEDUCTION WITHOUT REDUCING THE AMOUNT OF DEDUCTION UNDER SECTION 80IB CLAIMED UNDER SECTION 80IB. IT WAS FURTHER SUBMITT ED THAT THE HONBLE SUPREME COURT IN CASE OF PODDAR CEMENT PVT. LTD., 226 ITR 625 (SC) H AS HELD THAT WHERE THERE ARE TWO POSSIBLE INTERPRETATIONS, THE INTERPRETATION FAVOUR ABLE TO THE ASSESSEE SHOULD BE PREFERRED. IN THIS CASE THREE HIGH COURTS WERE AGAINST ASSESSE E AND TWO HIGH COURTS ARE IN FAVOUR OF ASSESSEE, THEREFORE, IT WAS HELD THAT VIEW FAVOURIN G THE ASSESSEE HAS TO BE PREFERRED. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE RAJA STHAN HIGH COURT IN CASE OF CIT VS. DHARMA CHAND, 204 ITR 787, IN THE CASE OF CIT VS. S KY ROOM PVT. LTD., 195 ITR 763 (CAL.) AND IN CASE OF MAHALAXMI POLYPLAST PVT. LTD. VS. STATE OF UTTAR PRADESH, 86 STC 522 (ALL.) 7. ON THE OTHER HAND, THE LD. D/R STATED THAT THE D ECISION OF SPECIAL BENCH IN THE CASE OF HINDUSTAN MINT & AGRO PRODUCTS P. LTD. 119 ITD 1 07 (DEL.) SHOULD BE FOLLOWED AS THIS DECISION IS GIVEN BY THE SPECIAL BENCH OF 5 ME MBERS. 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN RESPECT TO DED UCTION UNDER SECTION 80HHC. EARLIER THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF RO GINI GARMENTS AND IN CASE OF HINDUSTAN MINT &AGRO PRODUCTS P. LTD. 119 ITD 107 ( DEL.) HAVE TAKEN A VIEW THAT DEDUCTION UNDER SECTION 80HHC IS ALLOWABLE AFTER RE DUCING THE AMOUNT OF DEDUCTION CLAIMED UNDER SECTION 80IB IN VIEW OF THE PROVISION S OF SECTION 80IB (13) READ WITH SECTION 80IA (9). NOW THESE DECISIONS HAVE BEEN OV ER RULED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES (SUPRA). T HEREFORE, THE DECISION OF HONBLE BOMBAY HIGH COURT PREVAILS UPON. THE DECISION OF O THER TWO HIGH COURTS I.E. HONBLE DELHI HIGH COURT AND HONBLE KERALA HIGH COURT IN C ASE OF GREAT EASTERN EXPORTS AND IN 4 CASE OF OLAM EXPORT INDIA LTD. (SUPRA) HAVE BEEN DI SSENTED BY HONBLE BOMBAY HIGH COURT AS THEY WERE FOUND DISTINGUISHABLE. THE HON BLE SUPREME COURT IN CASE OF VEGETABLE PRODUCTS AND IN LATEST DECISION IN CASE O F PODAR CEMENT LTD. (SUPRA) HAVE HELD THAT WHERE TWO VIEWS ARE POSSIBLE, THE VIEW FAVOURI NG ASSESSEE SHOULD BE PREFERRED. THEREFORE, FOR THIS REASON ALSO, WE ARE OF THE CONS IDERED VIEW THAT DECISION OF HONBLE BOMBAY HIGH COURT SHOULD BE PREFERRED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE DIRECT THE AO TO ALLOW DEDUCTION UNDER SECTION 80HH C FOR BOTH THE YEARS WITHOUT REDUCING THE AMOUNT OF DEDUCTION UNDER SECTION 80IB . WE ORDER ACCORDINGLY. 9. SECOND ISSUE IN BOTH THE APPEALS ARE AGAINST NOT ALLOWING DEDUCTION ON ACCOUNT OF DUTY DRAW BACK. 10. THIS ISSUE HAS BEEN SET AT REST BY THE HONBLE SUPREME COURT NOW IN CASE OF LIBERTY INDIA VS. CIT, 317 ITR 218 WHEREIN IT HAS B EEN HELD THAT DEDUCTION UNDER SECTION 80IB CANNOT BE ALLOWED ON THE AMOUNT OF DUTY DRAW B ACK. ACCORDINGLY, WE FIND NO INFIRMITY IN THE FINDING OF LD.CIT (A) AND, THEREFO RE, THEY ARE CONFIRMED FOR BOTH THE YEARS. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED IN PART. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 .6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- 5 COPY FORWARDED TO :- GANGOTRI INTERNATIONAL, JAIPUR. THE ITO WARD 2(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 46 (2)/JP/2011) BY ORDER, AR ITAT JAIPUR.