Smt Rajasree Pratap Nair, Kollam V. DCIT, Kollam

ITA 487/COCH/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58323 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 22-05-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: T V HARIHARAN
• Keywords: Business income; Retrospective amendment; Difference of opinion; Change of opinion
• Section: 80HHC; 147

Judgement Text

1 ITA NO.487/COCH/2007 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) ITA NO.487/COCH/2007 (ASSESSMENT YEARS 2000-01) SMT. RAJASREE PRATAP NAIR VS THE DY.CIT, CENT.CI R. PROP SURYA EXPORTS KOLLAM KOCHUPILAMMOODU, KOLLAM PAN : AAWPP4670P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.V. HARIHARAN RESPONDENT BY : SMT. VIJAYAPRABHA DATE OF HEARING : 27-02-2012 DATE OF PRONOUNCEMENT : 29-02-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI DATED 26-02-200 7 AND PERTAINS TO ASSESSMENT YEAR 2000-01. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS REOP ENING OF ASSESSMENT U/S 147 OF THE ACT. 3. SHRI T.V. HARIHARAN, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S 1 47 OF THE ACT WITHIN FOUR 2 ITA NO.487/COCH/2007 YEARS IN ORDER TO INVOKE TAXATION LAWS AMENDMENT AC T, 2005. IT WAS INTRODUCED RETROSPECTIVELY FOR THE PURPOSE OF TAXING THE SALE PROCEEDS OF THE IMPORT LICENCE. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HA S DISCLOSED ALL THE DETAILS AND THEREFORE, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT. FURTHER, THE LD.REPRESENTATIVE SUBMITTED THAT THE REOPENING OF T HE ASSESSMENT IS DUE TO CHANGE OF OPINION. THE LD.REPRESENTATIVE HAS PLACE D HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSIONER OF IN COME-TAX VS KELVINATOR OF INDIA LTD & ANOTHER (2010) 320 ITR 561(SC) AND BALKR ISHNA HIRALAL WANI VS ITO & ORS (2010) 321 ITR 519 (SC). 4. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR SU BMITTED THAT THE ASSESSMENT PROCEEDINGS WAS REOPENED U/S 147 OF THE INCOME-TAX ACT DUE TO RETROSPECTIVE AMENDMENT IN SECTION 80HHC OF THE ACT FOR THE PURPOSE OF ASSESSING THE INCOME WHICH ESCAPED ASSESSMENT IN RE SPECT OF SALE PROCEEDS OF IMPORT LICENCE. THEREFORE, IT IS NOT A CHANGE OF O PINION. THE ASSESSING OFFICER HAS NOT TAKEN ANY OPINION OR VIEW IN THE ASSESSMENT AND IT WAS REOPENED ONLY BECAUSE OF THE AMENDED PROVISIONS OF SECTION 80HHC OF THE ACT BY TAXATION LAWS (AMENDMENT) ACT, 2005. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE CASE WAS REOP ENED DUE TO AMENDMENT BROUGHT BY THE LEGISLATURE IN SECTION 80HHC OF THE ACT FOR TAXING THE SALE PROCEEDS OF THE IMPORT LICENCE. THE ASSESSING OFFI CER HAS NOT EXAMINED THIS ISSUE EARLIER SINCE THERE WAS NO OCCASION FOR THE ASSESSI NG OFFICER TO DO SO. SINCE THE ASSESSMENT PROCEEDINGS WERE REOPENED ON THE BASIS O F THE SUBSEQUENT RETROSPECTIVE AMENDMENT IN THE INCOME-TAX ACT, THIS CANNOT BE SAID TO BE A CHANGE OF OPINION. WE HAVE ALSO CAREFULLY GONE THR OUGH THE JUDGMENTS OF THE 3 ITA NO.487/COCH/2007 APEX COURT IN THE CASE OF IN THE CASE OF KELVINATOR OF INDIA (SUPRA) AND BALKRISHNA HIRALAL WANI (SUPRA). ADMITTEDLY, THE CASE WAS REO PENED DUE TO RETROSPECTIVE AMENDMENT OF THE INCOME-TAX ACT. THEREFORE, THE JUD GMENTS OF THE APEX COURT IN THE CASE OF KELVINATOR OF INDIA (SUPRA) AND BALKRI SHNA HIRALAL WANI (SUPRA) MAY NOT BE OF ANY ASSISTANCE TO THE ASSESSEE. 5. NOW COMING TO THE NEXT ISSUE PERTAINING TO DEDUC TION U/S 80HHC, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE IS IN THE BUSINESS OF EXPORT OF CASHEW NUTS. THEREFORE, THE DEPB AND DUTY DRAW BACK FOR CASHEW INDUSTRIES WAS COMPULSORY AND THE ASSESSEE HAS NO O PTION BUT TO CHOOSE BETWEEN THE DEPB AND DUTY DRAW BACK. THEREFORE, ACC ORDING TO THE LD.REPRESENTATIVE, THERE IS NO QUESTION OF ANY PROD UCTION OF EVIDENCE FOR EXERCISING OPTION BY THE ASSESSEE BETWEEN THE TWO A LTERNATIVES. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE AMENDED PRO VISIONS MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. 6. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR SU BMITTED THAT IN VIEW OF THE APEX COURT JUDGMENT IN THE CASE OF TOPMAN EXPOR TS JUDGMENT DATED 09-02- 2012 THE MATTER NEEDS TO BE EXAMINED BY THE ASSESSI NG OFFICER AND PROFIT ON SALE OF DEPB NEEDS TO BE BROUGHT TO TAXATION. THE LD.RE PRESENTATIVE FOR THE ASSESSEE HAS ALSO FAIRLY SUBMITTED THAT THE MATTER NEEDS TO BE RE-EXAMINED IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF TOPMA N EXPORTS (SUPRA). 7. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE APEX COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA) HAS EXAMINED THIS ISSUE ELABORATELY . THE APEX COURT FOUND THAT THE PROFIT ELEMENT HAS TO BE BROUGHT FOR TAXATION. IN VIEW OF THE ABOVE, THIS 4 ITA NO.487/COCH/2007 TRIBUNAL IS OF THE OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED IN THE LIGHT OF JUDGMENT OF THE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA). SINCE THE LOWER AUTHORITIES HAD NO OCCASION TO EXAMINE THE IS SUE IN THE LIGHT OF JUDGMENT OF THE APEX COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA ), THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE IN THE LIGHT OF JUDGMENT OF THE APEX COURT IN TOPMAN EXPORTS (SUPRA) AND THE REAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. 8. THE NEXT ISSUE IS WITH REGARD TO THE EXCLUSION O F INTEREST FROM BUSINESS PROFITS FOR COMPUTING DEDUCTION U/S 80HHC IN VIEW O F EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. 9. SHRI T.V. HARIHARAN, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT ONLY THE NET INTEREST HAS TO BE TAKEN FOR THE PURPOS E OF EXCLUSION OF 90% OF INTEREST. THEREFORE, THE LOWER AUTHORITIES ARE NOT RIGHT IN EXCLUDING THE ENTIRE INTEREST PORTION. 10. ON THE CONTRARY, SMT. VIJAYPRABHA, THE LD.DR SU BMITTED THAT ADMITTEDLY, THE ASSESSEE RECEIVED INTEREST ON DEPOSIT WHICH WAS ASSESSED AS INCOME FROM OTHER SOURCES. ACCORDING TO THE LD.REPRESENTATIVE , EXPLANATION (BAA) OF SECTION 80HHC WOULD BE APPLICABLE ONLY IN RESPECT OF INCOME WHICH WAS ASSESSED AS BUSINESS INCOME. SINCE THE INTEREST INCOME WAS A SSESSED AS INCOME FROM OTHER SOURCES, THE ENTIRE INTEREST HAS TO BE EXCLU DED. 5 ITA NO.487/COCH/2007 11. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SI DE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. EXPLANATION (BAA) TO SECTION 80HHC CLEARLY SAYS THAT 90% OF THE MISCELLANEOUS INCOME IN THE NATURE OF RE NT, INTEREST, ETC. WHICH ARE INCLUDED IN THE BUSINESS PROFIT HAS TO EXCLUDED. T HEREFORE, THE ASSESSMENT OF INTEREST INCOME AS BUSINESS INCOME IS A PRE-CONDITIO N FOR THE PURPOSE OF EXCLUSION OF 90% OF THE SAME FROM THE COMPUTATION. IN THIS CASE, THE INTEREST IS ADMITTEDLY ASSESSED AS INCOME FROM OTHER SOURCES. NO OTHER MATERIAL IS ON RECORD TO SUGGEST THAT THE INTEREST INCOME HAS ANY NEXUS WITH THE BUSINESS OF THE ASSESSEE SO AS TO CLASSIFY IT AS BUSINESS INCOME. SINCE THE INTEREST WAS ADMITTEDLY RECEIVED FROM DEPOSIT WITH BANKS IT IS AN INDEPENDENT SOURCE OF INCOME. IN THE ABSENCE OF ANY MATERIAL, THE INTERE ST RECEIVED ON DEPOSITS WITH BANKS HAS TO BE TREATED AS INCOME FROM OTHER SOURCE S. THEREFORE, THERE IS NO QUESTION OF INCLUSION OF THE INTEREST INCOME IN THE BUSINESS PROFIT. ACCORDINGLY EXPLANATION (BAA) TO SECTION 80HHC MAY NOT BE APPLI CABLE AT ALL. THEREFORE, THE ENTIRE INTEREST INCOME HAS TO BE EXCLUDED FROM THE BUSINESS PROFIT AND HAS TO BE TAXED AS INCOME FROM OTHER SOURCES. THEREFORE, W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF FEBRUARY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 29 TH FEBRUARY, 2012 PK/- 6 ITA NO.487/COCH/2007 COPY TO: 1. SMT. RAJASREE PRATAP NAIR, PROP SURYA EXPORTS, KOCHU PILAMOODU, KOLLAM 2. THE DY.CIT, CENT.CIR., KOLLAM 3. THE C.I.T(A)-I, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH