MY FAVOURITE LADY EXPORTS P.LTD, MUMBAI V. DCIT OSDITO WD 6(3)(4)8(2), MUMBAI

ITA 5152/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3242 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAYDR
• Assessee Lawyers: JITENDRA SHANGVI
• Keywords: Business income; Reasonable cause
• Section: 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 5152/MUM/2014 (ASSESSMENT YEAR: 2004-05) MY FAVOURITE LADY EXPORTS APPELLANT PVT. LTD. 236A, JAI GOPAL INDUSTRIAL ESTATE, GROUND FLOOR, BHAVANI SHANKAR CROSS ROAD, DADAR (WEST) MUMBAI - 4000028 VS. ITO 6(3)(4) RESPONDENT AAYKAR BHAWAN MUMBAI PAN: AADCM 4452E /BY APPELLANT : SHRI JITENDRA SHANGVI, /BY RESPONDENT :SHRI CHANDRA VIJAY,DR /DATE OF HEARING : 16.08.2016 /DATE OF PRONOUNCEMENT : 24.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XXVI, MUMBAI, DATED 12.10.2007 FOR A.Y. 2004-05 ON FOLLOWING GROUND: ITA NO.5152/MUM/14 A.Y. 2004-05 [MY FAVOURITE LADY EXPORTS P. LTD. VS. ITO] PAGE 2 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S.80HHC AMOUNTING TO RS.38,18,344/- ON EXPORT PROFIT INCLUDING DEPB INCENTIVE, EXCISE DUTY REFUND AND DUTY DRAWBACK. 2. ISSUE BEFORE US IS REGARDING DISALLOWANCE OF DED UCTION U/S.80 HHC AMOUNTING TO RS.38,18,344/- ON EXPORT PR OFIT INCLUDING DEPB INCENTIVE, EXCISE DUTY REFUND AND DU TY DRAWBACK. 3. LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS ISSUE IS DULY COVERED BY THE ORDER OF HONBLE ITAT C BENCH MUMBAI IN CASE OF PAHILAJRAI JAIKISHIN V/S. JCIT MU MBAI. LEARNED AR ALSO POINTED OUT THAT THIS APPEAL IS DEL AYED IN FILING THE APPEAL. THE SIMILAR DELAY HAS ALSO BEEN CONDONE D IN THE CASE OF PAHILAJRAI JAIKISHIN V/S. JCIT MUMBAI BY OB SERVING AS UNDER: 2.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED MAT TER CAREFULLY. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THAT THERE WAS REASONABLE CA USE FOR DELAY IN FILING THE APPEAL. WE THEREFORE, IN THE IN TEREST OF JUSTICE, CONDONE THE DELAY AND ADMIT THE APPEAL FOR ADJUDICATING THE DISPUTE. 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO, FOLLOWING SAM E REASONING, WE ARE OF THE VIEW THAT THERE IS A REASONABLE CAUSE FOR DELAY IN FILING THE APPEAL, SO IN THE INTEREST OF NATURAL JU STICE WE CONDONE THE DELAY IN FILING THE APPEAL AND ADMIT TH E APPEAL FOR ADJUDICATION. ITA NO.5152/MUM/14 A.Y. 2004-05 [MY FAVOURITE LADY EXPORTS P. LTD. VS. ITO] PAGE 3 5. NOW COMING TO THE MERITS OF THE CASE, WE FIND TH AT IN THE SIMILAR CASE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTION. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ALLO WABILITY OF CLAIM OF DEDUCTION IN RELATION TO DEPB INCOME. T HE SPECIAL BENCH OF TRIBUNAL IN CASE OF TOPMAN EXPORTS LTD.(33 SOT 337) HAD EARLIER HELD THAT FACE VALUE O F DEPB HAS TO BE CONSIDERED AS BUSINESS INCOME U/S 28(III B) AND IN CASE OF SALE THE EXCESS OF SALE PR ICE OVER THE FACE VALUE HAS TO BE CONSIDERED AS BUSINESS PRO FIT U/S 28(III D) AND DEDUCTION U/S 80HHC HAD TO BE COMPUTED ACCORDINGLY. THE SAID DECISION OF TRIBUNAL HAS HOWEVER NOT BEEN UPHELD BY HON'BLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS LTD.(328 ITR 451) IN WHICH IT WAS HELD TH AT THE ENTIRE DEPB INCOME INCLUDING THE FACE VALUE HAS TO BE CONSIDERED AS A PROFIT U/S 28(III D). HOWEVER THE H ON'BLE SUPREME COURT RECENTLY IN CASE OF TOPMAN EXPORTS LT D. (SUPRA) HAVE NOT UPHELD THE VIEW TAKEN BY THE HON'B LE HIGH COURT OF BOMBAY AND HAVE CONFIRMED THE ORDER PASSED BY SPECIAL BENCH OF TRIBUNAL ON THIS IS-SUE, AS PER WH ICH THE FACE VALUE OF DEPB HAS TO BE CONSIDERED AS INCOME U /S 28 (IIIB) AND EXCESS OF SALE PRICE OVER THE FACE VALUE HAS TO BE CONSIDERED AS PROFIT U/S 28(III D). THE DEDUCTION U /S 80HHC IS, THEREFORE, REQUIRED TO BE COMPUTED ACCORDINGLY. WE, THEREFORE, SET ASIDE THE ORDER OF CITA) ARID DIRECT THE AO TO RE COMPUTE THE DEDUCTION U/S 80HHC IN RESPECT OF DE PB INCOME IN THE LIGHT OF JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF TOP-MAN EXPORTS LTD (SUPRA). 6. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO, FOLLOWING SAM E REASONING, WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RECOMPUTED THE DEDUCTION U/S.8 0HHC IN RESPECT OF DEPB INCOME IN THE LIGHT OF THE JUDGMENT OF HONBLE ITA NO.5152/MUM/14 A.Y. 2004-05 [MY FAVOURITE LADY EXPORTS P. LTD. VS. ITO] PAGE 4 SUPREME COURT IN THE CASE OF TOPMAN EXPORTS LTD., 3 3 SOT 337. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/08/2016 TRUE COPY PRABHAT KESARWANI / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5. -./ 00'(, '(, %& / DR, ITAT, MUMBAI 6. /45 67 / GUARD FILE. BY ORDER / , / %, '(, %&