DITEX EMBROIDERY EXPORTS, MUMBAI V. ITO (OSD) 14(2), MUMBAI

ITA 5376/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1553 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 24-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACAB
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D. MANMOHAN, HONBLE VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.5376/MUM/2009 ASSESSMENT YEAR: 2001-2002 ITA NO.5377/MUM/2009 ASSESSMENT YEAR: 2003-2004 ITA NO.5378/MUM/2009 ASSESSMENT YEAR: 2004-2005 DITEX EMBROIDERY EXPORTS SHOP NO.2, KAKAD A.C. MARKET, 306, KALBADEVI RD., MUMBAI 400 002. PAN : AABFD5388D VS. ITO (OSD) 14(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SASHI TULSIYAN RESPONDENT BY : SHRI T.T. JACAB O R D E R PER D. MANMOHAN, V.P. THESE APPEALS, FILED AT THE INSTANCE OF THE ASSESS EE FIRM, ARE DIRECTED AGAINST INDEPENDENT BUT IDENTICAL ORDERS PASSED BY THE CIT(A) XIV, MUMBAI, IN RESPECT OF ASSESSMENT YEAR 2001-02, 2003 -04 AND 2004-05. 2. GROUNDS FOR ASSESSMENT YEARS 2001-02 AND 2003-04 ARE IDENTICAL WHEREAS IN RESPECT OF ASSESSMENT YEAR 2004-05 TWO A DDITIONAL GROUNDS, REGARDING DISALLOWANCE OF THE TELEPHONE EXPENSES AN D FOREIGN EXCHANGE FLUCTUATION, WERE RAISED. 3. AT THE TIME OF HEARING, LEARNED COUNSEL DID NOT PRESS GROUND NO.3 AND 4 IN THE APPEAL FOR THE ASSESSMENT YEAR 2004-05 AND THUS THE SAME ARE DISMISSED AS NOT PRESSED. THUS, ONLY ONE ISSUE SUR VIVES FOR OUR CONSIDERATION IN ALL THE THREE YEARS. ITA NO.5376/MUM/2009 ITA NO.5377/MUM/2009 ITA NO.5378/MUM/2009 2 4. THERE IS SUBSTANTIAL DELAY IN FILING THESE APPEA LS AND PARTNER OF THE ASSESSEE-FIRM FILED DETAILED PETITION SEEKING CONDO NATION OF DELAY, BY FURNISHING REASONS AS TO WHY THERE WAS DELAY IN FIL ING APPEALS AGAINST ORDERS PASSED BY THE FIRST APPELLATE AUTHORITY, WHICH IN T URN, WERE SERVED UPON ASSESSEE ON 15.09.2006, 13.11.2006 AND 27.07.2007 R ESPECTIVELY, FOR THE ASSESSMENT YEARS 2001-02, 2003-04 AND 2004-05. THO UGH ORDERS PASSED BY THE CIT(A) WERE SERVED UPON THE ASSESSEE IN TIME APPEALS WERE FILED ONLY ON 24.09.2009, RESULTING IN DELAY OF 1043 DAYS, 984 DAYS AND 728 DAYS RESPECTIVELY. THROUGH THE AFFIDAVIT OF THE PARTN ER, AS WELL AS DETAILED WRITTEN SUBMISSIONS AND MATERIAL PAPERS, LEARNED CO UNSEL SOUGHT TO SUBMIT THAT THE DELAY WAS ON ACCOUNT OF SUFFICIENT CAUSE; THEREFORE, DELAY DESERVES TO THE CONDONED AND APPEALS BE ADMITTED. 5. CASE OF THE ASSESSEE IN BRIEF IS THAT THE TAX AN D AUDIT MATTERS OF THE FIRM ARE ENTRUSTED TO M/S. BAGARIA & CO. A FIRM OF CHARTERED ACCOUNTANTS. THE CENTRAL DISPUTE IN THESE APPEALS IS WITH REGARD TO DEDUCTION U/S.80HHC OF THE ACT WITH REFERENCE TO DEPB ENTITLEMENT. PR OFITS OF THE BUSINESS, FOR THE YEAR UNDER CONSIDERATION, INCLUDED SALE PROCEED S FROM THE TRANSFER OF DEPB. THE ASSESSING OFFICER, HOWEVER, EXCLUDED TH IS AMOUNT FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80HHC. IN THE ASSESSMENT ORDERS THE ASSESSING OFFICER HELD THAT AMOUNT RECEI VED FROM TRANSFER OF DEPB IS NOT ELIGIBLE FOR BENEFIT U/S.80HHC AS THEY WERE NOT COVERED BY THE PROVISIONS OF SECTION 28(IIIA) TO (IIID) OF THE ACT AND THEY WERE IN THE NATURE OF OTHER RECEIPT. THE LEARNED CIT(A), UPHELD THE OR DERS OF THE ASSESSING OFFICER BY OBSERVING THAT THE RECEIPTS WAS COVERED BY SEC.28(IIID), WHICH WAS BROUGHT INTO THE STATUE BOOK BY FINANCE ACT, 2005. IN OTHER WORDS, THE CASE OF THE REVENUE IS THAT THE PROVISIONS, AS AMEN DED BY THE FINANCE ACT, 2005, ARE APPLICABLE RETROSPECTIVELY. 6. ON RECEIPT OF THE ORDERS PASSED BY THE CIT(A), A SSESSEE SOUGHT ADVICE OF THEIR AUTHORISE REPRESENTATIVE. IN VIEW OF TH E AMENDMENT OF PROVISION OF SECTION 28 OF THE I.T. ACT WITH RETROSPECTIVE EFFEC T, BAGARIA & CO. C.A. EXPRESSED THEIR OPINION THAT THE ASSESSEE WOULD NOT BE ENTITLED FOR ITA NO.5376/MUM/2009 ITA NO.5377/MUM/2009 ITA NO.5378/MUM/2009 3 DEDUCTION U/S.80HHC WITH RESPECT TO DEPB RECEIPTS. HENCE ASSESSEE DID NOT PREFER APPEALS BEFORE THE ITAT AGAINST THE ORDE RS OF THE CIT(A). 7. HOWEVER, SUBSEQUENTLY THE ITAT, SPECIAL BENCH, M UMBAI, IN THE CASE OF M/S. TOPMAN EXPORTS (2009) 318 ITR (A.T.) 87, HE LD THAT DEPB ENTITLEMENT BECOMES INCOME OF THE EXPORTER AS SOON AS A CLAIM IS PREFERRED BEFORE THE AUTHORITY AND FURTHER OBSERVED THAT FOR THE PURPOSE OF EXPLANATION (BAA), THE AMOUNT TO BE EXCLUDED IS THE PROFIT ON TRANSFER OF DEPB AND NOT THE AMOUNT OF ENTITLEMENT OR SALES PRO CEEDS ITSELF. IN OTHER WORDS, FOR WORKING OUT THE PROFIT, THE AMOUNT OF EN TITLEMENT IS TO BE TAKEN AT THE COST. THE ABOVE DECISION WAS TAKEN BY THE SPE CIAL BENCH ON 11.08.2009 AND SOON AFTER BECOMING AWARE OF THE DEC ISION OF THE SPECIAL BENCH, THE ASSESSEE CHOSE TO FILE APPEALS ON 24.09. 2009, THOUGH BELATED. RELIANCE WAS PLACED UPON SEVERAL CASE LAW (SEE WRIT TEN SUBMISSIONS) IN SUPPORT OF HIS CONTENTION THAT LENGTH OF DELAY IS N OT MATERIAL AND SUBSTANTIAL JUSTICE BEING ONLY CRITERION, PROPER UNDERSTANDING OF LAW, BASED UPON THE LATEST JUDGEMENT AND THEREAFTER PREFERRING AN APPEA L, WOULD CONSTITUTE SUFFICIENT CAUSE IN WHICH EVENT DELAY DESERVED TO B E CONDONED. 8. THE LEARNED DR DID NOT DISPUTE THE FACTS STATED BY THE LEARNED COUNSEL. HOWEVER, HE MERELY SUBMITTED THAT THERE WAS SUBSTANTIAL DELAY IN FILING THESE APPEALS AND HENCE DO NOT DESERVE TO BE CONDONED. 9. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN TH E LIGHT OF FACTUAL MATRIX AS WELL AS THE CASE LAW SUPPORTING THE CONTE NTION ON BEHALF OF THE ASSESSEE WE ARE OF THE VIEW THAT THIS IS A FIT CASE FOR CONDONATION OF DELAY. AS WE ARE SATISFIED THAT ASSESSEE HAD SUFFICIENT CA USE FOR PREFERRING APPEALS BELATEDLY, THE DELAY IN ALL THE THREE APPEALS IS HE REBY CONDONED AND APPEALS ARE ADMITTED. 10. ON THE MERITS OF THE CASE, LEARNED COUNSEL AS W ELL AS LEARNED DR DID NOT DISPUTE THE FACT THAT THE DECISION OF TOPMAN EX PORTS (SUPRA) IS APPLICABLE TO THE FACTS OF THE CASE. IN CONSONANC E WITH THE VIEW TAKEN BY ITA NO.5376/MUM/2009 ITA NO.5377/MUM/2009 ITA NO.5378/MUM/2009 4 THE SPECIAL BENCH (SUPRA) WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO IS DIRECTED TO RECONSIDER THE MATTER IN LINE WITH THE VIEW EXPRESSED BY ITAT, SPECIAL BENCH, IN THE CASE OF M/ S. TOPMAN EXPORTS (SUPRA). 11. IN THE RESULT, APPEALS FOR THE ASSESSMENT YEAR 2001-02 AND 2003-04 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES WHE REAS APPEAL FOR THE ASSESSMENT YEAR 2004-05 IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY, ON THIS THE 4 TH JUNE, 2010. SD/- (RAJENDRA SINGH) (ACCOUNTANT MEMBER) SD/- (D. MANMOHAN) (VICE PRESIDENT) MUMBAI, DATED 4 TH JUNE, 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUMBA I 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI