M/s. MAN INDSUTRIES (I) LTD., MUMBAI V. ADDL. CIT SPL. Rg. - 10, MUMBAI

ITA 5406/MUM/2005

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3574 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-12-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 09-08-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Section: 80HHC; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5406/MUM/2005 (ASSESSMENT YEARS: 2002-03) MAN INDUSTRIES(I) LTD, 1, CHANDRAGEET 120, S V ROAD MUMBAI-400058, PAN: AAACM2675G . APPELLANT VS ADDL. CIT-SPL-RS-10 AAYAKAR BHAVAN MUMBAI-400020 RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI SUMEET KUMAR O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20.06.2005 OF CIT(A)-VIII, MUMBAI FOR THE ASSESSMENT YEAR 2002-03. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS.155,59,754 CLAIMED U/.S 80HHC OF THE IT ACT, 1961 AND IN DISMISSING T HE APPEAL; 2. THE LD. CIT(A) ERRED IN HOLDING ;THAT THE DEDUCTION ALLOWABLE U/.S 80HHC IS NIL AND NOT RS.155,59,754/- ITA NO. 5406/MUM/2005 (ASSESSMENT YEARS: 2002-03) 2 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE INCOME AS COMPUTED U/S 115JB IS NOT THE BASIS FOR COMPUTING DEDUCTION U/S 80HHC 3. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEAR NED DR AND CONSIDERED THE RELEVANT RECORD. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THIS ISSUE STANDS COVE RED BY THE DECISION OF THE HON SUPREME COURT IN THE CASE OF A JANTA PHARMA LTD V/S CIT REPORTED IN 327 ITR 305 (SC). T HE HON.SUPREME COURT HELD IN THE SAID DECISION THAT SE CTION 115JB IS A SELF-CONTAINED CODE AND 100% OF THE EXP ORT PROFIT EARNED BY THE ASSESSEE AS COMPUTED U/S 80HHC IS EL IGIBLE FOR REDUCTION UNDER CLAUSE (4) OF THE EXPLANATION TO SE CTION 115JB. THE RELEVANT PORTION OF THE DECISION IS RE PRODUCED BELOW: 10. ONE OF THE CONTENTIONS RAISED ON BEHALF OF THE DEPARTMENT WAS THAT IF CLAUSE (IV) OF EXPLANATION T O SECTION 115JB IS READ IN ENTIRETY INCLUDING THE LAS T LINE THEREOF (WHICH READS AS SUBJECT TO THE CONDIT IONS SPECIFIED IN THAT SECTION), IT BECOMES CLEAR THAT THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECT ION 80HHC, COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF SUB-SECTION (3) OR SUB-SECTION (3A), AS THE CASE MAY BE, IS SUBJECT TO THE CONDITIONS SPECI FIED IN THAT SECTION. ACCORDING TO THE DEPARTMENT, THE ASSESSEE HEREIN IS TRYING TO READ THE VARIOUS PROVISIONS OF SECTION 80HHC IN ISOLATION WHEREAS AS PER CLAUSE (IV) OF EXPLANATION TO SECTION 115JB, IT IS CLEAR THAT BOOK PROFIT SHALL BE REDUCED BY THE AMOU NT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80H HC AS COMPUTED UNDER CLAUSE(A) OR CLAUSE(B) OR CLAUSE( C) OF SUBSECTION (3) OR SUB-SECTION (3A), AS THE CASE MAY BE, OF THAT SECTION AND SUBJECT TO THE CONDITIONS ITA NO. 5406/MUM/2005 (ASSESSMENT YEARS: 2002-03) 3 SPECIFIED IN THAT SECTION, THEREBY MEANING THAT THE DEDUCTION ALLOWABLE WOULD BE ONLY TO THE EXTENT OF DEDUCTION COMPUTED IN ACCORDANCE WITH THE PROVISION S OF SECTION 80HHC. THUS, ACCORDING TO THE DEPARTMENT, BOTH ELIGIBILITY AS WELL AS DEDUCTIB ILITY OF THE PROFIT HAVE GOT TO BE CONSIDERED TOGETHER FO R WORKING OUT THE DEDUCTION AS MENTIONED IN CLAUSE (I V) OF EXPLANATION TO SECTION 115JB. WE FIND NO MERIT I N THIS ARGUMENT. IF THE DICHOTOMY BETWEEN ELIGIBILIT Y OF PROFIT AND DEDUCTIBILITY OF PROFIT IS NOT KEPT IN MIND THEN SECTION 115JB WILL CEASE TO BE A SELF-CONTAINE D CODE. IN SECTION 115JB, AS IN SECTION 115JA, IT HAS BEEN CLEARLY STATED THAT THE RELIEF WILL BE COMPUTE D UNDER SECTION 80HHC(3)/(3A), SUBJECT TO THE CONDITIONS UNDER SUB-CLAUSES (4) AND (4A) OF THAT SECTION. THE CONDITIONS ARE ONLY THAT THE RELIEF SH OULD BE CERTIFIED BY THE CHARTERED ACCOUNTANT. SUCH CONDITION IS NOT A QUALIFYING CONDITION BUT IT IS A COMPLIANCE CONDITION. THEREFORE, ONE CANNOT RELY UPON THE LAST SENTENCE IN CLAUSE (IV) OF EXPLANATIO N TO SECTION 115JB (SUBJECT TO THE CONDITIONS SPECIFIED IN SUB-CLAUSES (4) AND (4A) OF THAT SECTION) TO OBLITE RATE THE DIFFERENCE BETWEEN ELIGIBILITY AND DEDUCTIB ILITY OF PROFITS AS CONTENDED ON BEHALF OF THE DEPARTMENT . 4. RESPECTFULLY FOLLOWING THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD V/S CIT(SU PRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2010 SD SD (R.S.SYAL) ( VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 20 TH DAY OF DEC 2010 SRL:31210 ITA NO. 5406/MUM/2005 (ASSESSMENT YEARS: 2002-03) 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI