Mr. Vasu Dev Pahwa, New Delhi V. ACIT, New Delhi

ITA 5563/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53475 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-12-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 09-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Keywords: Business income
• Section: 80HHC; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.K. HALDER, ACCOUNTANT MEMBER I.T. A. NO.5563/DEL/2010 ASSESSMENT YEAR : 2002-03 MR. VASU DEV PAHWA, ASSTT. COMMISSIONER OF INCOME-TAX, PROP. M/S. SURYA INTERNATIONAL, VS. CIRCLE 27( 2), NEW DELHI. B-59/2, NARAINA INDUSTRIAL AREA, PHASE-II, NEW DELHI. PAN: AAKPP0764G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJIV KUMAR, CA. RESPONDENT BY: DR. B.R.R. KUMA R, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPE AL DIRECTED AGAINST THE ORDER DATED 10.10.2010 PASSED BY THE LEARNED CO MMISSIONER OF INCOME- TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT BY THE ASSESSING OFFICER UNDER SEC. 148/143(3) OF THE INCOME-TAX ACT, 1961 (THE AC T), FOR THE ASSESSMENT YEAR 2002-03 IS AS UNDER:- 2 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN WRONGLY CONFIRMING THE ADDITION MADE BY ASSESSING O FFICER TO THE EXTENT OF RS.53,67,087/- ON ACCOUNT OF DEDUCTIO N U/S 80 HHC ALLOWED AT RS.2,51,86,881/- AS AGAINST DEDUCTIO N CLAIMED BY ASSESSEE OF RS.3,05,53,968/-. 2. IN THIS CASE, THE ASSESSEE FILED HIS RETURN OF I NCOME ON 30.12.2002 DECLARING TAXABLE INCOME AT RS.2,15,11,871/- AFTER CLAIMING DEDUCTION OF RS.3,05,53,968/- UNDER SEC. 80HHC OF THE ACT. THE ASSESSEE IS A HUNDRED PER CENT EXPORT ORIENTED FIRM AND TOTAL SALES TURNO VER (EXPORT TURNOVER) OF THE ASSESSEE DURING THE RELEVANT YEAR WAS RS.18,35,17,4 47/- THE ASSESSING OFFICER ISSUED NOTICE UNDER SEC. 148 ON 31.03.2009 AFTER RECORDING THE REASON THAT DEDUCTION UNDER SEC. 80HHC IN RESPECT O F DPB RECEIPTS HAS BEEN WRONGLY CLAIMED BY THE ASSESSEE IN THE LIGHT OF THE PROVISO TO SEC. 80HHC(3) OF THE ACT. IT WAS NOTICED BY THE AO THAT THE ASSE SSEE HAD INCLUDED PROFIT OF SALE OF DPB LICENCE IN THE ELIGIBLE PROFIT FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SEC. 80HHC OF THE ACT. THE AO ALLO WED DEDUCTION UNDER SEC. 80HHC OF THE ACT, OF RS.2,45,90,538/- AS AGAIN ST RS.3,05,53,968/- CLAIMED BY THE ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 4. AFTER CONSIDERING THE FACTS OF THE PRESENT CASE AND THE PROVISIONS SET OUT IN THIRD PROVISO TO SEC. 80HHC(3) OF THE ACT, T HE LEARNED CIT(A) 3 DIRECTED THE AO THAT DISALLOWABLE DEDUCTION UNDER S EC. 80HHC ON ACCOUNT OF DEPB RECEIPTS WOULD BE 90% OF RS.59,63,430/- WHI CH WOULD COME TO RS.53,67,087/- AS AGAINST RS.59,63,430/- DISALLOWED BY THE ASSESSING OFFICER. THE LEARNED CIT(A) THEREFORE, DIRECTED TH E AO TO DISALLOW DEDUCTION UNDER SEC. 80HHC ON ACCOUNT OF DEPB RECEI PTS AT RS.53,67,087/- AS AGAINST RS.59,63,430/- DISALLOWED BY THE AO AND GRANTED RELIEF OF RS.5,96,343/-. 5. THE ASSESSEE IS IN APPEAL AGAINST THE CIT(A)S O RDER IN SUSTAINING THE DISALLOWANCE OF DEDUCTION UNDER SEC. 80HHC AT RS.53 ,67,087/-. 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE MATERIAL ON RECORD. IT IS NOW AN ADMITTED POSITION THAT THE DECISION OF SPECIAL BENCH OF INCOME-TAX APPELLATE TRIBUNAL, MUM BAI IN THE CASE OF M/S. TOPMAN EXPORTS VS. ITO, 318 ITR(AT) 87 (MUM.)( SB) ON WHICH RELIANCE WAS PLACED BY THE ASSESSEE BEFORE THE AO, HAS BEEN OVER-RULED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. KALPTARU COLOURS & CHEMICAL, 328 ITR 451 (BOM.), WHERE IT HA S BEEN HELD THAT THE ENTIRETY OF THE SALE CONSIDERATION OF DEPB WOULD FA LL WITHIN THE PURVIEW OF SEC. 28(IIID) OF THE ACT. THUS, THE SALE PROCEEDS OF DEPB INCLUDING FACE VALUE SHALL BE TREATED AS PROFIT ASSESSABLE UNDER S EC. 28(IIID) OF THE ACT. THE CASE OF THE ASSESSEE BEFORE THE AO THAT ONLY THE PR OFIT ELEMENT IN DEPB RECEIPTS IS TO BE REDUCED FROM THE PROFIT FOR THE P URPOSE OF COMPUTING DEDUCTION UNDER SEC. 80HHC ON THE BASIS OF DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF TOPMAN EXPORTS (SUPRA) IS THUS NOT MAINTAINABLE. FURTHER, IT IS ADMITTED BY THE ASSESSEE THAT THE TW IN CONDITIONS REFERRED TO IN 4 THE THIRD PROVISO TO SEC. 80HHC(3) I.E. (1) THE ASS ESSEE HAD AN OPTION TO CHOOSE EITHER THE DUTY DRAWBACK OR DUTY ENTITLEMENT PASS BOOK SCHEME, BEING THE DUTY REMISSION SCHEME, AND (2) RATE OF DR AWBACK CREDIT ATTRIBUTABLE TO THE CUSTOM DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER THE DUTY ENTITLEMENT PASS BOOK SCHEME BEING T HE DUTY REMISSION SCHEME, ARE NOT SATISFIED IN THE ASSESSEES CASE. THE LEARNED CIT(A) HAS RECORDED A FINDING THAT THE ASSESSEE HAS AN EXPORT TURNOVER EXCEEDING RS.10 CRORE AND HAS NOT FULFILLED THE CONDITIONS SET OUT IN THE THIRD PROVISO TO SEC. 80HHC AND THEREFORE, THE ASSESSEE IS NOT ENTITLED T O A DEDUCTION UNDER SEC. 80HHC ON THE AMOUNT RECEIVED ON TRANSFER OF DEPB IN THE PROPORTION AS THE EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED OUT BY THE ASSESSEE. THE ISSUE INVOLVED IN THE PRESENT CASE I S NOW COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F KALPTARU COLOURS & CHEMICAL (SUPRA) REFERRED TO ABOVE AND IN THE LIGHT OF THAT DECISION, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A), WHICH IS ACCORDINGLY UPHELD. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 8. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2011. SD/- SD/- (B.K. HALDER) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH DECEMBER, 2011. 5 ITA NO.5563/DEL/2010 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.