ACIT CIR 21(1), MUMBAI V. NARAYAN PAGRANI, MUMBAI

ITA 5603/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56273 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 09-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, MUMBAI. BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO. 5603/ MUM/2010 ASSESSMENT YEAR: 2002-03 ACIT, CIRCLE 2(1) .. APPELLANT 6 TH FLOOR, R.NO.601, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI. VS NARAYAN PAGRANI, .. RESPONDENT C/O. HOTEL AIRLINK, 75, OPP NEHRU ROAD, NEAR CENTUR AIRPORT, VILE PARLE(E), MUMBAI-99 PA NO.AAAPP 6459 Q APPEARANCES: P.C.MAURYA, FOR THE APPELLANT NONE, FOR THE RESPONDENT DATE OF HEARING : 28.12.2011 DATE OF PRONOUNCEMENT : 28 -12-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 9.4. 2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YE AR 2002-03 ON THE FOLLOWING GROUNDS: I.T.A NO. 5603/ MUM/2010 ASSESSMENT YEAR: 2002-03 2 (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE DEDUC TION U/S. 80 HHC AFTER RECOMPUTING IN THE MANNER THAT THE FACE VALUE OF DEPB I.E. CREDIT ALLOWED SHOULD BE CONSIDERED AS COST OF DEPB AND ONL Y 90% OF PROFIT ON TRANSFER OF DEPB SHOULD BE EXCLUDED AND NOT THE ENTI RE SALE PROCEEDS OF DEPB, WHILE COMPUTING THE PROFITS OF THE BUSINESS UN DER EXPLANATION (BAA) TO 80 HHC. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) HAS ERRED IN UPHOLDING THE FACT THAT THE COS T OF ACQUISITION IN THE CASE OF DEPB/DFRC HAS TO BE TAKEN AT NIL AS THE SAME ARE RECEIVED BY THE ASSESSEE IN THE FORM OF INCENTIVE WITHOUT INCUR RING ANY COST. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN HOLDING THAT ONLY THE PROFIT EL EMENT ON SALE OF DEPB COVERED U/S.28(IIID) OF THE I.T.ACT, 1961 FOR THE P URPOSES OF COMPUTATION OF DEDUCTION U/S. 80HHC AND NOT THE ENTIRE SALE PRO CEEDS OF DEPB. 2. DESPITE SERVICE OF NOTICE THROUGH RPAD, NO ONE A PPEARED ON BEHALF OF THE RESPONDENT-ASSESSEE WHEN THE MATTER WAS CALLED ON F OR HEARING. WE, THEREFORE, DECIDE THE APPEAL OF THE REVENUE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3. THE ASSESSING OFFICER DENIED THE CLAIM OF THE A SSESSEE IN RESPECT OF DEDUCTION U/S. 80HHC ON ACCOUNT OF THE FACT THAT THE TURNOVER OF THE ASSESSEE EXCEEDS RS.10 CRORES. THE CIT(A) DIRECTED THE AO TO RE-COMPUTE T HE DEDUCTION U/S. 80HHC KEEPING IN VIEW THE PRINCIPLE LAID DOWN BY THE ITAT (SB) IN THE CASE OF TOPMAN EXPORT(318 ITR 87). AGGRIEVED, THE ASSESSING OFFIC ER IS IN APPEAL BEFORE US. 4. HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE, WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CHEMICALS, 328 ITR 451(BOM ), WHEREIN, IT HAS BEEN HELD THAT DEPB SALE PROCEEDS CANNOT BE BIFURCATED INTO PROFI TS AND FACE VALUE. THE ENTIRE AMOUNT IS PROFITS FOR S. 80HHC R.W.S. 28(IIID). ACCORDINGLY, WE UPHOLD THE GRIEVANCE OF THE ASSESSING OFFICER AND REVERSE THE ACTION SO TAK EN BY THE CIT(A). I.T.A NO. 5603/ MUM/2010 ASSESSMENT YEAR: 2002-03 3 5. IN THE RESULT, APPEAL FILED BY THE ASSESSING OFF ICER IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH DECEMBER, 2011 SD/- (N.V.VASUDEVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 28 TH DECEMBER 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-32 4. COMMISSIONER OF INCOME TAX, CITY-21 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH B MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI