RAJESH NANDLAL KEWALRAMANI, MUMBAI V. ITO 14(3)-1, MUMBAI

ITA 5650/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55426 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: N M PORWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER & SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NO.5650/MUM/2010 A.Y 2002-03 SHRI RAJESH NANDLAL KEWALRAMANI, C/O. KAY PEE IMPORT & EXPORT, R NO.3-4, 2 ND FLOOR, 103, DAVAWALLA BLDG., PRINCESS ST., MUMBAI 400 002. PAN: AABPK 9097 J VS. INCOME TAX OFFICER 14(3)-1, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.M.PORWAL. RESPONDENT BY : SHRI G.P.TRIVEDI. DATE OF HEARING: 20-09-2011 DATE OF PRONOUNCEMENT: 23/09/2011 O R D E R PER T.R.SOOD, AM: IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION OF L0% MADE BEFORE THE LD. ASSESSING OFFI CER IN RECTIFICATION PROCEEDINGS OUT OF INCOME OF INCENTIV ES AS EXPENSES U/S. 8OHHC OF THE INCOME-TAX ACT, 1961. 2. THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT PR INCIPLE OF ATTRIBUTION IS APPLICABLE TO CASES FALLING U/S. 8OH HC(3)(B), AND THEREFORE, A PART OF INDIRECT COST HAS TO BE APPORT IONED TO EXPENSES INCURRED FOR EARNING EXPORT INCENTIVES WHI LE COMPUTING DEDUCTION U/S. 8OHHC(3)(B) IN RESPECT OF EXPORT OF TRADING GOODS. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE AO ISSUED A RECTIFICATION NOTICE U/S.154 FOR RECOMPUTING DEDUCT ION U/S.80HHC. THE ASSESSEE MADE A CLAIM FOR DEDUCTION OF 10% AGAINST THE EXPENSES CONTRIBUTED TO EARNING INCENTIVE INCOME ETC., WHICH WAS DISALLOWED BY THE AO. ITA NO.5650/M/10 2 3. ON APPEAL, ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). 4. BEFORE US, LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT THE ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HERO EXPORTS VS. CIT [165 TAXMAN 445]. 5. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF THE LD. CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF HERO EXPORTS VS. CIT [ SUPRA], HAS HELD THAT SUCH 10% EXPENSES ARE ALLOWABLE. IN FACT, THE HEAD NOTE OF THE DECISION READS AS UNDER: SECTION 8OHHC OF THE INCOME-TAX ACT, 1961 - DEDUCT IONS - EXPORTERS - ASSESSMENT YEARS 1994-95 TO 1997-98 - ASSESSEE WA S ENGAGED IN BUSINESS OF EXPORT OF TRADING GOODS - IT EARNED INC OME FROM EXPORT AS WELL AS FROM EXPORT INCENTIVES, INTEREST, ETC. (OTH ER INCOME) FOR WHICH IT HAD ONE COMMON POOL OF EXPENSES - ASSESSEE ATTRI BUTED 10 PER CENT OF OTHER INCOME AS EXPENSES INCURRED FOR EARNING SA ID INCOME AND REDUCED SAME FROM INDIRECT COST OF TRADING GOODS - ASSESSEE, THEREAFTER, DEDUCTED BALANCE INDIRECT COST AS WELL AS DIRECT COST FROM EXPORT INCOME WHILE COMPUTING DEDUCTION UNDER SECTI ON 8OHHC - ASSESSING OFFICER HELD THAT FULL AMOUNT OF INDIRECT COST WOULD BE DEDUCTIBLE FROM EXPORT INCOME - WHETHER ASSESSING O FFICER WAS JUSTIFIED - HELD, NO RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE DECID E THIS ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 23/9/2011. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 23/9/2011. P/-*