M/s. K.H.Leather Industries P. Ltd., CHENNAI V. ITO (OSD), CHENNAI

ITA 581/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61052 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-05-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHARANA
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment
• Section: 80HHC; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT ME MBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.581 & 582/MDS/2012 (ASSESSMENT YEARS: 1999-2000 & 2003-04) M/S. K.H.LEATHER INDUSTRIES P.LTD. C/O. S.SRIDHAR, ADVOCATE, NEW NO. 14, OLD NO. 82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI -600 020. PAN:AAACK1425C VS. THE INCOME TAX OFFICER, (OSD), COMPANY CIRCLE -II(4), CHENNAI-34 (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.SRIDHAR, ADVOCATE RESPONDENT BY : MR. MOH ARANA, CIT DR DATE OF HEARING : 10 TH MAY, 2012 DATE OF PRONOUNCEMENT : 10 TH MAY, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THESE TWO APPEALS I.E. ITA NO.581/MDS/2012 RELEVAN T TO THE ASSESSMENT YEAR 1999-2000 AND ITA NO.582/MDS /2012 RELEVANT TO THE ASSESSMENT YEAR 2003-04 HAVE BEEN F ILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDERS BOTH DATED 05.12.2011 PASSED BY THE CIT(A)-III, CHENNAI. SINC E BOTH THE APPEALS INVOLVE SIMILAR QUESTIONS, BOTH ARE TAKEN U P TOGETHER AND ARE HEARD & DISPOSED OF BY THIS COMMON ORDER. ITA NOS. 581 & 582/MDS/2012 2 2. THE ASSESSEE HAS TAKEN 10 GROUNDS IN APPEAL RELE VANT TO THE ASSESSMENT YEAR 1999-2000 AND 9 GROUNDS IN A PPEAL RELEVANT TO THE ASSESSMENT YEAR 2003-04. HOWEVER, C OUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT HE IS PRE SSING ONLY GROUND NO.9 IN ITA NO. 581/MDS/2012 AND GROUND NO.6 IN ITA NO.582/MDS/2012. NO OTHER GROUND OF APPEAL WAS PRES SED BY THE COUNSEL. BOTH THE GROUNDS I.E. GROUND NO.9 IN A PPEAL NO.581/MDS/2012 AND GROUND NO.6 IN APPEAL NO. 582/MDS/2012 ARE IDENTICAL. 3. THE ASSESSEE FILED RETURN OF INCOME RELEVANT TO THE ASSESSMENT YEAR 1999-2000 ON 30.11.1999 ADMITTING T OTAL INCOME OF ` 56,50,860/-. THE ASSESSING OFFICER ON PERUSAL OF RECORDS NOTICED THAT WHILE COMPUTING DEDUCTION UNDE R SECTION 80HHC THE ASSESSEE CLAIMED INCENTIVE ON SALE OF DEP B OF ` 86,86,801/-. THE ASSESSING OFFICER REWORKED THE DED UCTION UNDER SECTION 80HHC AND RESTRICTED THE SAME TO ` 2,64,29,460/- AS AGAINST THE CLAIM OF ` 3,51,26,709/-. THE ASSESSING OFFICER OBSERVED THAT IN VIEW OF THE AMEN DMENT OF 2005, NEW PROVISO TO SECTION 80HHC(3) WAS INTRODUCE D WITH EFFECT FROM 1998. AS PER THE NEW PROVISO, IF ASSESS EES EXPORT ITA NOS. 581 & 582/MDS/2012 3 TURNOVER EXCEEDS ` 10 CRORES INCENTIVES ON THE PROFIT ON SALE OF DEPB LICENCE IS ELIGIBLE FOR DEDUCTION UNDER SEC TION 80HHC ONLY IF THE ASSESSEE HAS NECESSARY AND SUFFIC IENT EVIDENCE TO PROVE THAT THE BENEFIT DERIVED FROM DEP B IS LESS THAN THE BENEFIT DERIVED FROM DUTY DRAW BACK ON THE SAME TRANSACTION. IN THE CASE OF THE ASSESSEE, EXPORT TU RNOVER EXCEEDED ` 10 CRORES. THE ASSESSMENT WAS REOPENED AND NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 30.06.2006. AFTER REOPENING THE ASSESSMENT, THE ASS ESSING OFFICER REWORKED THE DEDUCTION UNDER SECTION 80HHC AND PASSED THE ASSESSMENT ORDER DATED 28.12.2006. 4. SIMILARLY FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER ON THE GROUNDS AFOREMENTIONED RES TRICTED THE DEDUCTION UNDER SECTION 80HHC TO ` 97,47,595/- AS AGAINST THE CLAIM OF THE ASSESSEE FOR ` 1,69,83,820/-. HOWEVER, FOR THE RELEVANT ASSESSMENT YEAR THE ASSES SEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE HIS ORDER DATED 12.2.2007 DISMISSED THE APPEAL AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THEREAFTER, THE ASS ESSEE FILED SECOND APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VID E ORDER ITA NOS. 581 & 582/MDS/2012 4 DATED 28.10.2008 SET ASIDE THE ASSESSMENT AND REMIT TED THE CASE BACK TO ASSESSING OFFICER TO REDO THE ASSESSM ENT. THE ASSESSING OFFICER IN RE-ASSESSMENT PROCEEDINGS REIT ERATED HIS EARLIER COMPUTATION AND OBSERVED THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TOPMAN EXPORTS VS. ITO REPORTED AS 318 ITR 87(SB) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SEVERAL WRIT PETITIONS ARE PENDING I N THE MADRAS HIGH COURT. 5. AGGRIEVED AGAINST THE ASSESSMENT ORDERS DATED 28.12.2006 & 31.12.2009 FOR THE ASSESSMENT YEARS 19 99- 2000 & 2003-04 RESPECTIVELY, THE ASSESSEE PREFERRE D APPEALS BEFORE THE CIT(A) CHALLENGING THE VALIDITY OF THE REOPENING OF ASSESSMENT UNDER SECTION 147 AND RE- COMPUTATION/DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.80HHC. THE CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE. THE CIT(A) WHILE DISMISSING THE APPEALS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE IN THE REASSES SMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER WAS NOT AB LE TO FURNISH ANY EVIDENCE TO PROVE THAT THE BENEFITS DER IVED FROM DEPB WAS LESS THAN THE BENEFIT DERIVED FROM DUTY DR AW BACK. ITA NOS. 581 & 582/MDS/2012 5 EVEN BEFORE THE CIT(A), THE ASSESSEE HAS NOT BEEN A BLE TO PRODUCE ANY SUCH EVIDENCE, IN SPITE OF SUFFICIENT O PPORTUNITY BEING GIVEN. THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNA L ASSAILING THE ORDERS DATED 5.12.2011 PASSED BY CIT( A)- III,CHENNAI. 6. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) FAILED TO TAKE INTO CONSIDERATION THE DECISION OF T HE SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS VS. ITO., REPOR TED AS 318 ITR (AT) 87 (SB) WHICH HAS BEEN CONFIRMED BY T HE HONBLE SUPREME COURT OF INDIA WHEREIN IT HAS BEEN HELD THAT RECOMPUTATION OF THE BENEFIT UNDER SECTION 80HHC IS ERRONEOUS AND INVALID. HE SUBMITTED THAT THE CASE O F THE ASSESSEE IS SQUARELY COVERED BY THE ORDER PASSED IN THE CASE OF TOPMAN EXPORTS (SUPRA) AND NOW CONFIRMED BY THE HONBLE APEX COURT. 7. ON THE OTHER HAND, MR. S.MOHARANA, CIT DR., APPEARING ON BEHALF OF THE DEPARTMENT SUBMITTED THA T THE ORDERS PASSED BY THE CIT(A) ARE WELL REASONED AND D ETAILED ITA NOS. 581 & 582/MDS/2012 6 ORDERS. HE VEHEMENTLY DEFENDED THE ORDERS PASSED BY THE LOWER AUTHORITIES. 8. WE ARE PRIMA-FACIE OF THE OPINION THAT THE CASE OF THE ASSESSEE IS COVERED BY THE ORDER PASSED BY THE SPEC IAL BENCH IN THE CASE OF TOPMAN EXPORTS (SUPRA).WE THER EFORE, DEEM IT APPROPRIATE TO REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION UNDER SECTION 80 HHC IN ACCORDANCE WITH LAW AFTER TAKING INTO CONSIDERATIO N THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL PASSED IN TOPM AN EXPORTS WHICH HAS NOW BEEN UPHELD BY THE HONBLE SU PREME COURT OF INDIA REPORTED IN 342 ITR 49(SC). 9. IN VIEW OF THE ABOVE, THE IMPUGNED ORDERS PASSED BY THE CIT(A) ARE SET ASIDE AND BOTH THE APPEALS OF TH E ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES IN AB OVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 10 TH OF MAY, 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 10 TH MAY, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.