ACIT 21(1), MUMBAI V. MUCHHALA N V, MUMBAI

ITA 5844/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3980 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 28-10-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 04-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI. D.K. AGARWAL (J.M.) AND SHRI PRAMOD KU MAR (A.M.) ITA NO.5844/MUM/2009 ASSESSMENT YEAR : 2000-2001 ITA NO.5845/MUM/2009 ASSESSMENT YEAR : 2001-2002 ASSTT. C.I.T., CIRCLE-21(1), 6 TH FLR., ROOM NO.601, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. VS. M/S. MUCHHALA N V 20, SHANKAR DARSHAN, BHAGAT SINGH RD., VILE PARLE (W), MUMBAI 400 056. PAN : AAAFM7529E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVEEN GUPTA RESPONDENT BY : SHRI KIRAN MEHTA O R D E R PER D.K. AGARWAL, J.M. THESE TWO APPEALS PREFERRED BY THE REVENUE ARE DIR ECTED AGAINST THE COMBINED ORDER DATED 25.08.2009 PASSED BY THE LEARN ED CIT(A)-XXI, MUMBAI FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 . SINCE FACTS ARE IDENTICAL AND GROUNDS ARE COMMON, BOTH THESE APPEAL S ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE EXTRACTED FROM ITA NO.5844/MUM/09 FOR THE ASSESSMENT YEAR 2000-01 ARE THAT, THE ASSES SEE FIRM IS A RECOGNIZED EXPORT HOUSE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT ` NIL. SUBSEQUENTLY, THE CASE WAS REOPENED AND IN RESPONSE TO NOTICE ISSUED U/S.148 OF THE I.T. ACT, 1961 (THE ACT) THE ASSESSE E FILED RETURN DECLARING TOTAL INCOME AT ` NIL. HOWEVER, THE ASSESSMENT WAS COMPLETED DETER MINING TOTAL INCOME AT ` 1,61,86,250/- BY REDUCING THE CLAIM OF DEDUCTION U/S.80HHC TO ` 4,27,39,057/- AS AGAINST ` 5,89,25,310/- CLAIMED BY THE ASSESSEE, VIDE ORDER DATED 23.02.2004 PASSED U/S.14 3(3) R.W.S. 147 OF THE ITA NO.5844/MUM/2009 ITA NO.5845/MUM/2009 2 I.T. ACT. ON APPEAL, THE LEARNED CIT(A) DISMISSED THE ASSESSEES APPEAL. ON SECOND APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL IN ITA NO.7145 & 7146/MUM/04 DATED 08.06.2006 HAS RESTORED THE ISSUE S TO THE FILE OF THE ASSESSING OFFICER FOR ITS RE-ADJUDICATION IN THE LI GHT OF AMENDED PROVISIONS OF SECTION 80HHC OF THE I.T. ACT. PURSUANT TO THE ORD ER OF THE TRIBUNAL, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY BENEFIT/ ENTITLEMENT ON DEPB/ADVANCE LICENSES SHOULD BE CONSIDERED AS AN EX PORT INCENTIVE WITHIN THE MEANING OF SECTION 28(IIIA), (IIIB), (IIIC) (II ID) & (IIIE) OF THE ACT IN VIEW OF AMENDMENT BROUGHT INTO SECTION 80HHC BY TAXATION LA WS (AMENDMENT) ACT, 2005. IN THE ABSENCE OF ANY EXPLANATION BY T HE ASSESSEE THE ASSESSING OFFICER AFTER CONSIDERING THE RELEVANT PROVISIONS O F THE ACT WAS OF THE VIEW THAT THE PROFIT ON SALE OF DEPB CANNOT BE CONSIDERE D AS AN EXPORT INCENTIVE AND HENCE THE SAME SHOULD BE REDUCED 100% FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF EXPLANATION (BAA) AND F URTHER THE PROFITS SHOULD NOT BE ALLOWED TO BE INCREASED BY 90% OF DEPB IN TH E PROPORTION OF EXPORT TURNOVER TO TOTAL TURNOVER AND ACCORDINGLY THE ASSE SSING OFFICER AFTER ALLOWING THE SAME DEDUCTION U/S.80HHC AT ` 4,27,39,057/- COMPLETED THE ASSESSMENT AT INCOME ` 1,61,86,250/- VIDE ORDER DATED 03.12.2007 PASSED U/S.143(3) R.W.S. 254 OF THE ACT. 3. ON APPEAL, THE LEARNED CIT(A) FOLLOWING THE DECI SION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TOPMAN EXPORT VS. ITO IN I TA NO.5769/M/2006 FOR ASSESSMENT YEAR 2002-03 DATED 11.8.2009 AND OTHER D ECISION OF THE TRIBUNAL HELD THAT SINCE THE APPELLANT HAS NOT EARN ED ANY PREMIUM OVER AND ABOVE THE FACE VALUE OF DEPB, THE ENTIRE DEPB AMOUN T IS ELIGIBLE FOR DEDUCTION U/S.80HHC. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE COMMON GROUNDS FOR BOTH THE ASSESSMENT YEARS OF THE RELIEF ALLOWED BY THE LEARNED CIT(A). ITA NO.5844/MUM/2009 ITA NO.5845/MUM/2009 3 5. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT THE ISSUE STANDS COVERED BY THE RECENT JUDGMENT OF HONBLE JURISDICT IONAL HIGH COURT IN CIT VS. KALPATARU COLOURS AND CHEMICALS IN INCOME TAX A PPEAL (LODG.)NO.2887 OF 2009 DATED 28/29 JUNE, 2010 AND ALSO AGREED THAT THE MATTER REQUIRES TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER WI TH A DIRECTION TO RECONSIDER THE ISSUE IN LINE WITH THE VIEW TAKEN IN THE AFOREC ITED DECISION. 6. THAT BEING SO AND IN THE ABSENCE OF ANY OTHER CO NTRARY MATERIAL PLACED ON RECORD BY THE PARTIES, WE RESPECTFULLY FO LLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT SUPRA, SET AS IDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT TH E ASSESSING OFFICER TO RECONSIDER THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW I.E. IN THE LIGHT OF THE RECENT DECISION IN THE CASE OF KALPATARU COL OURS AND CHEMICALS SUPRA, AFTER PROVIDING REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, P ARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, REVENUE'S APPEALS STAND PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 4 TH DAY OF NOVEMBER, 2010. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 4 TH NOVEMBER, 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH , MUMBAI ITA NO.5844/MUM/2009 ITA NO.5845/MUM/2009 4 //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI