DCIT RG 1(3), MUMBAI V. WEIZMANN LTD, MUMBAI

ITA 6002/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55848 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2001-2002
• Appeal Filed On: 02-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Section: 80HHC; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 6002/MUM/2010 ASSESSMENT YEAR : 2001-02. DY. COMMISSIONER OF INCOME-TAX, M /S WEIZMANN LIMITED, RANGE-1(3), MUMBAI. VS. EMPIRE HOUSE, 214, DR.D.N. ROAD, A.K. NAIK MARG, FORT, MUMBAI 400 001. PAN AAACW 1260H APPELLANT. RESPONDENT APPELLANT BY : SHRI A.K.NAYAK. RESPONDENT BY: SHRI VIJAY MEH TA. DATE OF HEARING : 22-11-2011. DATE OF PRONOUNCEMENT : 30-11-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-2, MUMBAI DATED 19-05-2010 AND THE GRO UNDS RAISED BY THE REVENUE THEREIN READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW THE CIT(A) ERRED IN DIRECTING THE AO TO RECOMPUTED THE DEDUCTION U/S 80HHC AFTER REDUCING THE PROFIT ELEMENT INVOLVED IN DEPB AGAINST THE ENTIRE SALE VALUE OF DEPB LICENSEES REDUCED BY THE AO. 1.1 THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF TOPMAN EXPORT 33 SOT 337 RELIED UPON BY THE CIT(A) HAS BEEN OVERRULE D BY THE 2 ITA NO.6002/MUM/2010 ASSESSMENT YEAR:2001-02. BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CHEMICALS, MUMBAI VIDE ORDER NO. 2887 OF 2009 DATED 29.06.2010 . 2. THE CIT(A) HAS FURTHER ERRED IN DIRECTING THE AO TO COMPUTE THE BOOK PROFIT U/S 115JB AFTER REDUCING THE QUANTUM OF DEDU CTION U/S 80HHC ALLOWABLE TO THE ASSESSEE. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS AGREED BY THE LEARNED REPRES ENTATIVES OF BOTH THE SIDES, THE ISSUE INVOLVED IN GROUND NO. 1 OF THIS APPEAL IS SQ UARELY COVERED BY THE AMENDMENT MADE IN THE PROVISIONS OF SECTION 80HHC B Y INSERTING SECOND AND THIRD PROVISOS TO SUB-SECTION (3) RETROSPECTIVELY A S WELL AS THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS AND CHEMICALS 328 ITR 451 WHEREIN IT WAS HELD THAT THE AMOUNT EQUIVAL ENT TO THE FACE VALUE OF DEPB AS WELL AS THE AMOUNT RECEIVED IN EXCESS OF DEPB TR ADING CONSTITUTE PROFITS OF BUSINESS U/S 28(IIID) AND NOT U/S 28(IIIB) AS HELD BY THE TRIBUNAL IN THE CASE OF TOPMAN EXPORT 33 SOT 337. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND DIRECT THE A O TO RECOMPUTE THE DEDUCTION PERMISSIBLE TO THE ASSESSEE U/S 80HHC IN RESPECT OF DEPB KEEPING IN VIEW THE SAID AMENDMENT AS WELL AS THE DECISION OF HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CHEMICALS (SUPRA). GR OUND NO. 1 IS ACCORDINGLY TREATED AS ALLOWED. 3. AS REGARDS THE ISSUE RAISED IN GROUND NO.2, THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE SAME IS ALSO SQ UARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD. 327 ITR 305 WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF EXCLUDING THE EXPO RT PROFIT FROM THE BOOK PROFIT WHILE APPLYING THE MAT PROVISION, THE ENTIRE EXPORT PROFIT WILL BE EXCLUDED AND NOT THE REDUCED EXPORT PROFIT. IT WAS HELD THAT BO TH THE PROVISIONS OF SECTION 80HHC AND 115JB OPERATE IN DIFFERENT SPARES, SECTIO N 115JB IS A SELF CONTAINED 3 ITA NO.6002/MUM/2010 ASSESSMENT YEAR:2001-02. CODE, SECTION 80HHC(1) DEALS WITH THE ELIGIBILITY, WHEREAS SECTION 80HHC(3) DEALS WITH COMPUTATION OF QUANTUM OF DEDUCTION. IT WAS HE LD THAT SECTION 80HHC(1B) DEALS WITH THE EXTENT OF DEDUCTION AND NOT WITH THE ELIGIBILITY. IT WAS HELD THAT THERE IS A DIFFERENCE BETWEEN THE ELIGIBILITY AND DEDUCTI BILITY OF PROFIT AND THIS VIEW ALSO GET SUPPORT FROM MEMORANDUM EXPLAINING THE FINANCE BILL 2000. KEEPING IN VIEW THIS DECISION OF THE HONBLE SUPREME COURT, WE AGRE E WITH THE LEARNED REPRESENTATIVES OF BOTH THE SIDES THAT THIS ISSUE M AY ALSO BE RESTORED TO THE FILE OF THE AO FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB IN THE LIGHT OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF AJ ANTA PHARMA LTD. (SUPRA). 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV.,2011. SD/- SD/- (V. DURGA RAO) (P.M. J AGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH NOV., 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI. WAKODE