DCIT 24(3), MUMBAI V. ROVER WRITING INSRTUMENTS, MUMBAI

ITA 6063/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8394 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-11-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER & SHRI P.M.JAGTAP, ACCOUNTANT MEMBER. I.T.A. NO.6063 & 6064/MUM/2011 ASSESSMENT YEARS : 1999-2000&2000-01.. DY. COMMISSIONER OF INCOME-TAX, M/S ROVER WRITING INSTRUMENTS, 24(3), MUMBAI. VS. 23, PIRAMAL INDUSTRIAL ESTATE MP/4, S.V. ROAD, GOREGAON (W), MUMBAI 400 062. PAN AAAFR7374Q APPELLANT. RESPONDENT . APPELLANT BY : SHRI PARTHASARTHY NAIK. RESPONDENT : SHRI SATISH R. MODY. DATE OF HEARING : 06-11-2012 DATE OF PRONOUNCEMENT : 09-11-2012. O R D E R PER P.M. JAGTAP, A.M. : THESE TWO APPEALS ARE PREFERRED BY THE REVENUE AGAI NST TWO SEPARATE ORDERS PASSED BY THE LEARNED CIT(APPEALS)-34, MUMBAI BOTH DATED 01-07-2011 FOR ASSESSMENT YEARS 1999-2000 AND 2000-01 AND THE SOLI TARY GROUND RAISED THEREIN, WHICH IS IDENTICAL IN BOTH THE APPEALS, READS AS UN DER : ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-ASSE SS THE INCOME OF THE ASSESSEE AS PER THE DECISION OF THE HONBLE ITAT IN THE CASE OF M/S TOPMAN EXPORTS, WITHOUT CONSIDERING THAT THE SAID DECISION HAS BEEN REVERSED BY THE HONBLE BOMBAY HIGH COURT IN VIEW OF THE DECISION I N THE CASE OF KALPATARU COLOURS AND CHEMICALS. 2 ITA NOS.6063&6064/MUM/2011. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF WRITING INSTRUMENTS. I N THE RETURNS OF INCOME FILED FOR BOTH THE YEARS UNDER CONSIDERATION, DEDUCTION U/S 8 0HHC WAS CLAIMED BY THE ASSESSEE. IN THE ASSESSMENTS ORIGINALLY COMPLETED U /S 143(3) READ WITH SECTION 147, THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80HHC W AS RESTRICTED BY THE AO BY DENYING THE SAID DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF SALE PROCEEDS OF DEPB. AS THE LEARNED CIT(APPEALS) CONFIRMED THE ACT ION OF THE AO ON THIS ISSUE, THE ASSESSEE WENT IN APPEALS BEFORE THE TRIBUNAL WH O RESTORED THE ISSUE RELATING TO DEDUCTION U/S 80HHC TO THE FILE OF THE AO FOR BOTH THE YEARS UNDER CONSIDERATION VIDE ITS ORDER DATED 16-11-2009 WITH THE DIRECTION TO RECOMPUTE THE DEDUCTION U/S 80HHC KEEPING IN VIEW THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF TOPMAN EXPORT REPORTED IN 318 ITR 87 (MUM)(SB)(AT). THE AO, HOWEVER, TOOK NOTE OF THE FACT THAT THE HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2001-02 AND 2002-03 HAD DIRECTED V IDE AN ORDER DATED 02-07- 2010 TO DECIDE THE SIMILAR ISSUE KEEPING IN VIEW IT S JUDGMENT IN THE CASE OF KALPATARU COLOURS & CHEMICALS 328 ITR 451 (BOM) WHE REIN THE DECISION OF SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS (SUPRA) WAS REVERSED. TAKING NOTE OF THE SAID ORDER OF THE HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2001-02 AND 2002-03, THE AO MAINTA INED THE DISALLOWANCE MADE ON ACCOUNT OF DEDUCTION U/S 80HHC IN RESPECT OF SAL E PROCEEDS OF DEPB IN THE FRESH ASSESSMENTS MADE U/S 143(3) READ WITH SECTION 254 FOR BOTH THE YEARS UNDER CONSIDERATION VIDE ORDERS DATED 09-12-2010 FOLLOWIN G THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS & CHEMICALS (SUPRA). AGGRIEVED BY THE SAID ORDERS, THE ASSESSEE AGAIN PR EFERRED THE APPEALS BEFORE THE LEARNED CIT(APPEALS) WHO ALLOWED THE SAME HOLDING T HAT THE ORDER OF THE TRIBUNAL DATED 16-11-2009 WAS BINDING ON THE AO WHO SHOULD H AVE RECOMPUTED THE DEDUCTION U/S 80HHC IN ACCORDANCE WITH THE DECISION OF THE SPECIAL BENCH OF THE 3 ITA NOS.6063&6064/MUM/2011. TRIBUNAL IN THE CASE OF TOPMAN EXPORT (SUPRA) AS DI RECTED BY THE TRIBUNAL. HE, THEREFORE, DIRECTED THE AO TO FOLLOW THE DIRECTION GIVEN BY THE TRIBUNAL VIDE ITS ORDER DATED 16-11-2009 AND RECOMPUTE THE DEDUCTION U/S 80HHC IN ACCORDANCE WITH THE DECISION OF THE SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF TOPMAN EXPORT (SUPRA). AGGRIEVED BY THE ORDERS OF THE LEAR NED CIT(APPEALS), THE REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT ALTHOUGH TH E AO WAS DIRECTED BY THE TRIBUNAL VIDE ITS ORDER DATED 16-11-2009 TO RECOMPU TE THE DEDUCTION U/S 80HHC IN ACCORDANCE WITH THE DECISION OF ITS SPECIAL BENCH I N THE CASE OF TOPMAN EXPORT (SUPRA), THE SAID DECISION OF THE SPECIAL BENCH CAM E TO BE REVERSED BY THE HONBLE BOMBAY HIGH COURT BY ITS DECISION RENDERED IN THE CASE OF KALPATARU COLOURS & CHEMICALS (SUPRA). SINCE THE SAID DECISION OF JURIS DICTIONAL HIGH COURT WAS AVAILABLE TO THE AO AT THE TIME OF PASSING THE ORDE RS U/S 143(3) READ WITH SECTION 254, HE PREFERRED TO FOLLOW THE SAME IN PREFERENCE TO THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS (SUPR A) WHICH, IN OUR OPINION, CANNOT BE FOUND FAULT WITH. IN ANY CASE, THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CHEMICAL S (SUPRA) HAS SINCE BEEN REVERSED BY THE HONBLE SUPREME COURT IN THE CASE O F TOPMAN EXPORT 247 CTR 353 HOLDING THAT DEPB IS CASH ASSISTANCE RECEIVABLE AGAINST EXPORT UNDER THE SCHEME OF THE GOVERNMENT AND WHILE THE FACE VALUE O F THE DEPB FALLS UNDER CLAUSE (IIIB) OF SECTION 28, THE DIFFERENCE BETWEEN THE SALE VALUE AND THE FACE VALUE OF THE DEPB (I.E. PROFIT) WILL FALL UNDER CLAUSE (I IID) OF SECTION 28. IT WAS ALSO HELD THAT DEPB REPRESENTS PART OF THE COST INCURRED BY A PERSON FOR MANUFACTURING OF THE EXPORT PRODUCT AND HENCE EVEN WHEN THE DEPB IS NOT UTILIZED BY THE EXPORTER BUT IS TRANSFERRED TO ANOTHER PERSON, THE DEPB CONTINUES T O REMAIN AS A COST TO THE 4 ITA NOS.6063&6064/MUM/2011. EXPORTER. IT WAS HELD THAT WHEN DEPB IS TRANSFERRED , THE ENTIRE SUM RECEIVED ON SUCH TRANSFER DOES NOT BECOME THE PROFIT OF THE EXP ORTER AND IT IS ONLY THE AMOUNT THAT HE RECEIVES IN EXCESS OF THE DEPB WHICH REPRES ENTS HIS PROFITS ON TRANSFER OF THE DEPB. KEEPING IN VIEW THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF TOPMAN EXPORT (SUPRA), WE UPHOLD THE IMPUGNED ORDER S OF THE LEARNED CIT(APPEALS) ON THIS ISSUE ALTHOUGH ON DIFFERENT GR OUND AND DISMISS THESE APPEALS OF THE REVENUE. 4. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. ORDER PRONOUNCED ON THIS 9 TH DAY OF NOV., 2012. SD/- SD/- (B.R. MITTAL) (P.M. JAGTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 9 TH NOV., 2012. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, D-BENCH. (TRUE COPY) BY ORD ER ASSTT. REGI STRAR, ITAT, MUMBAI BENCHES, MUMB AI. WAKODE