CREATIVE OUTERWEAR KTD ( NOW AMALGATED WITH CREATIVE GARMENTS P. LTD), MUMBAI V. ITO 6(2)1, MUMBAI

ITA 6218/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8296 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 08-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.A. NO.6218/M/2011 ASSESSMENT YEAR:2003-2004 M/S. CREATIVE OUTERWEAR LTD., (NOW AMALGAMATED WITH CREATIVE GARMENTS PVT. LTD.) 119, CAMA INDUSTRIAL ESTATE, SUN MILL COMPOUND, LOWER PAREL, MUMBAI 400 020. VS. ITO, WARD-6(2)-1, 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020. (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSIONS RESPONDENT BY : SHRI A.B. KOLI, SR.DR DATE OF HEARING: 1.11.2012 DATE OF ORDER: 7.11.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 8.9.2011 AGAIN ST THE ORDER OF CIT (A)-12, MUMBAI DATED 7.7.2011 FOR THE ASSESSMENT YEAR 2003- 2004. THE MAIN ISSUE IN THIS APPEAL RELATES TO ALLOWABILITY OF DEDUCTION UNDER S ECTION 80-HHC IN RESPECT OF DEPB LICENSES OF RS. 1,83,78,301/-, EXPORT INCENTIVES UN DER SECTION 28(IIID) OF THE ACT. THERE ARE CONSEQUENTIAL ISSUES RELATING TO THE LEVY OF CHARGING OF INTEREST U/S 220 AND U/S 234-D OF THE ACT. 2. RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF READYMADE GARMENTS. THIS IS THE SECOND R OUND OF PROCEEDINGS BEFORE US. IN THE FIRST ROUND OF THE PROCEEDINGS, AO DID NOT AL LOW THE DEDUCTION U/S 80HHC IN RESPECT OF EXPORT INCENTIVES IN VIEW OF THE PROVISO TO SECTION 80-HHC OF THE ACT AS THE ASSESSEES TURNOVER IS MORE THAN RS. 10 CRORES. THE MATTER TRAVELLED TO THE HONBLE ITAT WHICH SET ASIDE THE PROCEEDINGS TO THE FILES OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE JU DGMENT OF THE SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS VS. ITO (318 ITR 87), WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THE ASSESSEE DID NOT FILE AN APPEAL BE FORE THE HONBLE HIGH COURT. IN 2 M/S. CREATIVE OUTERWEAR LTD., THE SET ASIDE PROCEEDINGS, THE AO DID NOT FOLLOW TH E DIRECTIONS OF THE ITAT IN VIEW OF THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF KALPATARU COLOURS AND CHEMICALS (328 ITR 451) WHICH, IN FACT, HAS THE IMP ACT OF THE REVERSE DECISION ON THE SAID SPECIAL BENCH IN THE CASE OF TOPMAN EXPORT S (SUPRA). THEREFORE, THE MATTER HAS COME BACK TO THE TRIBUNAL FOR ADJUDICATI ON AGAINST THE ORDER OF THE CIT (A). 3. DURING THE PROCEEDINGS BEFORE US, NONE APPEARED TO REPRESENT THE CASE OF THE ASSESSEE. HOWEVER, ASSESSEE FILED WRITTEN SUBMISSIO NS DULY SIGNED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WHO IS DULY AUTHORIZ ED. IN THE SAID SUBMISSIONS, LD COUNSEL MADE THE FOLLOWING ASSERTIONS AND THEY ARE READ AS UNDER: THE PRESENT APPEAL IS ARISING FROM ASSESSEES APPEA L IN RESPECT OF DEDUCTION UNDER SECTION 80-HHCOF THE INCOME TAX ACT. UPON PASSING THE ORDER DATED 24.8.2009 BY THE HONB LE ITAT FOR ASSESSMENT YEAR 2003-2004 FOLLOWING THE JUDGMENT OF SPECIAL BE NCH IN THE CASE OF TOPMAN EXPORTS, THE TRIBUNAL DIRECTED THE AO TO GIV E THE RELIEF. HOWEVER, THE AO AND CIT (A) ON ACCOUNT OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF KALPATARU C OLOURS & CHEMICALS (328 ITR 451) (BOM) DID NOT FOLLOW THE JUDGMENT OF HONBLE ITAT IN THE APPELLANTS OWN CASE. BE THAT SO, THE PRESENT MATTER IS NOW SETTLED BY THE HONBLE SUPREM E COURT IN THE CASE OF TOPMAN EXPORTS (342 ITR 49) AND THE CONTROVERSY IS SET RIGHT BY THE APEX COURT. IN VIEW OF THE ABOVE, THE APPELLANT PRAYS THAT THE APPEAL BE DISPOSED OFF ON THE BASIS OF THE WRITTEN SUBMISSION. 4. FROM THE ABOVE, IT IS EVIDENT THAT THE APEX COUR T HAS CONFIRMED THE SPECIAL BENCH DECISION IN THE CASE OF TOPMAN EXPORTS (SUPRA ) FOR THE PROPOSITION THAT THE ASSESSEE HAVING TURNOVER OF OVER RS. 10 CRORES, WOU LD GET A BENEFIT OF EXCLUSION OF SMALLER FIGURE FROM THE PROFITS OF BUSINESS AND THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS & CHEMICALS REPORTED IN 328 ITR 451, WHICH WAS RELIED UPON BY THE REVENUE AUTHORITIES, STANDS REVERSED BY THE SAID APEX COURT JUDGMENT VIDE 342 ITR 49 (SC). CONSIDERING THE SETTLED NAT URE OF THE ISSUE, WE ARE OF THE OPINION THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND THE RELEVANT GROUNDS ARE THEREFORE, ALLOWED . 3 M/S. CREATIVE OUTERWEAR LTD., 4. REGARDING THE OTHER ISSUES RELATING TO CHARGEABI LITY OF INTEREST U/S 220 AND U/S 234-D, THERE ARE NO WRITTEN SUBMISSIONS ON THIS ISS UE FROM THE ASSESSEES SIDE. ON THE PERUSAL OF THE ORDER OF CIT(A), WE FIND THAT TH E CIT (A) TREATED THEM AS CONSEQUENTIAL IN NATURE VIDE THE DISCUSSION GIVEN I N PARA 4.1 OF THE IMPUGNED ORDER. THEREFORE, CONSIDERING THE REASONABLENESS OF THE DI SCUSSION GIVEN BY THE CIT (A), WE ARE OF THE OPINION THAT THE DECISION OF CIT (A), MENTIONED IN PARA 4.1, DOES NOT CALL FOR ANY INTERFERENCE. THEREFORE, THE MATTER B EING CONSEQUENTIAL, RELEVANT GROUNDS ARE DISMISSED AS SUCH. ACCORDINGLY, THE GROUNDS RAISED BY THE ASS ESSEE ARE PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF NOVEMBER, 2012. SD/- SD/- (VIVEK VARMA) (D. KARUNAKA RA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 7 .11. 2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI