Anuj Goel, V. ITO Circle 22 (1),

ITA 627/DEL/2007

• Counselvise Citation: 62720114 RSA 2007
• Duration Of Justice: 5 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA; PIRTHI LA
• Assessee Lawyers: V RAJ KUMAR S
• Keywords: Competent authority
• Section: 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.627/DEL/2007 ASSESSMENT YEAR : 2004-05 SHRI ANUJ GOEL, ITO, PROP. M/S SONU EXIM, CIRCLE-22(1), B-5/3, OKHLA INDL.AREA, NEW DELHI. PHASE-II, NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAEPG AAEPG AAEPG AAEPG- -- -4433 4433 4433 4433- -- -F FF F APPELLANT BY : SHRI K. SAMPATH & SHRI V. RAJKUMAR, ADVOCATES. RESPONDENT BY : SHRI PIRTHI LA, SR. DR & SHRI RAM BILASH MEENA, SR . DR. ORDER PER TS KAPOOR, AM: THIS IS AN ORDER BEING PASSED IN PURSUANCE OF DIRECTIONS OF HON'BLE DELHI HIGH COURT ON THE BASIS OF AN APPEAL FI LED BY THE REVENUE AGAINST THE ORDER DATED 11.8.2009 OF DELHI TRIBUNAL . THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE WAS HAVING EXPORT TURNOVER OF MORE THAN ` .10 CRORES AND ASSESSING OFFICER VIDE ASSESSMENT ORDER DATE D 20.4.2006 HAD CALCULATED THE ELIGIBLE AMOUNT OF EXP ORT TURNOVER. THE ASSESSING OFFICER HAD ALLOWED DEDUCTION OF EXPORT PROFI TS AFTER REDUCING 90% OF DEPB AND DRAW BACK FROM BUSINESS PROFI TS AND THEN ADDING 90% OF DUTY DRAW BACK AND DID NOT CONSIDER 90 % OF DEPB. THE ASSESSEE WAS NOT SATISFIED WITH THE ORDER AND T HEREFORE HE TOOK THE MATTER TO LD CIT(A) WHO DID NOT ACCEPT THE ARGU MENTS OF LD AR OF ITA NO627/DEL/07 2 ASSESSEE AND DISMISSED THE APPEAL. THEREAFTER, THE ASSESSEE T OOK THE MATTER TO HON'BLE TRIBUNAL AND THE TRIBUNAL VIDE OR DER DATED 8.1.2010 FOLLOWING THE ORDER OF SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS V. ITO IN I.T.A. NO.5769/BOM./2006 DATED 11 TH AUGUST, 2009 HAD SET ASIDE THE ORDER OF LD CIT(A) AND RESTORED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH DECISION. THE RELEVANT EXTRAC T OF HON'BLE TRIBUNAL ORDER IS REPRODUCED BELOW:- WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE THR OUGH THE MATERIAL AVAILABLE ON RECORD. REGARDING GROUND NO.1 WE FIND THAT THE ASSESSEE IS HAVING EXPORT TURNOVER OF ABOVE ` .10 CRORES AND HENCE 90% OF DEPB WAS REDUCED FROM PROFIT OF BUSI NESS FOR THE PURPOSE OF COMPUTATION OF DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC OF THE ACT BUT THE SAME WAS NOT ADDED BACK AS PER THE AMENDED PROVISION OF SECTION 80HHC. NOW, AS PER THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDER ED IN THE CASE OF TOPMAN EXPORTS (SUPRA) 90% OF PROFIT ON SALE O F DEPB IS TO BE EXCLUDED AND NOT 90% OF TOTAL DEPB RECEIPTS. S PECIAL BENCH OF THE TRIBUNAL HAS ALSO DECIDED THE MANNER OF COMPUTATION OF PROFIT ON SALE OF DEPB AND AS PER THE SPECIAL BENCH, FACE VALUE OF DEPB IS TO BE REDUCED FROM SALE PROCEEDS OF DEPB & IF THE SALE PROCEEDS IS HIGHER THAN THE FACE VA LUE, SUCH EXCESS IS PROFIT ON SALE OF DEPB. WE, THEREFORE, SET ASI DE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THIS MA TTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISIO N IN THE LIGHT OF THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL REN DERED IN THE CASE OF TOPMAN EXPORTS (SUPRA). GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO627/DEL/07 3 2. AGGRIEVED BY THE ABOVE TRIBUNAL ORDER, THE REVEN UE HAD FILED APPEAL BEFORE THE HON'BLE HIGH COURT OF DELHI WHICH VIDE ORDER DATED 18.2.2011 HAD SET ASIDE THE ORDER PASSED BY THE HON'BL E TRIBUNAL AND HAD REMANDED BACK THE FILE TO THE TRIBUNAL FOR DECI DING THE APPEAL ON MERIT. THE RELEVANT ORDER OF HON'BLE HIGH COURT IS R EPRODUCED BELOW:- THE ORDER PASSED BY THE TRIBUNAL IN ALL THESE CASES ARE BRIEF BECAUSE OF THE REASON THAT THE TRIBUNAL HAS SIMPLY FOLL OWED (WHICH IS WAS SUPPOSED TO) THE DECISION OF ITAT SPECIAL BENCH, MUMBAI IN THE CASE OF TOPMAN EXPORTS V. ITO IN I.T.A. NO.5769/MUM/2006 DECIDED ON DATED 11 TH AUGUST, 2009. BY THAT JUDGMENT, THE SPECIAL BENCH OF THE TRIBUNAL HAS HELD THAT THE FACT VALUE OF DEPB IS CHARGEABLE TO TAX U/S 28 (IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DEPB IS FILED WITH THE COMPETENT AUTHORITY PURSUANCE TO EXPORTS AND PROFIT ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28( IIID) AT THE TIME OF ITS SALE. THE REVENUE HAD FILED THE APPEAL IN THE HIGH COURT ADJUDICATE AT BOMBAY AGAINST THE AFORESAID DECISION OF THE SPECIAL BENCH OF ITAT. THE BOMBAY HIGH COURT HAS REVERSED THE DECISION OF THE TRIBUNAL AND THE JUDGMENT OF THE BOMBAY HIGH COURT IS REPORTED AS CIT V., KALPATRU COLOURS ANMD CHEMICALS 328 ITR 451 . SINCE THE TRIBUNAL HAD SIMPLY FOLLOWED SPECIAL BENCH DECISION IN TOPMAN EXPORTS (SUPRA) WHICH STANDS OVER RULED, WE SET ASIDE THE ORDER PASSED BY THE TRIBUNAL IN ALL THESE CASES AND REMIT THE CASES BACK TO THE TRIBUNAL TO DECIDE THESE APPEALS ON M ERITS AFTER TAKING INTO ACCOUNT FACTUAL POSITION IN ALL TH ESE CASES. ITA NO627/DEL/07 4 3. FOLLOWING THE DIRECTIONS OF HON'BLE HIGH COURT, T HE CASE WAS RE- HEARD AND AT THE OUTSET, THE LD AR OF THE ASSESSEE SUBMIT TED THAT THE CASE RELIED UPON BY THE TRIBUNAL RELATING TO TOPMAN EXPORTS (SUPRA) HAS NOW BEEN FINALLY DECIDED BY HON'BLE SUPREME COUR T WHICH IS REPORTED IN342 ITR 49 (SC). HE FURTHER INVITED OUR ATTENTION TO PARA 22 OF THE SAID ORDER AND IN VIEW OF THE ABOVE, HE ARGUE D THAT THE CASE HAS TO GO BACK TO THE ASSESSING OFFICER FOR CALCULATION OF CLAIM OF ASSESSEE U/S 80HHC OF THE ACT. 4. THE LD DR HAD NO OBJECTION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE WAS AN EXPORTER HAVING TURNOVER OF EXC EEDING ` .10 CRORES. THE HON'BLE SUPREME COURT AT PARA 22 HAS FINA LLY HELD ABOUT THE METHOD OF CALCULATION OF DEDUCTION AVAILABLE U/ S 80HHC. THE SAID PARAGRAPH IS REPRODUCED BELOW:- THE AFORESAID DISCUSSION WOULD SHOW THAT WHERE AN A SSESSEE HAS AN EXPORT TURNOVER EXCEEDING RS.10 CRORES AND HA S MADE PROFITS ON TRANSFER OF DEPB UNDER CLAUSE (D) OF SECTI ON 28, HE WOULD NOT GET THE BENEFIT OF ADDITION TO EXPOR T PROFITS UNDER THIRD OR FOURTH PROVISO TO SUB-SECTION (3) OF SECTION 80HHC, BUT HE WOULD GET THE BENEFIT OF EXCLUSION OF A SMALLE R FIGURE FROM PROFITS OF THE BUSINESS UNDER EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT AND THERE IS NOTHING IN EXPLANATION (BAA) TO SECTION 80HHC TO SHOW THAT THIS BENEFIT OF EXCLUSION OF A SMALLER FIGURE FROM PROFITS OF THE BUSINESS WILL NOT BE AVAILABLE TO AN ASSESSEE HAVING AN EXPORT TURNOVER EXCEEDING RS.1 0 CRORES. IN OTHER WORDS, WHERE THE EXPORT TURNOVER OF AN ASSESSEE ITA NO627/DEL/07 5 EXCEEDS RS.10 CRORES, HE DOES NOT GET THE BENEF IT OF ADDITION OF NINETY PER CENT OF EXPORT INCENTIVE UNDER CLAUSE (IIID) OF SECTION 28 TO HIS EXPORT PROFITS, BUT HE G ETS A HIGHER FIGURE OF PROFITS OF THE BUSINESS, WHICH ULTIMATELY RESU LTS IN COMPUTATION OF A BIGGER EXPORT PROFIT. THE HI GH COURT, THEREFORE, WAS NOT RIGHT IN COMING TO THE CON CLUSION THAT AS THE ASSESSEE DID HAVE THE EXPORT TURNOVER EXCEEDI NG RS.10 CRORES AND AS THE ASSESSEE DID NOT FULFILL THE CONDITIONS SET OUT IN THE THIRD PROVISO TO SECTION 80HHC (III), THE ASSESSE E WAS NOT ENTITLED TO A DEDUCTION UNDER SECTION 80HHC ON THE AMOUNT RECEIVED ON TRANSFER OF DEPB AND WITH A VIEW TO GE T OVER THIS DIFFICULTY THE ASSESSEE WAS CONTENDING THAT THE PROF ITS ON TRANSFER OF DEPB UNDER SECTION 28 (IIID) WOULD NOT INCLUDE THE FACE VALUE OF THE DEPB. IT IS A WELL-SETTLED PR INCIPLE OF STATUTORY INTERPRETATION OF A TAXING STATUTE THAT A SU BJECT WILL BE LIABLE TO TAX AND WILL BE ENTITLED TO EXEMPTION FRO M TAX ACCORDING TO THE STRICT LANGUAGE OF THE TAXING STATUTE AND IF AS PER THE WORDS USED IN EXPLANATION (BAA) TO SECTION 80HHC RE AD WITH THE WORDS USED IN CLAUSES (IIID) AND (IIIE) OF SEC TION 28, THE ASSESSEE WAS ENTITLED TO A DEDUCTION UNDER SECTION 80HHC ON EXPORT PROFITS, THE BENEFIT OF SUCH DEDUCTION C ANNOT BE DENIED TO THE ASSESSEE. 6. IN VIEW OF THE ABOVE, THE MATTER IS BEING RESTORED TO THE FILE OF ASSESSING OFFICER FOR GIVING BENEFIT OF DEDUCTION U/S 80 HHC CALCULATED AS PER GUIDELINES OF HON'BLE SUPREME COURT IN THE AB OVE NOTED CASE. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE AFTER BEI NG REMANDED BACK FROM HON'BLE HIGH COURT OF DELHI IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO627/DEL/07 6 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DAY O F DECEMBER, 2012. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.14.12.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 10.10.2012 DATE OF DICTATION 7.12.2012 DATE OF TYPING 7.12.2012 DATE OF ORDER SIGNED BY 14.12.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 17.12.2012. & SENT TO THE BENCH CONCERNED.