The DCIT,Ahmedabad Circle-1, Ahmedabad V. Associated DyestuffP) Ltd., Ahmedabad

ITA 652/AHD/2007

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2418 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 17-12-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 12-02-2007
• Court: TRIBUNAL
• Department Lawyers: SOMUGYAN PAL
• Keywords: Tax effect
• Section: 80HHC

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.652/AHD/2007 [ASSTT/YEAR 2003-2004] DCIT, CIR.1 AHMEDABAD. VS ASSOCIATED DYESTUFF P.LTD. PLOT NO.A-1/5, GIDC ESTATE PHASE-I, NR.SHAH TEXTILE VATVA, AHMEDABAD. ./ ITA NO.776/AHD/2007 [ASSTT/YEAR 2003-2004] ASSOCIATED DYESTUFF P.LTD. PLOT NO.A-1/5, GIDC ESTATE PHASE-I, NR.SHAH TEXTILE VATVA, AHMEDABAD. VS DCIT, CIR.1 AHMEDABAD. / (APPELLANT) / (RESPONDENT) REVENUE BY : MS.SOMUGYAN PAL, SR.DR ASSESSEE BY : MS.URVASHI SHODHAN ! / DATE OF HEARING : 17/12/2015 '#$ ! / DATE OF PRONOUNCEMENT: 01/03/2016 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE AND THE REVENUE ARE IN CROSS-APPEALS A GAINST THE ORDER OF THE CIT(A)-V, AHMEDABAD DATED 28.11.2006 P ASSED FOR THE ASSTT.YEAR 2003-2004. ITA NO.652 AND 776/AHD/2007 2 2. BOTH THESE APPEALS WERE TAKEN UP FOR HEARING AND DISPOSED OF BY THE TRIBUNAL VIDE ORDER DATED 30.10.2009. THE APPE AL OF THE REVENUE BEARING ITA NO.652/AHD/2007 WAS DISMISSED ON ACCOUN T OF LOW TAX EFFECT INVOLVED IN THE APPEAL. THE APPEAL OF THE A SSESSEE I.E. ITA NO.776/AHD/2007 WAS ALLOWED FOR STATISTICAL PURPOSE BY FOLLOWING THE DECISION OF THE ITAT, SPECIAL BENCH DECISION IN THE CASE OF TOPMAN EXPORTS VS. ITO, (2009) 318 ITR (AT) 87 (MUM.SB). DISSATISFIED WITH THIS ORDER OF THE TRIBUNAL, THE DEPARTMENT APPROACH ED THE HONBLE GUJARAT HIGH COURT AND CHALLENGED THE ISSUE INVOLVE D IN THE APPEAL OF THE ASSESSEE. THE APPEAL WITH THE HONBLE GUJARAT HIGH COURT WAS REGISTERED AS TAX APPEAL NO.775 OF 2010. THE HONB LE GUJARAT HIGH COURT HAS DISPOSED OF THIS APPEAL ALONG WITH A LARG E NUMBER OF APPEALS VIDE ORDER DATED 29.6.2011. 3. AGGRIEVED WITH THE ORDER OF THE HONBLE GUJARAT HIGH COURT, THE ASSESSEE WENT IN APPEAL BEFORE THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT HAS DECIDED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 25.10.2013. THE ORDER READS AS UNDER: HEARD LEARNED COUNSEL FOR THE PARTIES. 2. BOTH THE LEARNED COUNSEL AGREE THAT THE INCOME T AX APPELLATE TRIBUNAL (FOR SHORT, TRIBUNAL) MAY BE P ERMITTED TO DECIDE THE MATTER IN ACCORD WITH THE LAW LAID DOWN BY THIS COURT IN TOPMAN EXPORTS VS. COMMISSIONER OF INCOME TAX. 3. THE PRAYER MADE BY THE LEARNED COUNSEL FOR THE P ARTIES IS FAIR AND REASONABLE. 4. CIVIL APPEAL IS DISPOSED OF BY OBSERVING THAT TH E TRIBUNAL SHALL CONSIDER THE APPEAL APPROPRIATELY IN ACCORDAN CE WITH THE ABOVE JUDGMENT. NO COSTS. 5. IN VIEW OF THE ABOVE, HIGH COURTS ORDER DOES NO T SURVIVE AND IT IS SET ASIDE. ITA NO.652 AND 776/AHD/2007 3 4. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THERE ARE TWO CORRESPONDENCES FROM THE REGISTRY OF THE HONBLE SU PREME COURT - ONE OF THE LETTERS IT HAS BEEN POINTED OUT THAT THE CIVIL APPEAL NO.4551 OF 2012 AROSE OUT OF THE TAX APPEAL NO.775 OF 2010 BEFORE THE HONBLE GUJARAT HIGH COURT. HOWEVER, IN FURTHER COMMUNICAT ION TO THE REGISTRY OF THE ITAT, REFERENCE TO ITA NO.652/AHD/2007 HAS A LSO BEEN MADE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS INFORMED T HAT THE ASSESSEE HAS WRITTEN LETTERS TO THE REGISTRY OF HONBLE SUPR EME COURT AS WELL AS HONBLE GUJARAT HIGH COURT POINTING OUT THAT THIS I SSUE HAS ARISEN FROM THE ITA NO.776/AHD/2007 BEFORE THE TRIBUNAL. THE I SSUE INVOLVED IN THE APPEAL OF THE REVENUE WAS NEVER TAKEN UP BEFORE THE HONBLE GUJARAT HIGH COURT OR BEFORE THE HONBLE SUPREME COURT. TH E ISSUE IN THE APPEAL OF THE REVENUE WAS WHETHER THE CIT(A) HAS ER RED IN DELETING THE ADDITION OF RS.30,678/- WHICH WAS MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS MADE PAYMENT OF EMPLOYERS CONTRIB UTION TOWARDS PF AFTER EXPIRY OF LIMITATION. THIS ISSUE IS NEITHER DISCERNIBLE FROM THE ORDER OF THE HONBLE GUJARAT HIGH COURT AND HONBLE SUPREME COURT. THEREFORE, IT WAS NEVER TAKEN UP FOR FURTHER APPEAL AFTER THE ORDER OF THE TRIBUNAL. 5. THE LD.COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT THOUGH AFTER THE ORDER OF THE TRIBUNAL DATED 30.10.2009, T HE AO HAS AGAIN MADE ADDITION. THE ASSESSEE HAS FILED AN APPEAL BE FORE THE CIT(A), WHICH WAS DECIDED BY THE CIT(A) ON 17.11.2011. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) BEFORE THE TRIBU NAL IN ITA NO.2622/AHD/2011. THE TRIBUNAL AFTER TAKING COGNIZ ANCE OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. AVANI EXPORTS AS WELL AS TOPMAN EXPORTS VS. ITO (SUPRA) HAS ALLOWED THE APPEAL OF T HE ASSESSEE AND GRANTED RELIEF CLAIMED WITH REGARD TO DEDUCTION UND ER SECTION 80HHC. ITA NO.652 AND 776/AHD/2007 4 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT SINCE THE TRIBUNALS VIDE ORDER DATED 30.10.2009 PASSED ORIGINALLY, WAS REVERSED BY THE HONBLE GUJARAT HIG H COURT, THEREFORE, THERE WAS NO OCCASION FOR THE AO TO PASS THE ORDER DATED 29.10.2010, BECAUSE, THE VERY ORDER GIVING JURISDICTION TO THE AO FOR RE-ADJUDICATING THE ISSUE WAS NO MORE IN PICTURE. THOUGH WHEN THE CIT(A) HAS DECIDED THE ISSUE ON 17.8.2011 IN CONSEQUENCE TO THE ITATS ORDER, THAT ORDER WAS NO MORE IN EXISTENCE AND THIS PROCEEDING OUGHT TO HAVE BEEN NOT UNDERTAKEN IN VIEW OF THE HONBLE GUJARAT HIGH COUR TS DECISION. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT RIGHT COURSE OF THE PROCEDURE WOULD BE NOT TO TAKE UP THE ITA NO.2622/A HD/2011 FOR DECISION, BUT CONSIDERING THE SUBSEQUENT DECISION O F THE HONBLE SUPREME COURT PASSED ON 25-10-2013, WE ARE OF THE V IEW THAT WHOLE EXERCISE WILL BE AN ACADEMIC ONE, BECAUSE, THE HON BLE SUPREME COURT HAS REMITTED THE ISSUE TO THE TRIBUNAL WITH A DIREC TION TO CONSIDER IN THE LIGHT OF THE DECISION IN THE CASE OF TOPMAN EXPORTS VS. ITO (SUPRA). IN OTHER WORDS, FINDING OF ITAT RECORDED IN THE ORDER DATED 30.10.2009 WHICH WERE SET ASIDE BY THE HONBLE HIGH COURT WERE RESTORED TO A LIMITED EXTENT. 7. AS OBSERVED EARLIER THAT IN PURSUANCE OF ITAT OR DER DATED 30.10.2009, THE AO HAS DECIDED THE ISSUE AND DISPUT E TRAVELLED UPTO THE TRIBUNAL IN ITA NO.2622/AHD/2011. THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDING: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE TRIBUNAL (ITAT C BENCH AH MEDABAD) IN ITA NO.776/AHD/2007 FOR Y 2003-04 (ASSESSEES OWN C ASE) VIDE ITS ORDER DATED 30/10/2009 WAS PLEASED TO RESTORE T HE ISSUE IN RESPECT OF DEDUCTION U/S.80HHC OF THE ACT, BY OBSER VING AS UNDER:- ITA NO.652 AND 776/AHD/2007 5 9. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF TH E TRIBUNAL, WE HOLD THAT PROFIT ELEMENT ON DEPB LICEN CE WILL BE COVERED BY SECTION 28(IIID) AND, ACCORDINGLY, BY TH IRD PROVISO TO SECTION 80HHC(3) OF THE I.T.ACT, 1961 AS THE TURNOVER OF THE ASSESSEE EXCEEDS RS.10 CRORES. THIS AMOUNT SHALL BE EXCLUDED FOR THE PURPOSE OF COMPUTING DEDU CTION U/S.80HHC OF THE I.T.ACT, 1961, IF CONDITION LAID D OWN IN THAT PROVISO ARE NOT SATISFIED. THE FACE VALUE OF T HE DEPB LICENCE WILL BE COVERED U/S.28(IIIB) OF THE I.T.ACT , 1961 AND, THEREFORE, 90% THEREOF WOULD BE ADDED TO THE EXPORT PROFITS AS PER FIRST PROVISO TO SECTION 80HHC(3) OF THE I.T .ACT.1961. 10. IN ORDER TO COMPUTE DEDUCTION U/S.80HHC OF THE I.T.ACT, 1961 IN ACCORDANCE WITH THE DECISION OF THE SPECIAL BENCH IN THE CASE OF M/S.TOPMAN EXPORTS (SUPRA), WE RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER. 4.1. THERE IS NO DISPUTE WITH REGARD TO THE FACT TH AT THE DECISION OF THE SPECIAL BENCH RENDERED IN THE CASE OF TOPMAN EXPORTS VS. ITO(SUPRA) HAS BEEN UPHELD BY THE HONBLE SUPREME C OURT. THEREFORE, THE ISSUE REMAINS TO BE EXAMINED WHETHER THE AO HAS COMPUTED THE DEDUCTION AS PER THE DECISION OF THE S PECIAL BENCH RENDERED IN THE CASE OF TOPMAN EXPORTS(SUPRA). THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE COMPUTA TION OF PROFIT OF THE BUSINESS AS PER EXPLANATION(BAA) OF SECTION 80HHC, WHETHER MADE ON THE BASIS OF THE JUDGMENT OF TOPMAN EXPORTS OR ON THE BASIS OF KALPATARU COLOURS AND CHEMICALS, WI LL NOT MAKE ANY DIFFERENCE BECAUSE WHATEVER AMOUNT IS REDUCED F ROM THE PROFIT OF THE BUSINESS AS PER EXPLANATION (BAA), THE SAME WILL BE INCREASED BY THE IDENTICAL AMOUNT AS PER VARIOUS PR OVISOS OF SECTION 80HHC(3) OF THE ACT. IN OTHER WORDS, THE OV ERALL COMPUTATION OF CLAIM OF DEDUCTION U/S.80HHC WILL NO T MATERIALLY BE DIFFERENT UNDER BOTH THE JUDGMENTS. THUS, THE AM OUNT OF DEDUCTION OF RS.38,08,898/- U/S.80HHC AS SHOWN WILL REMAIN UNCHANGED. THE AO DID NOT ACCEPT THE CONTENTION ON THE BASIS THAT THE EXPORT TURNOVER OF THE ASSESSEE IS MORE TH AN RS.10 CRORES. FURTHER, IT WAS NOTICED THAT PROFITS DERIVE D FROM EXPORT IN RESPECT OF GOODS OR MERCHANDISE MANUFACTURED ARE AT LOSS. PROFITS DERIVED FROM EXPORT IN RESPECT OF TRADING GOODS IS AT RS.12,13,054/-. THUS, THE ASSESSEE-COMPANY HAS A NE T LOSS DERIVED FROM EXPORT OF GOODS OR MERCHANDISE MANUFAC TURED AND TRADING GOODS AT RS.15,55,222/-. THE CONTENTION OF THE ASSESSEE IS THAT THE AMENDMENT WAS MADE IN THE PROVISIONS OF SECTION 80HHC OF THE ACT AS BROUGHT W.E.F. 01/04/1997, BY T HE TAXATION ITA NO.652 AND 776/AHD/2007 6 LAWS (AMENDMENT) ACT, 2005 WOULD NOT BE APPLICABLE SINCE THE ASSESSMENT IS AY 2003-04. IN SUPPORT OF THIS CONTEN TION, THE LD.COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE JUD GEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF AVANI EXPORTS VS. CIT REPORTED AT REPORTED AT 348 ITR 391 (GUJ.). THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. AVANI EXPORTS REPORTED AT 58 TAXMANN.COM 100(SC) HAS CATEGORICALL Y RULED THAT HAVING SEEN THE TWIN CONDITIONS AND SINCE 80HHC BEN EFIT IS NOT AVAILABLE AFTER 1.4.05, THE CASES OF EXPORTERS HAVI NG A TURNOVER BELOW AND THOSE ABOVE 10 CRORES SHOULD BE TREATED S IMILARLY. 4.2. IN VIEW OF THE ABOVE JUDGEMENT OF HONBLE SUPR EME COURT, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) WA S NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO. THEREFORE, RESP ECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE SUPREME COURT RE NDERED IN THE CASE OF CIT VS. AVANI EXPORTS, WE HEREBY DIRECT THE AO TO ALLOW THE DEDUCTION U/S.80HHC OF THE ACT. THUS, GRO UND NOS.1 TO 5 OF ASSESSEES APPEAL ARE ALLOWED. 8. ON MERIT, THIS VERY FINDING HAS TO BE RECORDED B Y US IN ITA NO.776/AHD/2007 WHICH IS ORIGINAL ROUND OF APPEAL A ND HAS BEEN RESTORED BY THE HONBLE SUPREME COURT. BECAUSE, TH E ISSUE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. AVANI EXPORT AS WELL AS IN THE CASE OF TOPMAN EXPOR T (SUPRA). THE LD.AO IS DIRECTED TO GRANT DEDUCTION UNDER SECTION 80HHC OF THE ACT. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 10. SO FAR AS THE REVENUES APPEAL IS CONCERNED, IT DID NOT TRAVEL TO THE HONBLE SUPREME COURT AND IT HAS NOT BEEN REMIT TED TO THE TRIBUNAL. THE ORIGINAL ORDER OF THE TRIBUNAL DATED 30.10.2009 , AS FAR AS REVENUES APPEAL IN ITA NO.652/AHD/2007 IS CONCERNED, IS NOT DISTURBED. THE REGISTRY HAS LISTED THE REVENUES APPEAL ONLY ON AC COUNT OF ITS NUMBER BEING MENTIONED IN THE COMMUNICATION OF THE HONBLE SUPREME COURT AS WELL AS OF THE HONBLE HIGH COURT. THEREFORE, NO O BSERVATION IS BEING MADE QUA THIS APPEAL. ITA NO.652 AND 776/AHD/2007 7 11. WITH THIS OBSERVATION, THE APPEAL OF THE REVENU E IS DISPOSED OF ACCORDINGLY, AND THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST MARCH, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER