The Arvind Ltd.,(Earlier known as The Arvind Mills Ltd.), Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 673/AHD/2011

• Counselvise Citation: 67320514 RSA 2011
• Duration Of Justice: 4 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AND ITA NO AHD ARVIND MILL
• Keywords: Business income; Depreciation; Search and seizure; Cost of acquisition; Tangible material; Difference of opinion; Capital receipt; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 80HHC; 115JB; 10B; 147; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.673/AHD/2011 A.Y. 2004-05 2. ./ I.T.A. NO.269/AHD/2011 A.Y. 2004-05 1. ARVIND MILLS LTD. NARODA ROAD AHMEDABAD 2. ACIT CIRCLE-1,AHMEDABAD / VS. 1. ACIT CIRCLE-1 AHMEDABAD 2. ARVIND MILLS LTD. AHMEDABAD % & ./ ./ PAN/GIR NO. AABCA 2398 D ( %( / APPELLANTS ) .. ( )*%( / RESPONDENTS ) ASSESSEE B Y : SHRI S.N. SOPARKAR WITH SHRI P.M. MEHTA, ARS REVENUE B Y : SHRI RAHUL KUMAR, SR.DR +, - .& / DATE OF HEARING 01/07/2015 /012 - .& / DATE OF PRONOUNCEMENT 23/07/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE CROSS-APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABAD (CIT(A) IN SHORT) DAT ED 14/12/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2004-05. THESE CROSS-APPEALS WERE ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 2 - HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.673/AHD/2011 FOR AY 2004-05. THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN REJECTING THE CLAIM OF THE ASSESSEE TH AT THE REASSESSMENT PROCEEDINGS CARRIED OUT IN ACCORDANCE WITH SECTION 147 OF THE INCOME TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE RELIEF U/S.80HHC, WHIL E COMPUTING BOOK PROFIT, MERELY FOR THE REASON THAT THE ASSESSM ENT REOPENED U/S.147 CANNOT RESULT INTO EXCESS RELIEF, WHEN HE H IMSELF HAS ACCEPTED THAT THE ASSESSEE IS ENTITLED TO GET HIGHE R RELIEF, ON THE BASIS OF THE DECISION OF SUPREME COURT IN CASE OF C IT V. AJANTA PHARMA LTD. DATED 9 TH SEPTEMBER, 2010. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF T HE ASSESSEE WAS REOPENED AND THE REASSESSMENT U/S.143(3) R.W.S.147 OF THE IN COME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 30/12/2008, THEREBY THE ASSESSING OFFICER (AO IN S HORT) HELD THAT SINCE THE AMOUNT DEDUCTIBLE U/S.80HHC OF THE ACT IS NIL, NO DEDUCTION U/S.80HHC IS ADMISSIBLE TO THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION. AGAINST THE SAID ASSESSMENT ORDER, THE ASSESSEE FIL ED AN APPEAL BEFORE THE ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 3 - LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. AGAINST THE ORDER OF THE LD.CI T(A), NOW BOTH THE ASSESSEE AND THE REVENUE ARE IN CROSS-APPEALS BEFOR E US. 4. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT BEFORE THE LD.CIT(A) A SPECIFIC GROUND WAS RAISED WITH REGARD TO VALIDITY OF REOPENING OF THE ASSESSMENT BY WAY OF GROUND NO.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO.1 IS DISM ISSED BY THE LD.CIT(A) TREATING THE SAME AS GENERAL IN NATURE. HE SUBMITTED THAT THE ISSUE OF JURISDICTION GOES TO VERY ROOT OF THE MATT ER, SAME CANNOT BE LEFT UNADJUDICATED TERMING THE SAME AS GENERAL IN NATUR E. HE SUBMITTED THAT THE LD.CIT(A) OUGHT TO HAVE ADJUDICATED THE ISSUE. HE SUBMITTED THAT REOPENING IS BASED SOLELY ON THE CHANGE OF OPINION AND PLACED RELIANCE ON THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF P.V. DOSHI VS. CIT REPORTED AT (1978)113 ITR 22 (GUJ.). HE SUBMITTED THAT THE REASONS FOR REOPENING THE ASSESS MENT ARE ON THE BASIS THAT THE BOOK PROFIT U/S.115JB, NET PROFIT REDUCED BY RS.783.75 LACS FOR, DEDUCTION U/S.80HHC WAS INCORRECT AS (I) DEDUCTION U/S.80HHC WAS CALCULATED ON THE BASIS OF BOOK PROFIT INSTEAD OF O N PROFIT (II) DEDUCTION U/S.80HHC WAS NOT ALLOWABLE AS UNDER NORMAL PROVISI ON AFTER SETTING OFF LEASE UNABSORBED DEPRECIATION AND BROUGHT FORWARD L OSS INCOME REDUCED TO NIL. WHILE CALCULATING THE BOOK PROFIT, THE DE DUCTION U/S.80HHC WAS MADE FIRST INSTEAD OF SETTING OFF LEAST UNABSORBED DEPRECIATION AND ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 4 - BROUGHT FORWARD LOSS (AS PER BOOKS OF ACCOUNTS). THE ASSESSEE HAD REDUCED THE AGGREGATE UNABSORBED DEPRECIATION AND B USINESS LOSS OF RS.29611.36 LACS INSTEAD OF YEAR-WISE OF RS.25502.7 2 LACS. RS.9066.49 LACS ALREADY SET OFF IN AY 2003-04 WAS NOT TAKEN IN TO ACCOUNT. THIS RESULTED IN EXCESS CARRIED FORWARD LOSS OF RS.4892. 35 LACS. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REOP ENING OF THE ASSESSMENT IS MADE PURELY ON THE BASIS OF CHANGE OF OPINION WH ICH IS NOT PERMISSIBLE UNDER LAW. HE DREW OUT ATTENTION TOWARDS ORIGINAL ASSESSMENT ORDER DATED 29/12/2006. HE SUBMITTED THAT THE AO HAS DEV OTED SUBSTANTIAL PAGES ON THE ISSUE OF DEDUCTION U/S.80HHC AND BOOK- PROFIT. HE SUBMITTED THAT THE AO ALSO MADE ADJUSTMENT. THEREF ORE, HE SUBMITTED THAT IT CANNOT BE SAID THAT THE DETAILS WERE NOT BE FORE THE AO AND THE AO HAS NOT APPLIED HIS MIND. UNDER THESE FACTS, HE SU BMITTED THAT THE REOPENING OF THE ASSESSMENT IS CONTRARY TO THE LAW AS LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF P.V.DOSHI VS. CIT REPORT AT (1978) 113 ITR 22 (GUJ.). HE ALSO PL ACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF VISHWANATH ENGINEER VS. ACIT REPORTED AT (2012) 21 TXMANN.COM 5 (GUJ.). 4.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THERE IS NO ILLEGALITY IN REJECTING THE GROUND NO.1 OF THE APPEAL. ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 5 - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AS PER FORM NO.35, GROUND NO.1 RAISED IN THE ASSESS EES APPEAL READS AS UNDER:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE IMPUGNED REASSESSMENT ORDER IS VOID AND DESERVES TO BE CANCELLED. INTER ALIA, FOR THE REASON THAT IT HAS BEEN PASSED WITHOUT JURI SDICTION. 5.1. HOWEVER, THE LD.CIT(A) HAS DISMISSED THE GROUN D BY OBSERVING AS UNDER:- 2. THE GROUND NO.1 IS GENERAL IN NATURE AND THERE FORE NOT REQUIRED TO BE ADJUDICATED. 5.2. IT IS A SETTLED POSITION OF LAW THAT WHENEVER A QUESTION OF JURISDICTION IS RAISED, THE SAME IS REQUIRED TO BE ADJUDICATED AND CANNOT BE TERMED AS GENERAL IN NATURE. FROM THE RECORDS, EX- FACIE IT IS TRANSPIRED THAT THE LD.CIT(A) HAS FAILED TO ADJUDICATE THE GRO UND RAISED BY THE ASSESSEE. IT IS ADMITTED FACT THAT THE ASSESSEE HA D RAISED A GROUND AGAINST VALIDITY OF REASSESSMENT. THE GROUND SO RAISED WAS NOT DECIDED BY THE LD.CIT(A). THE ASSESSEE HAS PLACED MATERIAL BEFORE THIS TRIBUNAL WHICH WAS AVAILABLE BEFORE THE LD.CIT(A). IT IS SETTLE D POSITION OF LAW THAT IF THE MATERIAL THAT WAS AVAILABLE WITH THE AO AND THE LD.CIT(A), IS ALSO BEFORE THE TRIBUNAL, IN THAT EVENT, IT IS THE DUTY OF THE TRIBUNAL TO DECIDE THE ISSUE RAISED IN APPEAL WITHOUT RESTORING TO LOW ER AUTHORITIES FOR ADJUDICATION. ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 6 - 5.3. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LA ID DOWN IN THE JUDGEMENT(S) OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF RAJESH BABUBHAI DAMANIA VS. ITO REPORTED AT (2012)122 TAXM AN 614 (GUJ.) AND OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF RAMGOSRI CONSTRUCTIONS (P.)LTD. VS. ITO, WE PROCEED TO DECI DE THIS ISSUE. WE FIND THAT IN THE ORIGINAL ASSESSMENT ORDER PLACED AT PAG E NOS.90 TO 108 OF THE PAPER-BOOK, THE AO IN PARA-5 OF ITS ORDER DECIDED T HIS ISSUE OF DEDUCTION U/S.80HHC OF THE ACT. FOR THE SAKE OF CLARITY, THE FINDING OF THE AO IS REPRODUCED HEREINBELOW:- 5. DEDUCTION U/S.80HHC OF THE ACT. IT IS NOTICED THAT THE ASSESSEE COMPANY HAD COMPUTE D DEDUCTION UNDER SECTION 80HHC BY TAKING BOOK PROFIT AS PROFIT OF THE BUSINE SS INSTEAD OF CONSIDERING BUSINESS INCOME FOR THE SAME RELYING ON THE DECISION OF THE HYDERABAD ITAT IN CASE OF STARCHIK SPECIALTIES LTD. V DCIT 90 ITD 34 AND THE KERALA HIGH COURT DECISION IN THE CASE OF CIT V GTN TEXTILES LIMITED 248 ITR 37 2. 5.1 ON THIS ISSUE, THE ASSESSEE COMPANY DURING THE COURSE OF DISCUSSION EXPLAINED THAT FOR MAT COMPUTATION UNDER SECTION 115JB, SECTI ON 80HHC RELIEF QUANTUM SHOULD BE BASED ON 'BOOK PROFIT' OF THE COMPANY AND . CLAUSE (IV) OF THE EXPLANATION TO SECTION 115JB BY APPLYING METHODOLOGY CONTAINED IN SECTION 80HHC(3) TO SUCH BOOK PROFIT FIGURE. IT ALSO SUBMITTED THAT THOUGH T HE JUDGMENT OF KERALA HIGH COURT WAS RENDERED IN THE CONTEXT OF INTERPRETATION OF SE CTION 115J SHOULD APPLY AS EQUALLY TO SECTION 115JB ALSO AS THERE ARE NO ESSENTIAL DIS TINCTION BETWEEN THE PHRASE 'COMPUTED IN THE MANNER SPECIFIED IN SECTION 80HHC( 3)' WHICH APPEARED IN SECTION 115JA AS COMPARED TO THE PHRASE 'COMPUTED UNDER SEC TION 80HHC(3) AS APPEARING IN SECTION 115JB. THE DECISION OF GTN TEXTILES LIMI TED ALSO CANNOT BE DISTINGUISHED ON THE GROUND OF CHANGE IN LANGUAGE. THE ASSESSEE C OMPANY ALSO RELIED ON CBDT CIRCULAR NO. 55.9 AND 680. THE CLAIM OF DEDUCTION UNDER SECTION 80HHC WAS EXAM INED IN DETAIL FROM ALL ABOVE ANGELS. THE SIMILAR CLAIM WAS ALSO MADE IN THE IMME DIATELY PRECEDING ASSESSMENT YEAR WHICH WAS FOUND IN ORDER AFTER DETAIL EXAMINAT ION. THEREFORE FOLLOWING THE ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 7 - ASSESSMENT ORDER FOR IMMEDIATELY PRECEDING ASSESSME NT YEAR, FOR MAT COMPUTATION UNDER SECTION 115JB, CONTENTION OF THE ASSESSEE COM PANY ARE ACCEPTED AND FOR SECTION 80HHC RELIEF QUANTUM IS ALLOWED BASED ON BO OK PROFIT OF THE ASSESSEE COMPANY. 5.2 THE ASSESSEE COMPANY IN ITS LETTER DATED 23.5.2 005 STATED THAT WHILE PASSING THE ASSESSMENT ORDER, THE WHOLE OF THE EXPORT PROFIT SH ALL BE REDUCED FROM THE BOOK PROFIT AND NOT TO RESTRICT AMOUNT OF DEDUCTION TO THE EXTE NT OF 30% PROFIT AS PROVIDED IN SUBSECTION (1B) OF SECTION 80HHC OF THE I.T. ACT. T HE CONTENTION OF THE ASSESSEE COMPANY ARE EXAMINED IN DETAIL HEREIN BELOW: ON THE POINT WHETHER THE ASSESS.EE COMPANY SHOULD C OMPUTE THE RELIEF UNDER SECTION 80HHC WITHOUT GIVING EFFECT TO SECTION 80HHC.(1B) O F THE I.T. ACT. THE ASSESSEE COMPANY IN THIS CONNECTION DURING THE COURSE OF DIS CUSSION, SUBMITTED THAT SECTION 80HHC (1B) IS THE CONDITION CONTROLLING QUANTUM OF DEDUCTION. SINCE COMPUTATION UNDER SECTION 115JB IS ON A DIFFERENT BASIS OF BOOK PROFIT, THE ASPECT OF QUANTIFICATION OF DEDUCTION SHOULD HAVE NO IMPACT ON REDUCTION CON TEMPLATED BY SECTION 115JB. THE ASSESSEE COMPANY FURTHER RELIED ON THE CBDTS VIEW I N CIRCULAR NO.680 DATED 21.2.1994 THAT ONLY-THE MANNER OF COMPUTATION AS GI VEN IN SECTION 80HHC IS TO BE IMPORTED IN SECTION 115JB. AND THEREFORE THE RESTR ICTION AS PRESCRIBED IN SECTION 80HHC DOES NOT APPLY WHILE DEDUCTING THE EXPORT PRO FIT UNDER SECTION 115 JB OF THE ACT, IT ALSO ARGUED THAT THE CIRCUMSTANCES THAT SEC TION 80HHC CONTINUES ON THE STATUTES BOOK AND THE CIRCUMSTANCES THAT CLAUSE (IV ) OF EXPLANATION TO SECTION 115JB DOES STILL CONTINUE TO BEAR REFERENCE TO SECTION 80 HHC CAN BE DEFINITELY A FAVOURABLE FACTOR FOR AN ASSESSEE. THE ASSESS.EE COMPANY IN TH IS REGARD ALSO HEAVILY RELIED ON THE FINANCE MINISTER'S SPEECH INTRODUCING THE FINAN CE BILL WHEREIN THE FINANCE MINISTER HAD STATED THAT EXPORTERS WOULD CONTINUE T O ENJOY EXEMPTION FROM MAT TILL THE FULL PHASE OUT. DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRODUCED FOR MY PERU SAL FOLLOWING EXTRACTS FROM THE MEMORANDUM EXPLAINING FINANCE BILL 2000: 'THE NEW PROVISIONS PROVIDE THAT ALL COMPANIES- HAV ING BOOK PROFITS UNDER THE COMPANIES ACT, PREPARED IN ACCORDANCE WITH PART II AND PART III OF SCHEDULE VI TO THE COMPANIES ACT, SHALL BE LIABLE TO PAY A MINIMUM ALTERNATE TAX AT A LOWER RATE OF 7.5% , AS AGAINST THE EXISTING EFFECTIVE RATE OF, 1 0.5% OF THE BOOK PROFITS. THESE PROVISIONS WILL BE APPLICABLE TO ALL CORPORATE ENTI TIES WITHOUT ANY. EXCEPTION. HOWEVER, EXPORT PROFITS UNDER SECTION. 80HHC, 80HHE , AND 80HHF ARE KEPT OUT OF THE PURVIEW OF THIS PROVISION DURING THE PERIOD OF PHASING OUT OF DEDUCTIONS AVAILABLE UNDER THOSE PROVISIONS . ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 8 - FURTHER, MY ATTENTION WAS INVITED TO THE CIRCULAR N O.794, DATED 9/8/2000 WHICH GIVES EXPLANATORY NOTES ON PROVISIONS RELATING TO FINANCE ACT, 2000, WHICH STATE AS UNDER: 43.5 THE EXPORT PROFIT UNDER SECTION 10A, 10B ,80HH C, 80HHE AND 80HHF ARE KEPT OUT OF THE PURVIEW OF THIS PROVISION AS TH ESE ARE BEING PHASED OUT............... . THERE ARE MERITS IN THE ARGUMENT OF THE ASSESSEE CO MPANY THAT IT SHOULD COMPUTE THE- RELIEF UNDER SECTION 115JB WITHOUT GIVING EFFECT TO SECTION 80HHC(1B). THIS ISSUE WAS ALSO EXAMINED DURING THE COURSE OF ASSESSMENT P ROCEEDING FOR IMMEDIATELY PRECEDING ASSESSMENT YEAR AND AFTER DETAILED EXAMIN ATION THE CLAIM WAS ACCEPTED. FOLLOWING THE SAME, THE CLAIM ARID CONTENTION OF TH E ASSESSEE COMPANY ARE ALSO ACCEPTABLE FOR PRESENT ASSESSMENT, YEAR, HOWEVER, I T IS REJECTED ON THE GROUND THAT THE SAME IS NOT MADE THROUGH FILING A REVISE RETURN OF INCOME BUT IT IS CLAIMED BY WAY OF LETTER. THE SUPREME COURT OF INDIA IN THE CASE OF G OETZE (INDIA) LTD. V CIT (284 ITR 323) HAS UPHOLD THE CONTENTION OF THE ASSESSING OFF ICER THERE ARE NO PROVISION UNDER THE INCOME-TAX ACT TO MAKE AMENDMENT IN THE RETURN OF INCOME BY MODIFYING AN APPLICATION AT THE ASSESSMENT STAGE WITHOUT REVISIN G THE RETURN. THUS THOUGH THE CLAIM OF THE ASSESSEE COMPANY IS GENUINE IT IS NOT ENTERTAINED IN VIEW OF ABOVE CLEAR CUT FINDING OF THE APEX COURT. 5.3 THE ASSESSING COMPANY, IN ITS LETTER DATED 23.5 .2005 ALSO STATED THAT DEPB SHOULD BE CONSIDERED AS BUSINESS INCOME IF THE SAME IS NOT HELD TO BE EXPORT INCENTIVE AND HENCE NO JUSTIFICATION IS REQUIRED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE COMPANY WAS ALSO ASKED CLARIFY WHETHER THEY ARE SATISFYING TWO CONDI TIONS PRESCRIBED BY THE TAXATION LAWS (SECOND AMENDMENT) ACT 2005 BEING AN EXPORTER HAVING TURNOVER IN EXCESS OF RS.10 CRORES. AND IF ANSWER TO THE SAME IS IN NEGAT IVE THEN WHY THE BENEFIT OF DEDUCTION UNDER SECTION 80HHC SHALL NOT BE DENIED O N THE AMOUNT OF PROFIT ON TRANSFER DEPB. THE ASSESSEE COMPANY IN RESPONSE ARGUED ON LINE SIM ILAR TO ARGUMENT PUT FORTH DURING THE ASSESSMENT YEAR 2003-04 AND SHOWED COPY OF DETAILED REPLY FILED THEREIN WITH RESPECT TO THE ABOVE QUERY. THE DETAILED SUBMI SSION MADE BY THE ASSESSEE COMPANY IN THIS REGARD DURING ASSESSMENT YEAR 2003- 04 IS REPRODUCED HEREIN BELOW: BEFORE MAKING OUR DETAIL SUBMISSION BOTH ON FACT AS WELL AS LAW, WE WOULD LIKE TO NARRATE SUMMARY OF THE AMENDMENTS BROUGHT IN SECTIO N 80HHC OF THE ACT BY ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 9 - TAXATION LAWS (SECOND AMENDMENT) ACT 2005 AND THE H ISTORY OF SECTION THE SAID AMENDMENTS CAN BE SUMMARISED AS UNDER: (I) PROFIT ON TRANSFER OF DUTY ENTITLEMENT PASS BOO K (DEPB) LICENCE AND DUTY FREE REPLENISHMENT CERTIFICATE (DFRC)]IS TREATED AS BUSI NESS PROFIT BY INSERTING SECTIONS 28(IIID) AND 28(IIIE) AND CORRESPONDINGLY SAID INCO ME IS MADE ELIGIBLE FOR DEDUCTION U/S 80 HHC. (II) ASSESSEES HAVING EXPORT TURNOVER OF LESS THAN RS.10 CRORES ARE ELIGIBLE FOR DEDUCTION U/S 80HHC ON THE AFORESAID PROFIT ON TRAN SFER OF DEPB/DFRC WITHOUT ANY FURTHER CONDITION TO BE COMPLIED WITH. (III) ASSESSE'ES HAVING EXPORT TURNOVER OF MORE TH AN RS.10 CRORES HAVE TO COMPLY WITH FOLLOWING TWO CONDITIONS SO AS TO BE ELIGIBLE FOR DEDUCTION U/S 80HHC ON THE AFORESAID PROFIT. THE CONDITIONS ARE - IF THE ASSES SEE HAS NECESSARY AND SUFFICIENT EVIDENCE TO PROVE THAT - (A) HE HAD AN OPTION TO CHOOSE EITHER THE DUTY DRAW BACK OR THE DEPB/DFRC SCHEME, BEING THE DUTY REMISSION SCHEME; AND (B) THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER. THE DEPB SCHEME, BE ING DUTY REMISSION SCHEME. NOW WE WOULD LIKE TO BRING TO YOUR HONOUR'S KIND NO TICE THE HISTORY OF SECTION 80HHC, HISTORY OF INTRODUCTION OF VARIOUS EXPORT IN CENTIVE AND A/SO FACTS IN BRIEF GIVING RISE TO THE PRESENT AMENDMENT AS UNDER: I)SECTION 80HHC GRANTS DEDUCTION FROM TOTAL INCOME OF THE ASSESSEE IN RESPECT OF PROFITS DERIVED FROM EXPO/IF BUSINESS AS CONTEMPLAT ED UNDER SECTION 23 OF THE ACT. THE SAID PROVISION WAS ORIGINALLY INSERTED BY FINAN CE ACT, 1982 BY INSERTION OF SECTION 89A AND WITH A VIEW TO ENCOURAGING LARGER E XPORTS OF GOODS. II) BY FINANCE ACT, 1983, THE AFORESAID PROVI SION WAS RENUMBERED AS 80-HHC. SUBSEQUENTLY, THERE HAVE BEEN VARIOUS AMENDMENTS IN THE PROVISIONS OF SECTION 80HHC INCLUDING THE AMENDMENT BROUGHT ABOUT IN THE YEAR 1991 TO COVER ALL THE CASES OF EXPORT INCENTIVES, AVAILABLE AT THAT POINT OF TIME. AS A RESULT, VARIOUS EXPORT INCENTIVE INCLUDING PROFIT AND GAIN AS WELL AS PREM IUM ON SALE OF LICENCE, CASH ASSISTANCE AND DUTY DRAW BACK WERE COVERED UNDER TH E SCHEME OF SECTION 80HHC. ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 10 - THIS WAS FURTHER CLARIFIED THROUGH CBDT CIRCULAR, B EARING REF. F. 133/131/97-TPL DATED 23.02.1998, BY TREATING PREMIUM ON SALE OF QU OTA AS OTHER EXPORT INCENTIVES AS ENVISAGED UNDER CLAUSES (IIIA), (IIIB) AND (IIIC) O F SECTION 28. THUS, THE HISTORY OF SECTION 80HHC CLEARLY POINTS TOWARDS THE ASSURANCE OF THE GOVERNMENT TO THE TAXPAYER THAT THE LARGER THE EXPORT GREATER WOULD B E THE BENEFIT UNDER SECTION 80HHC. IT IS WELL KNOWN FACT THAT IN THE PRE-LIBERALISED INDIAN ECONOMY, THE INDIAN PRODUCTS WERE NOT INTERNATIONALLY COST COMPETITIVE BUT AT THE SAME TIME, INDIA WAS IN DIRE NEED OF FOREIGN EXCHANGE. WITH A VIEW TO ENCOU RAGE EARNING OF MORE FOREIGN EXCHANGE FOR THE COUNTRY, THE EXPORTERS WERE LURED WITH TAX INCENTIVE UNDER DIRECT AND INDIRECT TAX. WHILE THE AFORESAID PROVISION UNDER THE ACT, VIZ., SECTION 80HHC WAS ONE SUCH- INCENTIVE UNDER THE DIRECT TAX SCHEME, INSOFAR AS T HE INDIRECT TAX SCHEME WAS CONCERNED, THE EXPORTERS WERE GRANTED VARIOUS EXPOR T INCENTIVE SCHEMES WHICH INCLUDED DUTY DRAWBACK SCHEME [BEING LICENSE GRANTE D UNDER THE IMPORTS (CONTROL) ORDER 1955 MADE UNDER THE IMPORTS, AND EXPORTS (CON TROL) ACT, 1947] AND BENEFITS UNDER-DEPB SCHEME/DFRC/SALE OF LICENCE, CASH ASSIST ANCE AND SALE OF QUOTA, ETC. BENEFIT OF DUTY DRAWBACK AT THE RATE THAT WAS SPECI FIED IN THE SCHEDULE WAS DIRECTLY PAID TO THE EXPORTERS AGAINST EXPORT, DFRC WAS INTR ODUCED IN 2001 UNDER THE DEPB SCHEME, WHICH WAS INTRODUCED FOR THE FIRST TIME IN THE EXIM POLICY (DECLARED UNDER FOREIGN TRADE AND DEVELOPMENT REGULATION ACT) 1997- 2002, WITH EFFECT FROM 1.04.1997, WITH THE OBJECTIVE BEING TO NEUTRALISE THE INCIDENCE OF BASIC CUSTOM DUTY, SPECIAL CUSTOMS DUTY AND SURCHARGE ON THE IMPORT CO NTENT OF THE EXPORT PRODUCT THROUGH REIMBURSEMENT OF DUTIES AND TAXES PAID DIRE CTLY OR INDIRECTLY ON EXPORT PRODUCT. THE SAID NEUTRALISATION WAS EFFECTED BY WA Y OF GRANT OF DUTY CREDIT AGAINST THE EXPORT PERFORMANCE. THE CREDIT ADMISSIBLE FOR A N EXPORT PRODUCT IS CALCULATED BY TAKING INTO ACCOUNT THE DEEMED IMPORT CONTENTS OF T HE EXPORT PRODUCT, THE VALUE ADDITION TO BE ACHIEVED BY THE EXPORT OF THE PRODU CT AS PRESCRIBED IN IRIS STANDARD INPUT-OUTPUT NORMS (SION) AND THE BASIC CUSTOMS DUT Y, SPECIAL CUSTOMS DUTY, SURCHARGE LEVIABLE ON THE INPUT CONTENTS. THESE DEP B ENTITLEMENTS CAN BE USED BY THE ASSESSEE WHILE MAKING PAYMENT OF IMPORT DUTY ON THE IR OWN IMPORTS. THE SAID DEPB IS ALSO TRANSFERABLE AND CAN BE USED BY THE TRANSFE REE AGAINST THEIR, IMPORT DUTY LIABILITY. THE EFFECT AND OBJECT OF BOTH THE POLICI ES WAS SAME TO COMPENSATE FOR TAXES AND DUTIES LEVIED ON EXPORT MATERIAL, IT IS PERTINE NT TO NOTE FROM THE ABOVE THAT AN EXPORTER IS REIMBURSED CUSTOM DUTY AS DRAWBACK IN C ASH AND THE POSITION UNDER DEPB IS EXACTLY THE SAME BUT IN FORM OF A CERTIFICA TE. SINCE THE FOREIGN TRADE AND DEVELOPMENT REGULATION ACT, 1992 HAS REPEALED THE IMPORTS AND EXPORTS (CONTROL) ACT 1947, AS PER THE PROVISIONS OF SECTION 8(1) OF ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 11 - GENERAL CLAUSES ACT ANY REFERENCE TO THE IMPORTS AN D EXPORTS (CONTROL) ACT, 1947 SHALL BE DEEMED TO BE A REFERENCE TO THE FOREIGN TR ADE AND DEVELOPMENT REGULATION ACT, 1992. ACCORDINGLY THOUGH AMENDMENT ARE NOT MAD E IN 1. T. ACT, IN SECTION 28(IIIA), REFERENCE TO THE IMPORTS AND EXPORTS (CON TROL) ACT, 1947 HAS TO BE READ AS REFERENCE TO THE FOREIGN TRADE AND DEVELOPMENT CONT ROL REGULATION ACT, 1992 AS PER THE PROVISIONS OF SECTION 8(1) OF GENERAL CLAUS E ACT. IN. VIEW OF PROVISIONS OF SECTION 8(1) OF GENERAL CLAUSES ACT, PREMIUM ON SAL E OF DEPB LICENCE, GRANTED TO THE EXPORTER UNDER NEW FOREIGN TRADE AND DEVELOPMEN T REGULATION ACT, WOULD STAND AT PAR WITH DUTY DRAWBACK. NOW, WE GIVE HEREIN BELOW OUR DETAIL SUBMISSION AS TO HOW THE NEW PROVISIONS ARE UNCONSTITUTIONAL AND ILLEGAL AND HOW IT DO NOT APPL Y TO THE FACT OF OUR CASE. AT THE OUTSET, WE SUBMIT THAT THE ABOVE AMENDMENT I S EX FACIE DISCRIMINATORY VIS-A-VIS THE EXPORTERS LIKE THE ASSESSES, COMPANY HAVING TUR NOVER, OF OVER RS.10 CRORES AND EXPORTERS WITH TURNOVER OF LESS THAN RS.10 CRORES. IT IS SUBMITTED THAT THE CLASSIFICATION SOUGHT TO BE INTRODUCED THROUGH THE IMPUGNED AMENDMENT IS NOT ONLY WITHOUT ANY REASONABLE BASIS AND IT TRIES TO CREATE NEW BURDEN ON THE VARIOUS EXPORTERS HAVING ANNUAL TURN OF OVER RS. 10 CRORES AND HAVING AVAILED OF DEPB SCHEME, BY DENYING THE DEDUCTION UNDER SECTION 80 H HC OTHERWISE AVAILABLE TO THEM. THE AFORESAID AMENDMENT ARE UNCONSTITUTIONAL AND ILLEGAL AS IT EX FACIE MAKING DISCRIMINATION BETWEEN THE EXPORTERS WITH TURNOVER OF RS.10 CRORE AND EXPORTERS WITH TURN OVER OF LESS THAN RS.10 CRORES AND ALSO BETWEE N EXPORTERS WHO HAVE CHOSEN TO AVAIL DUTY DRAWBACK INSTEAD OF DEPB SCHEME AND THAT TOO WITHOUT ANY REASONABLE OR ANY VALID BASIS AND WITH A LONG AND UNREASONABLE RE TROSPECTIVELY OF SEVEN YEARS. THE AMENDMENT NOT ONLY AFFECTS THE VESTED RIGHTS OF EXP ORTERS WITH ANNUAL TURN OF OVER RS. 10 CRORES AND WHO HAVE AVAILED OF DEPB SCHEME B Y IN EFFECT IMPOSES A LEVY FOR THE PAST PERIOD OF SEVEN YEARS WHEN IN FACT THERE WAS NO SUCH LEVY DURING THE SAID- PAST PERIOD INCLUDING THE YEAR UNDER CONSIDERATION. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, WE NOW S TATE THAT SECTION 80-HHC READ WITH SECTION 28 OF THE INCOME-TAX ACT, 1961 HAS BEE N AMENDED BY THE TAXATION LAWS (AMENDMENT) ACT, 2005 WHICH INTER-ALIA, PROVIDES TH AT PROFITS ON SALE OF DUTY ENTITLEMENT PASS-BOOK SCHEME (DEPB).CREDITS WILL BE TREATED AT PAR WITH DUTY DRAWBACK FOR THE PURPOSES OF PROPORTIONATE INCREASE OF PROFITS DERIVED FROM EXPORTS COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE ( C) OF SUB-SECTION (3) OF SECTION 80- HHC IN THE CASE OF AN EXPORTER HAVING EXPORT TURNOV ER EXCEEDING RS. 10 CRORES IF (A) HE HAD AN OPTION TO CHOOSE EITHER DUTY DRAWBACK OR DUTY ENTITLEMENT PASS BOOK SCHEME AND ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 12 - (B) THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER DUTY ENTITLEMENT PAS S BOOK SCHEME. NOW WE RESPECTFULLY SUBMIT THAT OUT OF ABOVE TWO CO NDITIONS PRESCRIBED, SO FAR AS THE FIRST CONDITION IS CONCERN, LIKE ALL OTHER EXPORTER S, IT IS SATISFIED IN OUR CASE ALSO. BEFORE FURNISHING DETAILS IN RESPECT OF SECOND COND ITION, WE REQUEST YOUR HONOUR TO TAKE A CLOSE LOOK AT THE LANGUAGE USED IN CLAUSE (B ) ABOVE. ON PERUSING THE SAID CLAUSE, YOUR HONOUR WILL APPRECIATE THAT IT REQUIRE S AN EXPORTER TO COMPARE THE COMPONENT OF DUTY DRAWBACK ATTRIBUTABLE IN RESPECT OF CUSTOM DUTY PAYABLE BY IT ON IMPORT PERMITTED TO AN EXPORTER WITH THE RATE OF CR EDIT ALLOWABLE UNDER DEPB. WE EXAMINED THE FACT OF OUR CASE IN ABOVE RESPECT AND OUR EXAMINATION REVEALS THAT THE RULES PERTAINING TO DUTY DRAWBACK APPLICABLE FOR TH E YEAR UNDER CONSIDERATION DID NOT PRESCRIBE ANY ALLOCATION TOWARDS CUSTOM DUTY IN CAS E OF MANUFACTURER OF COTTON FABRICS. THE APPLICABLE RULES OF DRAWBACK CREDIT A TTRIBUTES ENTIRE RATE TO THE CENTRAL EXCISE FOR THE YEAR UNDER CONSIDERATION. THUS IN OU R CASE SO FAR AS SECOND CONDITION IS CONCERN, THE COMPUTATION PROVISION FAILS AND THE REFORE AS PER THE SETTLED PROVISIONS OF THE LAW, THE ABOVE REFERRED AMENDMENT DO NOT APP LY TO THE FACT OF OUR CASE. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, YOUR H ONOUR WILL PLEASE NOTE THAT ABOVE PROVISIONS ARE INSERTED IN THE STAT UTE BOOK TO NEUTRALIZE EFFECT OF THE JUDGEMENT OF ITAT AS WELL AS DUE TO THE CONTENTION OF THE REVENUE THAT THE PREMIUM ON THE SALE OF DEPB LICENCE IS NOT AN EXPORT INCENT IVE. THIS INTERPRETATION IS BASED ON THE WORDING-OF SECTION 28(IIIA) OF THE ACT WHICH READS ASUNDER: 'PROFIT ON SALE OF LICENCE GRANTED UNDER THE IMPORT S (CONTROL) ORDER 1955 MADE UNDER THE .IMPORTS AND EXPORTS (CONTROL) ACT, 1947' . ACCORDING TO THE REVENUE, IN THE. PROVISO TO SECTIO N 80HHC(3) THE REFERENCE IS TO ABOVE SECTION 28(IIIA), AS SUCH, ANYTHING FALLING O UTSIDE THE SCOPE OF SECTION 28(IIIA) WILL NOT BE ELIGIBLE WHILE COMPUTING DEDUCTION UNDE R SECTION 80HHC. PROBABLY THE REVENUE HAS GOT CARRIED AWAY BY THE FACT THAT THE I MPORTS AND EXPORTS (CONTROL) ACT, 1947 HAS BEEN REPEALED AND AS SUCH PREMIUM ON THE S ALE OF DEPB LICENCE WHICH IS GRANTED UNDER, THE FOREIGN TRADE, AND DEVELOPMENT R EGULATION ACT, 1992 IS SOMETHING DIFFERENT, AND THE SAME IS NOT COVERED BY SECTION 28(IIIA). HOWEVER, THIS IS NOT A CORRECT VIEW. 1. GENERAL CLAUSES ACT AS PER PROVISIONS OF SECTION. 8(V) OF GENERAL CLAUS E ACT, WHENEVER AN SET IS REPEALED AND ANY NEW ACT IS ENACTED IN PLACE THEREOF, THE NA ME OF THE OLD ACT WOULD BE ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 13 - PRESUMED TO BE REPLACED BY THE NEW ACT. SINCE THE F OREIGN TRADE AND DEVELOPMENT REGULATION ANT, 1992 HAS REPEALED THE IMPORTS AND E XPORTS (CONTROL) ACT 1947, AS PER THE PROVISIONS OF SECTION 8(1) OF GENERAL CLAUS ES ACT ANY REFERENCE TO THE IMPORTS AND EXPORTS (CONTROL) ACT, 1947 SHALL BE DE EMED TO BE A REFERENCE TO THE FOREIGN TRADE AND DEVELOPMENT REGULATION ACT, 1992. ACCORDINGLY IN SECTION 28(IIIA), REFERENCE TO THE I MPORTS AND EXPORTS (CONTROL) ACT, 1947 HAS TO BE READ AS REFERENCE TO THE FOREIGN TRA DE AND DEVELOPMENT CONTROL REGULATION ACT, 1992. SINCE DEPB LICENCE IS GRANTED TO THE EXPORTER UNDER THIS NEW FOREIGN TRADE AND DEVELOPMENT REGULATION ACT, PREMI UM ON SALE OF SUCH LICENCE SHALL BE SQUARELY COVERED BY THE PROVISIONS OF SECT ION 28(IIIA). 2. DEPB REFUND OF DUTY PAID ON PURCHASES LIKE DUTY DRAWBACK FURTHER, DEPB IS A SUBSTITUTE OF DUTY DRAWBACK. AN EXPORTER IS ENTITLED TO GET REFUND OF THE DUTY PAID IN RESPECT OF THE PURCHASES MADE B Y HIM. UNDER THE SCHEME THERE IS AN OPTION EITHER TO CLAIM DUTY DRAWBACK OR DUTY EXE MPTION PASSBOOK. THE ONLY DIFFERENCE IN THESE TWO SCHEMES IS THAT IN DUTY DRA WBACK, THE REFUND IS MADE BY ISSUING A CHEQUE IN THE NAME OF THE CLAIMANT WHEREA S IN THE CASE OF DEPB IT IS BY WAY OF CREDIT IN THE PASSBOOK, NOT BY WAY OF CHEQUE . THIS CREDIT CAN BE UTILIZED AGAINST PAYMENT OF CUSTOMS DUTY, IF ANY, IN RESPEC T OF IMPORT OF ANY MATERIAL. ACCORDINGLY WHEREAS DUTY DRAWBACK IS A CASH-PAYMENT , DEPB IS A PAYMENT WHICH CAN BE ADJUSTED AGAINST LIABILITY TO PAY CUSTOMS DU TY. THIS CREDIT IS PRIMARILY, TO BE USED BY THE CLAIMANT ONLY. IT WAS BECAUSE OF THE P RACTICAL DIFFICULTIES BEING FACED BY EXPORTERS OF NOT GETTING IMMEDIATE CREDIT, THE GOVE RNMENT HAD INTRODUCED (HE SCHEME LATER ON, TO TRANSFER THIS CREDIT TO ANY OTHER PER SON WHO CAN CLAIM THIS CREDIT AGAINST THE LIABILITY OF THE CUSTOMS DUTY. DEPB IS NOT LIKE A LICENCE WHICH IS ORDINARILY SALEABLE IN THE MARKET. THE NATURE AND CHARACTER OF THE CREDIT OF THE AMOUNT IN THE PASSBOOK, NOWHERE ENTITLES ANY PARTICULAR ITEM OR GOODS AT ANY CONCESSIONAL RATE OR AT A SPECIFIC RATE. IN THIS CASE WHENEVER CREDIT HAS TO BE AVAILED, IMPORT DUTY ON THE IMPORTED GOODS IS COMPUTED IN AN ORDINARY MA NNER AND THEREAFTER INSTEAD OF MAKING PAYMENT OF THAT LIABILITY, THE CREDIT IN THE PASSBOOK CAN BE USED. IT IS JUST LIKE MONEY IN THE BANK ACCOUNT WITH THE GOVERNMENT TO BE USED AS AND. WHEN REQUIRED TO. THE BASIC OBJECTIVE OF COMING OUT WITH THE SCHEME B Y THE GOVERNMENT WAS TO HELP ITS OWN FUND FLOW BECAUSE THE GOVERNMENT WAS NOT REQUIR ED TO PAY THE MONEY IN CHEQUE. AS REGARDS THE TRANSFER OF DEPB, THERE IS A RESTRIC TION ON THE TRANSFER. AN EXPORTER CAN AVAIL OF THE DEPB IN HIS OWN NAME EVEN WHEN TH E EXPORT PROCEEDS HAVE NOT BEEN REALIZED. THE TRANSFER OF THE DEPB CREDIT CAN BE MADE BY THE EXPORTER ONLY WHEN THE PAYMENT OF EXPORT HAS BEEN REALIZED. THIS IS A VERY VITAL DIFFERENCE WHICH ENDORSES ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 14 - THE ABOVE ARGUMENT THAT IT IS A CREDIT TO THE EXPOR TER AND THE FACILITY OF TRANSFER IS ONLY AN ADDITIONAL ADVANTAGE GIVEN TO THE EXPORTER TO ALLOW THE CREDIT TO BE USED BY OTHER PERSON. ACCORDINGLY THE AMOUNT OF THE CREDIT IN DEPB IS THE REFUND OF THE DUTY WHICH HAS GONE INTO THE PURCHASE COST OF THE GOODS WHICH HAVE BEEN EXPORTED BY THE EXPORTER. IN VIEW OF THE ABOVE LEGAL POSITION AND THE FACTS, THE DEPB CREDIT SHALL SQUARELY FALL UNDER CLAUSE 28(III)(C) BECAUSE BOTH DUTY DRAWBACK AND DEPB ARE REFUND OF THE TAXES PAID ON THE PURCHASE OF GOODS. THIS VIEW ALSO GETS SUPPORTED BY CLAUSE 7.17 OF THE EXPORT AND IMPORT POLICY WHEREIN IT HAS BEEN SPECIFICALLY PROVIDED THAT THE EXPORT M ADE UNDER THE DEPB SCHEME SHALL NOT BE ENTITLED FOR DRAWBACK WHICH OTHER CONFIRMS T HAT DEPB AND DRAWBACK ARE SUBSTITUTES OF EACH OTHERS. ACCORDINGLY NO DISTINCT ION IS REQUIRED TO BE MADE IN DEPB AND DUTY DRAWBACK WHILE COMPUTING DEDUCTION UNDER S ECTION 80HHC. 3. ALL EXPORT INCENTIVES ARE ELIGIBLE FOR 80 HHC DEDUCTION - BOARD CLARIFICATION NO.FNO.133/137/97-TPL DATED 23 RD FEBRUARY, 1998 WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATI VE, THE THIRD CONTENTION IS THAT ALL EXPORT INCENTIVES ARE ELIGIBLE FOR DEDUCTION WHILE COMPUTING DEDUCTION UNDER SECTION. 80HHC. THE THREE CLAUSES MENTIONED IN SECTION 28(I II) COVER ALL INCENTIVES RELATING TO EXPORTS. IN SUPPORT OF THIS CONTENTION ATTENTION MAY BE INVITED TO THE CLARIFICATION ISSUED BY THE CBDT VIDE INSTRUCTION NO, F NO.133/13 7/97-TPL DATED 23 RD FEBRUARY, 1998, (GIVEN IN THE ANNEXURE) WHEREIN AN ISSUE HAS ARISEN ON THE PREMIUM RECEIVED FOR THE TRANSFER OF THE GARMENT EXPORT QUOTA. IT HA S BEEN CLARIFIED IN THIS INSTRUCTION BY THE CBDT THAT THE PREMIUM ON THE SALE OF EXPORT QUOTE STATUTORY RECEIVE THE SAME TREATMENT AS PROFIT ON SALE OF IMPORT-LICENCES, CAS H ASSISTANCE AND DUTY DRAWBACK. THE GARMENT EXPORT QUOTA IS ISSUED BY THE APPAREL E XPORT PROMOTION COUNCIL. ON THE BASIS OF THIS QUOTA THE EXPORTER CAN MAKE AN EXPORT ON HIS- OWN OR CAN TRANSFER THE QUOTA TO SOME OTHER EXPORTER. THE PREMIUM RECEIVED FOR TRANSFER OF THIS GARMENT QUOTA FROM OTHER EXPORTERS HAS BEEN CLARIFIED TO CO NSTITUTE EXPORT INCENTIVE AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC. THE CAS E OF THE DEPB FALLS IN A MUCH BETTER CATEGORY IN THAT THIS DEPB IS BEING RECEIVED AGAINST ACTUAL EXPORT AS REFUND OF THE DUTY PAID ON PURCHASES OF GOODS AND THAT TOO FR OM THE GOVERNMENT OF INDIA DIRECTLY AS AGAINST PREMIUM ON SATE OF GARMENT QUOT A RECEIVED FROM THE OTHER EXPORTERS. ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 15 - 4. FURTHER, IT IS SETTLED LAW THAT THE PROVIS ION FOR EXEMPTION OR RELIEF NEED TO BE CONSTRUED LIBERALLY IN FAVOUR OF THE ASSESSED ANY O THER INTERPRETATION WOULD MEAN DEPRIVING THE ASSESSES OF THE BENEFIT, WHICH THE LE GISLATURE DESIRED TO GIVE TO THE ASSESSES. IN VIEW OF ABOVE, YOUR HONOUR WILL PLEASE APPRECIAT E THAT THE PREMIUM ON SALE OF DEPB LICENCE IS SQUARELY COVERED UNDER THE PROVISIO NS OF SECTION 28(IIIA) AND THERE WAS NO NEED TO INSERT NEW PROVISIONS VIZ 28(IIID) & 28(IIIE) WHICH ARE NOT ONLY UNCONSTITUTIONAL BUT ALSO CREATE UNNECESSARY BURDEN AND HARDSHIP ON EXPORTERS HAVING TURNOVER OF RS.10 CRORE OR MORE. PRESUMING BUT NOT ACCEPTING AND WITHOUT PREJUDICE T O WHAT IS STATED ABOVE, WE ALSO RESPECTFULLY STATE THAT THE DEPB LICENCE IS GRANTED TO THE EXPORTER UNDER TRADE AND DEVELOPMENT REGULATION ACT. UNDER THE SCH EME AN EXPORTER IS ENTITLED TO GET REFUND OF THE DUTY PAID IN RESPECT OF THE PURCH ASES MADE BY HIM BY WAY OF LICENSE/CREDIT IN THE PASSBOOK. THIS LICENSE/CREDIT CAN BE UTILIZED BY THE EXPORTER AGAINST PAYMENT OF CUSTOM/IMPORT DUTY, IF ANY, IN R ESPECT OF IMPORT OF ANY MATERIAL OR HE IS NOT IN POSITION TO UTILISE THE SAID LICENSE/C REDIT, HE CAN TRANSFER THIS LICENSE/CREDIT AT A PREMIUM OR DISCOUNT TO ANY OTHER PERSON WHO CAN CLAIM THIS CREDIT AGAINST THE LIABILITY OF THE CUSTOMS DUTY. YOUR HONOUR WILL PLEASE APPRECIATE THAT THE LANGUAG E OF THE AMENDMENTS CLEARLY SUGGESTS THAT THE LEGISLATURE WANTS TO MAKE DISCRIM INATION BETWEEN SMALL AND BIG EXPORTERS. IT SEEKS, TO GRANT CONCESSION TO THE SMA LL EXPORTER BY ENTITLING THEM TO GET DEDUCTION ON THE AMOUNT OF PROFIT RECEIVED ON TRANS FER OF DEPB CREDIT HOWEVER, IT WANTED TO DENY THE BENEFIT/DEDUCTION TO THE BIG EXP ORTERS ON THE AMOUNT PREMIUM I.E. PROFIT RECEIVED BY THEM ON TRANSFER/SALE OF SUCH DEPB LIC ENSES. THE PERUSAL OF ABOVE AMENDMENT DEARLY REVEALS THAT WHAT IS SOUGHT TO BE COVERED IS ONLY THE 'PROFIT ' ARISING FROM THE TRANSFER OF DEPB AND IT SHOULD N OT APPLY IN RESPECT OF THE REIMBURSEMENT OF DUTY COMPONENT IN THE DEPB SCHEME. YOUR GOOD SELVES WILL PLEASE APPRECIATE THAT THE ASSESSES COMPANY HAD REA LISED NET PROFIT OF RS.72,86,165/- ON TRANSFER OF DEPB. SO, AS PER THE AMENDED PROVISI ONS, WE HAVE REVISED OUR COMPUTATION OF DEDUCTION UNDER SECTION 80HHC BY TAK ING IT AS EXPORT INCENTIVE, UNDER SECTION 28(IIID) OF THE ACT. PLEASE ALSO NOTE THAT WHILE REVISING THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE I. T. ACT, THE VALUE OF DEPB ALLOWABLE HAS BEEN CONSIDERED AS BUSINESS PROFIT. THE REVISED CO MPUTATION TAKING INTO ACCOUNT ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 16 - ABOVE ADJUSTMENTS, WORK OUT THE DEDUCTION UNDER SEC TION 80HHC OF THE I. T. ACT RS.55,54,78,522/-. NOW, IN RESPECT OF ABOVE REVISED COMPUTATION, IF YO UR HONOUR IS OF THE VIEW THAT THE AMOUNT OF DEPB IS NOT OUR BUSINESS INCOME THEN WE R EQUEST YOU TO KINDLY CONSIDER THE 1 VALUE OF DEPB AS CAPITAL RECEIPT AS PER THE VIEW T AKEN BY THE JUDICIARY ON THE ISSUE. IN VIEW OF ABOVE FACTUAL POSITION, ACCORDING TO US NO ADJUSTMENT THAT REVISES THE AMOUNT OF DEDUCTION IS REQUIRED TO BE MADE TO THE C OMPUTATION FURNISHED BY THE ASSESSES COMPANY BY ADOPTING BOOK PROFIT AS BUSINES S INCOME VIDE ITS LETTER DATED 30.3.2005 FURNISHED ALONGWITH REVISE RETURN OF INCO ME. HOWEVER, IF OUR ABOVE SUBMISSION IS NOT ACCEPTABLE TO YOUR HONOUR THAN KI NDLY CONSIDER OUR REVISE CLAIMS AND EITHER INCREASE THE DEDUCTION UNDER SECTION 80H HC OR CALCULATE DEDUCTION BY TREATING VALUE OF DEPB AS CAPITAL RECEIPT AND THE N ET PROFIT ON TRANSFER OF DEPB AS EXPORT INCENTIVE UNDER SECTION 28(IIID) OF THE I. T . ACT. THE CLAIM OF DEDUCTION UNDER SECTION 80HHC WAS EXAM INED IN THE CONTEXT OF AMENDMENTS MADE BY TAXATION LAWS SECOND AMENDMENT A CT, 2005 AND WITH RESPECT TO VARIOUS ARGUMENTS SIMILAR TO ARGUMENTS PUT FORWA RDED BY THE ASSESSEE COMPANY IN ASSESSMENT YEAR 2003-04. AS FAR AS THE ARGUMENT OF THE ASSESSEE COMPANY CONCERNING THAT THE PROVISIONS ARE UNCONSTITUTIONAL AND ILLEGA L, NON APPLICATION OF AMENDMENT TO SECTION 80HHC IN VIEW OF FAILURE OF MACHINERY PROVI SIONS TO THE FACT OF ASSESSEE'S CASE, DEPB CREDIT FALL UNDER CLAUSE 28(III)(A) AND RECEIPT ARE IN THE NATURE OF CAPITAL RECEIPT ARE NOT AT ALL ACCEPTABLE AND HENCE REJECTE D. SIMILARLY, THE ARGUMENT OF THE ASSESSEE COMPANY THAT THE LEGISLATURE THROUGH ABOVE AMENDMENT WANT TO TAX THE PROFIT ON TRANSFER OF DEPB AND NOT THE VALUE OF DEP B AND WHILE COMPUTING DEDUCTION, THE VALUE OF DEPB IS TO BE CONSIDERED AS BUSINESS PROFIT ALSO DO NOT FIND MERIT AND ACCORDINGLY REJECTED. THUS FOR MAT COMPUTATION UNDER SECTION 115JB, SECTI ON 80HHC RELIEF QUANTUM IS ALLOWED BASED ON BOOK PROFIT OF THE ASSESSEE COMPAN Y BUT IT IS RE-WORKED IN VIEW OF NON-ACCEPTANCE THE CLAIM OF THE ASSESSEE COMPANY RE FERRED IN PARA 5.2 AND REJECTION OF CLAIM REFERRED IN PARA 5.3. IT IS ALSO NOTICED T HAT WHILE COMPUTING THE BOOK PROFIT, THE ASSESSEE COMPANY CONSIDERED THE PROFIT OF RS.10 1,28,42,940/- BEING PROFIT BEFORE TAX AS SHOWN IN THE PROFIT AND LOSS ACCOUNT (I.E. N ET PROFIT AFTER TAX PLUS DEFERRED TAX EXPENDITURE), HOWEVER, WHILE WORKING OUT DEDUCTION UNDER SECTION 80HHC, THE ASSESSES COMPANY ADOPTED FIGURE OF BOOK PROFIT AFTE R TAX I.E. RS.96,73,42,940/- (PROFIT BEFORE TAX OF RS.101,28,42,940 MINUS DEFERRED TAX P ROVISION OF RS.4,55,00,000/-. ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 17 - HENCE THE MISTAKE COMMITTED BY THE ASSESSEE COMPAN Y IN ADOPTING FIGURE OF RS.96,73,42,-940/- IS CORRECTED AND THE DEDUCTION I S WORKED OUT BY TAKING CORRECT PROFIT OF RS.101,28,42,940/-. 6. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEED INGS, THE ASSESSEE VIDE LETTER DATED 23/05/2005 REVISED THE STATEMENT OF COMPUTATION OF DEDUCTION U/S.80HHC OF THE ACT IS ENCLOSED AT PAGE NO.49 OF THE PAPER- BOOK. THEREFORE, ALL THE DETAILS WERE BEFORE THE AO. THE AO HAS APPLIED HIS MIND ON THE MATERIAL AVAILABLE BEFORE H IM. IT IS NOW SETTLED POSITION OF LAW THAT THE ASSESSMENT CANNOT BE REOPE NED MERELY ON THE BASIS OF CHANGE OF OPINION. WE FIND FORCE IN THE C ONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE AO HAD ALLOWED THE CLAIM OF DEDUCTION U/S.80HHC OF THE ACT ON THE BOOK PROFIT A ND ALSO CONSIDERED THE CLAIM OF DEDUCTION U/S.80HHC OF THE ACT BEFORE SETTING OFF OF LOWER OF UNABSORBED LOSS OR DEPRECIATION FOR THE PURPOSE OF DETERMINING THE BOOK PROFIT. THE RELIANCE IS PLACED ON THE JUDGEME NT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. BHANJI L AVAJI REPORTED AT (1971)79 ITR 582(SC) IN SUPPORT OF THE CONTENTION T HAT THE INITIATION OF RE-ASSESSMENT PROCEEDINGS WAS NOT VALID SINCE THE R EOPENING OF ASSESSMENT WAS BASED MERELY ON A CHANGE OF OPINION ABOUT ADMISSIBILITY OF CLAIM OF ALLOWANCE. RELIANCE IS ALSO PLACED ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF HYNOUP FOOD & OIL INDUSTRIES LTD. VS. ASSTT.CIT REPORTED AT (2008) 21 9 CTR 124(GUJ.). FURTHER RELIED ON THE JUDGEMENT OF HONBLE APEX COU RT RENDERED IN THE ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 18 - CASE OF CIT VS. KELVINATOR REPORTED AT 187 TAXMAN 3 12 (SC). THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VISHWANAT H ENGINEERS VS. ACIT REPORTED AT (2012) 21 TAXMANN.COM 5 (GUJ.) HAS HELD AS UNDER:- 17. THEREFORE, IF FROM THE SELFSAME MATERIALS, THE ASSE SSING OFFICER FORMS A SECOND OPINION AND REOPENS-THE ASSESSMENT MERELY ON THE GR OUND THAT ON-SECOND THOUGHT, A DIFFERENT VIEW IS POSSIBLE, SUCH FACT DOES NOT AUTH ORIZE HIM TO REOPEN THE ASSESSMENT WITHIN THE PURVIEW OF SECTION 147/148 OF THE ACT. I N THIS CONNECTION, WE MAY PROFITABLY REFER TO THE FOLLOWING OBSERVATIONS MADE BY THE SUPREME COURT IN THE CASE OF CIT V. KELVIRATOR OF INDIA LID. [2010] 320 1TR 5 61 :: 187 TAXMAN 312. WHERE THE COURT MADE THE FOLLOWING OBSERVATION ON THE SCOPE O F SECTION 147 OF THE ACT: '5. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MAD E TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO THE DIRECT TAX LAWS (AM ENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER THE ABOVE TWO CONDITI ONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT (WIT H EFFECT FROM 1-4-1989), THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS R EMAINED VIZ. THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT IN COME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REOPEN THE ASSE SSMENT. THEREFORE, POST--1- 4-1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BE LIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. 6. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERE NCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFIC ER HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITION AND IF THE CONCEPT OF 'CHAN GE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. 7. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION ' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENC E, AFTER 1-4-1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THE RE IS 'TANGIBLE MATERIAL' TO ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 19 - COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RE CEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'R EASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SAID EXPRESSION AND DEL ETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS I N THE ASSESSING OFFICER. 8. WE QUOTE HEREINBELOW THE RELEVANT PORTION OF CIR CULAR NO. 549 DATED 31- 10-1989, WHICH READS AS FOLLOWS: '7.2. AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION 'REASON TO BELIEVE' IN SECTION 147.A NU MBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS 'RE ASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBSTITUTION BY THE 'OPINION' OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, 'REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITR ARY POWERS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON MER E CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989, HAS AGAI N AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION 'HAS REASON TO BELIEVE' IN THE PLACE OF THE WORDS 'FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION'. OTHER PROVISIONS OF TH E NEW SECTION 147, HOWEVER, REMAIN THE SAME.' (EMPHASIS SUPPLIED) 9. FOR THE AFORESTATED REASONS, WE SEE NO MERIT IN THESE CIVIL APPEALS FILED BY THE DEPARTMENT, HENCE, DISMISSED WITH NO ORDER AS T O COSTS.' (EMPHASIS SUPPLIED). 18. AFTER APPLYING THE AFORESAID PRINCIPLE TO THE F ACTS OF THE PRESENT CASE, WE ARE CONVINCED THAT THIS IS A CASE WHERE THE ASSESSING O FFICER HAS REOPENED THE PROCEEDING MERELY ON THE GROUND THAT FROM THE MATER IAL AVAILABLE, THE VIEW EARLIER ADOPTED BY HIM WAS ERRONEOUS ONE. THUS, SUCH FACT C ANNOT BE A GROUND FOR REASSESSMENT. ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 20 - 6.1. IN VIEW OF THE BINDING PRECEDENT, WE ARE OF TH E CONSIDERED VIEW THAT IT IS NOT THE CASE WHERE THE MATERIAL WAS NOT AVAILABLE WITH THE AO AND AO HAS NOT APPLIED HIS MIND IN THE CASE UNDER A PPEAL. THEREFORE, WE HOLD THAT THE REOPENING OF THE ASSESSMENT IS MADE O N THE BASIS OF CHANGE OF OPINION ONLY AS THE LD.COUNSEL FOR THE ASSESSEE HAS DEMONSTRATED FROM THE RECORDS THAT ALL INFORMATION/DETAILS WERE AVAIL ABLE WITH THE AO AND THE AO HAS APPLIED HIS MIND ON THE ALLOWABILITY OF DEDUCTION U/S.80HHC AND COMPUTATION OF BOOK PROFIT. THEREFORE, ORDER UNDER APPEAL IS SET ASIDE AND ASSESSMENT FRAMED U/S.143(3) READ WITH SE CTION 147 IS QUASHED BEING INVALID. 7. SINCE WE HAVE DECIDED THE REOPENING OF THE ASSES SMENT AS INVALID AND QUASHED THE ASSESSMENT, THEREFORE THE OTHER GRO UNDS ARE NOT ADJUDICATED. AS A RESULT, THE APPEAL OF THE ASSESSE E IS ALLOWED. 8. NOW, WE TAKE UP THE REVENUES APPEAL IN ITA NO.2 69/AHD/2011 FOR AY 2004-05. THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DIR ECTING THE A.O. TO CONSIDER UNABSORBED DEPRECIATION AND BUSINESS LOSSE S TOGETHER FOR ALL THE YEARS FOR THE PURPOSE OF CALCULATION OF BOOK PROFIT U/S.115JB INSTEAD OF YEAR WISE UNABSORBED DEPRECIAT ION OR BUSINESS LOSS, WHICHEVER IS LESS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER TO THE EXTENT ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 21 - MENTIONED ABOVE, SINCE THE ASSESSEE HAS FAILED TO D ISCLOSE HIS TRUE INCOME. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPE LLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 8.1. THE RESPECTIVE REPRESENTATIVE OF THE PARTIES A RE HEARD AT LENGTH. SINCE WE HAVE ANNULLED THE ASSESSMENT ORDER IN ASSE SSEES APPEAL, THE REVENUES APPEAL IS DISMISSED. THEREFORE, THE GROU NDS RAISED IN THE REVENUES APPEAL ARE DISMISSED AND THE APPEAL OF T HE REVENUE IS DISMISSED. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED, WHE REAS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 23 RD DAY OF JULY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 23/ 07 /2015 5...+, .+../ T.C. NAIR, SR. PS ITA NO.673/AHD/2011(BY ASSESSEE) AND ITA NO.269/AHD/2011 (BY REVENUE) ARVIND MILLS LTD. VS. DCIT ASST.YEAR 2004-05 - 22 - !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 678 9 / CONCERNED CIT 4. 9 ( ) / THE CIT(A)-6, AHMEDABAD 5. :; )+78 , . 782 , 6 / DR, ITAT, AHMEDABAD 6. ;< =, / GUARD FILE. / BY ORDER, *: ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 7/16.7.15 (DICTATION-PAD 6+12PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..7.7.15/17.7.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23.7.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.7.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER