M/S. SAGAR OVERSEAS, MUMBAI V. THE ITO 14(3)(2),

ITA 6835/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9376 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 21-11-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 12-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ISHWAR RATHI
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI P.M. JAGTAP (A.M.) ITA NO. 6835/MUM /2007 ASSESSMENT YEAR : 2000-01 M/S SAGAR OVERSEAS, C/O DIVYESH SHETH, 518, MASTERMIND -1, ROYAL PALMS, AAREY COLONY, GOREGAON (EAST), MUMBAI 400 065. PAN AAAFS4517J VS. THE INCOME TAX OFFICER, WARD 14(3)(2), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 21. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI ISHWAR RATHI DEPARTMENT BY : SHRI DINESH KUMAR DATE OF HEARING 21-11-2012 DATE OF PRONOUNCEMENT 21-11-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 9-8-2007 PASSED BY THE LD. CIT(A) XV, MUMBAI FOR THE A.Y. 2000-01. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A REGISTERED FIRM ENGAGED IN THE BUSINESS OF EXPORT OF FABRIC AN D CLOTH. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS, INTER ALIA, OBSERVED BY THE A.O. THAT THE ASSESSEE HAS CLAIMED DEDUCTION AMOUNTING T O RS. 65,95,048/- U/S 80HHC OF THE INCOME TAX ACT, 1961 (THE ACT). H E FURTHER OBSERVED ITA NO. 6835/MUM/2007 2 THAT THE TURNOVER OF THE ASSESSEE FOR THE YEAR WAS RS. 12,76,68,270/- WHEREAS THE DEPB CREDITED WAS RS. 1,27,79,179/-. A CCORDING TO THE A.O., IN VIEW OF THE RETROSPECTIVE EFFECT OF TAXATI ON LAWS AMENDMENT ACT, 2005 DTD. 28-12-2005, PROFIT ON SALE OF DEPB IS TAX ABLE WHERE THE TURNOVER OF THE ASSESSEE IS IN EXCESS OF RS. 10 CRO RES. HE FURTHER OBSERVED THAT THE DEDUCTION U/S 80HHC OF THE ACT ON DEPB IS ALLOWABLE ONLY ON PROFIT ON TRANSFER OF DEPB CREDIT RECEIVED. IN OTHER WORDS THE DEDUCTION U/S 80HHC IS ALLOWABLE ONLY AS AND WHEN T HE ASSESSEE SELLS THE DEPB PREMIUM RECEIVED AND A DEFINITE AMOUNT OF TRANSFER PROFIT IS DETERMINED TO BE RECEIVABLE. HE FURTHER OBSERVED T HAT SINCE THE ASSESSEE HAS SHOWN THE DEPB RECEIVABLE RS. 20,84,905/- NOTWI THSTANDING THE ISSUE OF NEGATIVE PROFITS AND THE ISSUE OF NON-ELIG IBILITY OF DEDUCTION ON ACCOUNT OF TURNOVER IN EXCESS OF RS. 10 CRORES, HEL D THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80HHC OF THE ACT WIT H RESPECT TO THE DEPB RECEIVABLE RS. 20,84,905/- AND ACCORDINGLY COMPLETE D THE ASSESSMENT AT AN INCOME OF RS. 65,97,550/- WITHOUT ALLOWING THE D EDUCTION U/S 80HHC VIDE ORDER DTD. 30-11-2006 PASSED U/S 143(3) R.W.S. 147 OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE UPHOLDING THE VIEWS OF THE A.O., UPHELD THE ORDER PASSED BY THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUND OF APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) XV, MUMBAI ERRED IN CONFIRMING THE ADDITIONS MADE OF ITA NO. 6835/MUM/2007 3 RS. 65,97,550/- BY THE A.O. ON DISALLOWING DEDUCTIO N U/S 80HHC OF THE INCOME TAX ACT, 1961 CLAIMED BY THE APPELLANT FIRM ON THE DEPB AMOUNT OF RS. 1,28,34,693/- CREDITED AS ANY PROFIT S DEFINED IN SECTION 28(IID) OF THE ACT IN ITS PROFIT AND LOSS ACCOUNT. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN TOPMAN EXPORTS VS. CIT (2012) 342 ITR 49 (SC), THE ISSUE M AY BE SET ASIDE TO THE FILE OF THE A.O. 5. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND THE LD. CIT(A) SUBMITS THAT HE HAS NO OBJE CTION IF THE MATTER IS SEND BACK TO THE FILE OF THE A.O. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND MERIT IN THE PLEA OF THE PARTIES. WE ARE OF THE OPINION THAT THE ISSUE I NVOLVED IN THE PRESENT CASE IS NO MORE RES INTEGRA AND IS COVERED BY THE R ECENT DECISION OF THE HONBLE APEX COURT IN THE CASE OF TOPMAN EXPORTS (S UPRA) WHEREIN IT HAS BEEN HELD THAT NOT THE ENTIRE AMOUNT RECEIVED BY TH E ASSESSEE ON SALE OF DEPB, BUT THE SALE VALUE LESS THE FACE VALUE OF THE DEPB WILL REPRESENT PROFIT ON TRANSFER OF DEPB BY THE ASSESSEE. RESPECT FULLY FOLLOWING THE ABOVE AUTHORITATIVE PRONOUNCEMENT OF THE HONBLE SU PREME COURT, WE DIRECT THE AO TO RECOMPUTE THE DEDUCTION U/S 80HHC IN ACCORDANCE WITH THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT AF TER PROVIDING ITA NO. 6835/MUM/2007 4 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR S TATISTICAL PURPOSE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 21-11-2012. SD/- (P.M. JAGTAP ) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 21-11-2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XII, MUMB AI 4. COMMISSIONER OF INCOME TAX XII, MUMBAI. 5. DEPARTMENTAL REPRESENTATIVE, BENCH K, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI