M/S. B.S. EXPORTS, MUMBAI V. THE JCIT RG 20(1), MUMBAI

ITA 6923/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9293 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 07-01-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 19-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 80HHC; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI. BEFORE SHRI SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMB ER AND SHRI V.D. RAO, JUDICIAL MEMBER. I.T.A. NO. 69 23/MUM/2007 ASSESSMENT YEAR : 2004-05. M/S B.S. EXPORTS, JT. COMMISSIONER OF SHRI LAXMI INDL. ESTATE, VS. INCOME TAX, RANGE-20(1), UNIT NO. 34/135, NEW LINK ROAD, MUMBAI. ANDHERI (WEST), MUMBAI 400 053. PAN :AADFB4485H APPELLANT RESPONDENT I.T.A. NO. 6797/MUM/2007 ASSESSMENT YEAR : 2004-05. ASSTT. COMMISSIONER OF M/S B.S. EXPORTS, INCOME TAX-20(1), VS. MUMBAI. MUMBAI. ASSESSEE B Y : NONE. DEPARTMENT BY : SMT. APARNA AG ARWAL. O R D E R PER J. SUDHAKAR REDDY, A.M. THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDE R OF THE CIT(APPEALS)-XX, MUMBAI DATED 6-8-2007 FOR THE ASSE SSMENT YEAR 2004-05. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUAL OF NOTICE. THERE IS NO REQUEST FOR ADJOURNMENT EITHER. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T THE APPEAL SHOULD BE 2 DISPOSED OF EXPARTE ON MERITS QUA THE ASSESSEE, AFT ER HEARING THE LEARNED DR. 3. WE HAVE HEARD THE LEARNED DR, SMT. APARNA AGARW AL, ON BEHALF OF THE REVENUE. 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. 5. THE ASSESSEE IS AN EXPORTER IN TEXTILE GOODS OF ALL DESCRIPTIONS. THE ISSUES THAT ARISE IN THIS APPEAL PERTAIN TO COMPUTATION OF RELIEF U/S 80HHC, ADHOC DISALLOWANCE OF MOTOR CAR E XPENSES AND TELEPHONE EXPENSES. 6. WE FIRST TAKE UP THE ISSUE OF COMPUTATION OF RE LIEF U/S 80HHC WITH REFERENCE TO EXCISE DUTY REFUND AND INTE REST INCOME. THE INTEREST INCOME IN QUESTION IS RS.64,382/- AND EXCI SE DUTY REFUND IS RS.34,16,110/-. AS FAR THE INTEREST INCOME IS CONC ERNED, THE ASSESSEE HAS NOT SUBMITTED ANY PROOF, TO ENABLE THIS INCOME TO B E TREATED AS INCOME FROM BUSINESS. THE FINDING OF THE AO IS THAT THE IN TEREST INCOME IS FROM FIXED DEPOSITS WHICH ARE MADE OUT OF SURPLUS MONEY OF THE ASSESSEE. ON THESE FACTS, WE UPHOLD THE FINDING OF THE REVENUE A UTHORITIES THAT THE INCOME IN QUESTION IS ASSESSABLE UNDER THE HEAD O THER SOURCES AND NO DEDUCTION NEED BE GRANTED U/S 80HHC. 7. COMING TO EXCISE DUTY REFUND, THE UNDISPUTED FA CT IS THAT THE ASSESSEE PAYS EXCISE DUTY ON THE GOODS AND AS AND WHEN THE GOODS ARE EXPORTED, THE EXCISE DUTY SO PAID IS REFUNDED. WHEN EXCISE DUTY IS PAID, ITS EXPENDITURE OF THE ASSESSEE IS ALLOWABLE U/S 37 (1). WHEN SUCH EXCISE 3 DUTY IS REFUNDED, IT GOES TO REDUCE THE EXPENDITURE EARLIER CLAIMED AND THUS GOES TO INCREASE THE INCOME FROM BUSINESS. HEN CE IN OUR HUMBLE OPINION, IT WAS WRONG ON THE PART OF THE ASSESSING AUTHORITY TO TREAT THE EXCISE DUTY REFUND AS INCOME FROM OTHER SOURCES. WE FIND THAT THE K- BENCH OF THE TRIBUNAL IN ITA NO. 7583/M/2007 IN TH E CASE OF SHRI RAVI SANGHAI VS. DCIT ORDER DATED 24 TH NOV., 2009. AT PARA 4 AND 5 HELD AS FOLLOWS : 4. GROUND NO. 4 AND 5 RELATE TO THE ALLOWABILITY O F DEDUCTION U/S 80HHC ON EXCISE DUTY REFUND. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR HEARING BEFORE US IN THE CASE OF M/S SUPER TRADING CO. IN I TA NOS. 4249 & 4250/MUM/2006. WE HAVE PASSED A DETAILED ORDER DA TED 17 TH NOVEMBER, 2009 IN THAT CASE BY HOLDING THAT THE EXC ISE DUTY REFUND WILL NOT BE REDUCED FROM THE COST OF GOODS BUT WILL BE CONSIDERED AS INCOME FALLING U/S. 28(IIIB). IN THE ABSENCE OF ANY DISTINGUISHING FEATURE HAVING BROUGHT TO OUR NOTICE, WE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE MATTER TO THE F ILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RECOMPUTE THE DEDUCTION U/S 80HHC BY CONSIDERING THE AMOUNT OF EXCISE DUTY REFU ND AS FALLING U/S 28(IIIB). RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR CONSIDERING THE ISSUE AFRESH IN VIEW OF THE DIRECTIONS GIVEN IN THE AFORESAID CASE. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. COMING TO THE DISALLOWANCE OF MOTOR CAR EXPENSE S AND TELEPHONE EXPENSES, ON ADHOC BASIS, WE HOLD THAT IT CANNOT BE SAID THAT THERE IS NO ELEMENT OF PERSONAL EXPENDITURE IN THES E ITEMS. THE DISALLOWANCE IS REASONABLE AND WE UPHOLD THE SAME. 9. THE OTHER GROUNDS OF APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE. 4 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED IN PART. 11. COMING TO THE REVENUES APPEAL, THE SOLE ISSUE IS ON THE COMPUTATION OF RELIEF U/S 80HHC IN RESPECT OF EXCIS E DUTY REFUND. IN VIEW OF OUR DECISION IN THE ASSESSEES CASE, WE DISMISS THESE GROUNDS OF THE REVENUE. 12. IN THE RESULT, THE REVENUES APPEAL IS DISMISS ED. ORDER PRONOUNCED ON THIS 13 TH DAY OF JANUARY, 2010. SD/- SD/- (V.D. RAO) (J. SUDHAKARY REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 13 TH JANUARY, 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, I-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES