The DCIT, Circle 1, JUNAGADH V. M/s R K Ice & Cold Storage, Mangrol

ITA 70/RJT/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62796 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-04-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 04-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA
• Keywords: Opportunity of being heard
• Section: 28; 80HHC

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. S RIVASTAVA, AM. ITA NO.70/RJT/2011. / ASSESSMENT YEAR:-2000-01. / V/S. THE D C.I. T., CIRCLE-1,JUNAGADH, ( +/ APPELLANT) M/S.R. K. ICE & COLD STORAGE, BARA ROAD, MANGROL. PAN: AACFR4738A ,-+/ RESPONDENT . / REVENUE BY SHRI M. K. SINGH, D. R. 0. / ASSESSEE BY SHRI J. C. RANPURA, C.A. . / DATE OF HEARING 16-04-2012 . / DATE OF PRONOUNCEMENT 20 - 04-2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 24-12-2010 OF CI T (A)-XXI, AHMEDABAD DELETING THE ADDITION OF RS.16,71,785/- MADE BY AO BY DISALLOWING THE ASSESSEES CLAIM 80HHC AMOUNTING TO RS.36,06,165/- FOR THE ASSESSMENT YEAR 2000-01. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A FIRM. FOR THE ASSESSMENT UNDER APPEAL, IT FILED THE RETURN OF INC OME ON 22-01-2001 DECLARING INCOME OF RS. NIL AFTER CLAIMING DEDUCTION U/S.80HH C AMOUNTING TO RS.55,22,054/-. THE AO FRAMED THE ASSESSMENT U/S.14 3(3) ON 03-03-2006 ITA NO 70/RJT/2011. 2 WHEREIN, HE HELD THAT ASSESSEE IS NOT ENTITLED TO D EDUCTION U/S.80HHC ON DEPB LICENSE SALE AND DISALLOWED THE SAID DEDUCTION TO T HE EXTENT OF RS.16,71,785/-. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) DE LETED THE SAID DISALLOWANCE. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING BEFORE US, BOTH SIDES CON CEDED THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TO PMAN EXPORTS VS. CIT REPORTED IN 67 DTR (SC) 185, THE ORDER OF LD. CIT(A ) BE SET-ASIDE AND CONTROVERSY INVOLVED IN THIS APPEAL REGARDING ALLOW ANCE OF DEDUCTION U/S.80HHC BE RESTORED TO THE FILE OF AO FOR RECOMPUTING THE S AME AFRESH. 4. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTH ORITIES BELOW. THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS HAS HELD AS UNDER:- (I) FACE VALUE OF DEPB TAXABLE UNDER SECTION 28(II IB) IN THE YEAR IN WHICH ASSESSEE APPLIED FOR DEPB CREDIT AGAINST EXPO RTS WHILE THE EXCESS OF SALES PROCEEDS OF DEPB OVER ITS FACE VALUE IS TA XABLE UNDER SECTION 28(IIID) IN THE YEAR OF TRANSFER. (II) DEPB IN CASH ASSISTANCE RECEIVABLE BY ANY PE RSON AGAINST EXPORTS UNDER THE SCHEME OF GOVERNMENT OF INDIA AND IS TAXABLE UNDER CLAUSE (IIIB) OF SECTION 28 UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION EVEN BEFORE IT IS TRANSFERRED BY THE AS SESSEE; FACE VALUE OF DEPB IS TAXABLE UNDER SECTION 28(IIIB) IN THE YEAR IN WHICH ASSESSEE APPLIED FOR DEPB CREDIT AGAINST EXPORTS. (III) PROFIT ON THE TRANSFER OF THE DUTY ENTITLEME NT PASS BOOK SCHEME IS THE EXCESS OF SALES PROCEEDS OF DEPB OVER ITS FACE VALUE AND IS TAXABLE UNDER SECTION 28(IIID) IN THE YEAR OF TRANSFER. (IV) THE COST OF ACQUIRING DEPB IS NOT NIL AS THE PERSON ACQUIRES IT BY PAYING CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EX PORT PRODUCT AND THE FACE VALUE OF DEPB REPRESENTS ITS COST. (V) FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SE CTION 80HHC, 90% OF THE DEPB WHICH IS CASH ASSISTANCE AND COVE RED BY SECTION 28(IIIB) SHALL BE EXCLUDED FROM PROFITS OF THE BUS INESS OF THE ASSESSEE IF THE DEPB HAS ACCRUED TO THE ASSESSEE DURING THE PRE VIOUS YEAR, IF DURING THE SAME PREVIOUS YEAR, THE ASSESSEE TRANSFERS THE DEPB AND ITS SALES PROCEEDS EXCEEDS ITS FACE VALUE, 90% OF THE DIFFERE NCE BETWEEN SALES PROCEEDS AND FACE VALUE WILL GET EXCLUDED FROM THE PROFITS OF THE BUSINESS. ITA NO 70/RJT/2011. 3 (VI) IF DEPB ACCRUES TO ASSESSEE IN THE FIRST PREVI OUS YEAR AND IS TRANSFERRED IN THE SECOND YEAR AT A PRICE EXCEEDING ITS FACE VALUE, 90% OF THE DIFFERENCE BETWEEN SALES PROCEEDS AND FACE VALU E AND NOT 90 OF THE ENTIRE SALES PROCEEDS WILL GET EXCLUDED FROM PROFI TS OF THE BUSINESS IN THE SECOND PREVIOUS YEAR AND THE ASSESSEE GETS HIGHER D EDUCTION UNDER SECTION 80HHC AS BIGGER FIGURE OF PROFITS OF THE B USINESS BECOMES THE MULTIPLIER IN THE FORMULA UNDER SECTION 80HHC(3)(A) FOR ARRIVING AT THE FIGURE OF PROFIT DERIVED FROM EXPORTS. 5. WE THEREFORE, SET-ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO RE-COMPUTE THE DEDUCTION U/S.80HHC OF THE I.T . ACT AFRESH IN THE LIGHT OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TO PMAN EXPORTS(SUPRA) AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, FOR THE STATISTICAL PURPOSES, THE APPEAL OF REVENUE IS TREATED AS ALLOWED. . 5 20/04/2012 7 . THIS ORDER PRONOUNCED IN OPEN COURT ON 20/04/2012. SD/- SD/- ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 5/ ORDER DATE 20/04/2012. /RAJKOT . .. . ,9 ,9 ,9 ,9 :9 :9 :9 :9 / COPY OF ORDER FORWARDED TO:- 1. + / APPELLANT-THE D.C.I.T., CIRCLE-1, JUNAGADH. 2. ,-+ / RESPONDENT-M/S. R.K. ICE & COLD STORAGE, MANGROL . 3. > / CONCERNED CIT-III, RAJKOT 4. >- / CIT (A)-XXI, AHMEDABAD. 5. 9 ,, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.