Nava Bharat Ventures Limited, Hyderabad V. ACIT, Circle-16(1), Hyderabad

ITA 732/HYD/2013

• Counselvise Citation: 73222514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P MOHAN REDDY
• Assessee Lawyers: V SIVA KUMAR
• Section: 147; 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.732/HYD/13 (ASSESSMENT YEAR 2003 - 04) M/S. NAVA BHARAT VENTURES LIMITED, HYDERABAD ( PAN - AAACN 7327 C ) V/S. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 16(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI V.SIVA KUMAR RESPONDENT BY : SHRI P.MOHAN REDDY DR DATE OF HEARING 25 .0 8 .2014 DATE OF PRONOUNCEMENT 27.08.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX IV, HYDERABAD DATED 28.3.2013 PASSED UNDER S.263 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2003 - 04 , WHEREBY HE REVISED THE ORDER PASSED BY THE ASSESSING OFFICER UNDER S.143(3) READ WITH S.147 DATED 28.7.2010, BY DIRECTING THE ASSESSING OFFICER TO RESTRICT THE CLAI M OF THE ASSESSEE FOR DEDUCTION UNDER S.80HHC TO RS.1,12,66,533 IN PLACE OF RS.2,46,76,977. 2. THE ASSESSEE IN TH E PRESENT CA S E IS A COMPANY WHICH IS ENGAGED IN TH E BUSINESS OF MANUFACTURE OF FERRO ALLOYS AS WELL AS GENERATION OF POWER. RETURN O F INCOME FOR THE YEAR UNDER CON S I D ERATION WAS FIL E D BY IT ON 28.11.2003 DECLARING TOTAL INCOME OF R S .7,93,07,230. IN THE SAID RETURN, THE ASSESSEE COMPANY HAD CLAIMED DEDUCTION UNDER S.80HHC AND S.80IA. DURIN G THE COURSE O F ASSESSMENT PROCEEDINGS, IT WA S NOTICED BY THE ASSESSING OFFICER I TA NO. 732/H YD/201 3 M/S. NAVA BHARAT V ENTURES LIMITED, HYDERABAD 2 THAT WHILE COMPUTING DEDUCTION UNDER S.80HHC, THE ASSESSEE HAS NOT EXCLUDED THE DEDUCTION CLAIMED UNDER S.80IA FROM THE ELIGIBLE PROFITS. ACCOR D ING TO HIM , THERE WAS THUS A CLEAR VIOLATION OF PROVIS I ONS OF SUB - SE C TION (9 ) OF S. S.80IA BY THE ASSESSEE AND ACCORDINGLY, THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER S.80HHC WAS RECO M PUTED BY HIM, AFTER REDU C IN G THE DEDUCTION CLAIMED UNDER S .80IA FROM THE ELI G IBLE PROFIT. THE TOTAL INCOME O F TH E ASSESSEE THUS, WAS COMPUTED BY THE ASSESSING OFFICER AT R S .10,41,49,209, VIDE ASSESSMENT COMPLETED UNDER S.143(3) OF THE ACT , BY AN ORDER DATED 31.3.2006. AGAIN S T THE SAID ORDER, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(A), AND VIDE HIS APP E LL A TE ORDER DATED 9.3.2007, THE LEARNED CIT(A) DIRE C TED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.80HHC FIRST AND THEN TO ALLOW DEDUCTION UN D ER S.80IA AFTER REDUCING THE AMOUNT OF RELIEF ALREADY GRANTED UNDER S.80HHC. CONS E QUENT TO GIVIN G EFFECT TO THE SAID APPEL LA TE ORDER, THE TOTAL INCOME OF THE ASSESSEE WAS REVISED BY THE ASSESSING OFFICER TO RS. 8,70,69,961. TH E R E AFT E R, ANOTHER ORDER UNDER S .154 WAS PASSED BY THE ASSESSING OFFICER ON 23.3.2010 DE T ERMINING THE TOTAL INCOME O F THE ASSESS EE AT RS.9,36,04,760. LATER ON, THE ASSESSMENT WAS REOPENED ON ACCOUNT OF EXCESS ALLOWANCE OF DEDUCTION UNDER S.80HHC TO THE EXTENT OF R S .22,54,380 AND THE SAID SUM WAS ADDED TO THE TOTAL INCOM E O F T H E ASSESSEE IN THE ASSESSMENT COMPLETED UNDER S.143(3 ) READ WITH S.147 OF THE A C T BY THE ORDER DATED 28.7.2010. 3. RECORD OF ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S.143(3) READ WITH S.147 CAME TO BE EXAMINED BY THE LEARNED COMMISSIONER OF INCOME - TAX AND ON SUCH EXAMINATION, HE WAS OF THE OPINION THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S .143(3) READ WITH S.147 WAS ERRONEOUS AND I TA NO. 732/H YD/201 3 M/S. NAVA BHARAT V ENTURES LIMITED, HYDERABAD 3 PREJU D I C IAL TO THE IN T ER E STS OF THE REVENUE. HE ACCOR D INGLY ISSUED A NOTICE UNDER S.263(3) DATED 5.3.2013, POINTING OUT SUCH ERROR AS UNDER AND SEEKING THE EXPLANATION OF THE ASSESSEE AS TO WHY THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S.143(3) READ WITH S.147 SHOULD NOT BE REVISED UNDER S.263 OF THE ACT. THE ASSESSEE, FOR CALCULATING 80HHC DEDUCTION HAS TAKEN ENTIRE INCOME FROM BUSINESS I.E. RS.25.70 CRORES ( ADJU S TED STATEMENT OF INCOME SHOWING ITNER - 0ALIA MAJOR DEDUCTION OF RS.5.01 CRO R ES PRESENTING PROFIT ON SALE OF ASSET I.E. DEDUCTION FROM THE CONSOLIDATED PROFIT FIGURE OF R S .32.87 CRORES ( VIDE ANNE X URE - 5 ) AS A BASIS NOW THIS FIGURE OF RS.25.70 CRORES IS CERTAINLY INCLUSIVE OF THE PROFIT FROM POWER DIVISION. AS PER THE PROVISIONS OF SECTION 80IA(9), THE EXTENT OF PROFIT ALREADY DEDUCTED OR CONSIDERED FOR DEDUCTION U/S. 80IA CANNOT BE CONSIDERED AGAIN FOR ANY OTHER DEDUCTI ON UNDER CHAPTER VIA OF THE I.T. ACT. THE OTHER PROVISIONS OF CHAPTER VIA WOULD MEAN PROVISIONS OF PRECEDING SECTION 80IA AS WELL AS PROVISIONS FOLLOWING SECTION 80IA. IT CANNOT BE RESTRICTED TO ONLY PROVISIONS FOLLOWING 80IA. BOTH THE PROVISIONS OF SEC TION 80HHC AND 80IA HAPPEN TO BE UNDER CHAPTER VIA OF THE ACT. THE METHOD RECOGNIZED IN THE ASSESSMENT IS FOUND CONTRARY TO THE PROVISION OF 80IA(9). THE ASSESSEE HAS DEDUCTED RS.15.02 CRORES AS 80IA DEDUCTION RELATING TO THIS POWER DIVISION AT PALONCHA, T HE SAME EXTENT OF PROFIT WAS ALLOWED AS CONSIDERATION FOR CALCULATION U/S. 80HHC. CONSOLIDATED INCOME FROM BUSIN E SS AS PER ADJUSTED STATEMENT OF INCOME RS.25.70 CRORES LESS: PROFITS FROM POWER DIVISION RS.15.02 CRORES TOTAL RS.10.68 CRO RES LESS: EXPORT INCENTIVES RS.99824667 RENT RECEIVED RS. 2110088 90% OF R S .101934755 IS RS.91741280 ELIGIBLE PROFITS OF THE BU S IN E SS RS.1.51 CRORES 90% OF EXPORT INCENTIVES I.E. 99824667 RS.898 4 2200 PROFITS FROM EXPORT GOODS RS.15100000X 761806535+89842200+ 761806535 3811211928 =3018272+17958166 =20976438 50% OF RS.0976438 IS ABOVE RS.1,04,88,219/ - IT IS OBSERVED THAT IN THE RE - OPENED ASSESSMENT ORDER INSTEAD OF ALLOWING R A .10488219 AS DEDUCTION, A DEDUCTION OF RS.2,46,76,977/ - WAS ALLOWED THEREBY ALLO W IN G AN EXCESS DEDUCTION OF R S .1,41,88,758. I TA NO. 732/H YD/201 3 M/S. NAVA BHARAT V ENTURES LIMITED, HYDERABAD 4 4. IN REPLY, THE FOLLOWING EXPLAN A TION WAS OFFERED BY THE ASSESSEE IN WRITING TO THE LEARNED COMMISSI ONER OF INCOME - TAX. .WE AT THE OUTSET SUBMIT THAT THE ASSESSING OFFICER RAISED SIMILAR ISSUES IN THE COU R SE OF ASSESSMENT PROCEEDINGS AND ALLOWED DEDUC T ION UNDER SEC.80HHC ON THE I NCOM E AF T ER DEDUCTION OF ALLO W ANCE UNDER SEC.80IA IN HIS ASSESSMENT O R DER DATED 31.3.2006. WE PREFERRED AN APPEAL AGAINST THE SAID ASSESSMENT ORDER AND CIT(A) ALLOWED THE MAT T ER IN OU R FAVOUR IN HIS ORDER DATED 9.3.2007. WE FURTHER SUB M I T THAT OUR ASSESSMENT FOR THE ASSESSMENT YEAR 2003 - 04 WAS REOPENED UNDER SEC.147 ON 25.3.2010 FOR DISALLO W ING PART OF DEDUCTION CLAIMED UN D ER SEC.80HHC ON ACCOUNT OF IN T ER E ST EARNED TAKING INTO ACCOUNT EXPLANATION (BAA) BELOW S UB - SEC T ION (4C) OF SEC.80HHC AS COULD B E SEEN FROM THE REASON RECORDED FOR REOPENING THE ASSESSMENT. ACCOR D INGLY TH E RE - ASSESSMENT WAS COMPLETED BY REDUCING THE ALLOWANCE UNDER SEC.80HHC BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATE 28.7.2010. WE THEREFORE SUBMIT THAT THE ISSUE O F DEDUCTION OF ALLOWANCES UNDER SEC.80HHC AND 80IA IN THE CHRONOLOGICAL ORDER AROSE IN THE ORIGINAL ASSESSMENT ORDER DATED 31.3.2006 ITSELF AND WAS A SUBJECT MATT E R OF APPEAL WHICH WAS ALLOWED IN OUR FAVOUR AND SUCH ISSUE DID NO T ARISE OUT OF RE - ASSESSMENT ORDER. WE THER E FORE SUBMIT THAT THE ISSUE O F DEDUCTION OF ALLOWANCE UNDER SEC.8 0HHC AND SEC.80IA IN A CHRONOLOGICAL ORDER CANNOT B E SUBJECT MATTER OF REVISION UNDER SEC.263 AND REQUEST YOU TO DROP THE PROPOSAL. 5. THE ABOVE EXPLANATION OF THE ASSESSEE WAS NO T FOUND ACCEPTABLE BY THE LEARNED COMMISSIONER OF INCOME - TAX AND HE PROCEEDED TO PASS AN ORDER UNDER S.26 3 REVISIN G THE O R DER PASSED BY THE ASSESSING OFFICER UNDER S .143(3) READ WITH S.147 DATED 28.7.201 0 BY DIRE C TING HIM TO R E STRICT THE CLAIM OF THE ASSES SEE FOR DEDU CT ION UNDER S. 80HHC TO R S .1,12,66,533 IN PLACE OF RS.2,46,76,977. I TA NO. 732/H YD/201 3 M/S. NAVA BHARAT V ENTURES LIMITED, HYDERABAD 5 6. AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX, ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LEARNED C OUNSEL FOR THE ASSESSEE, APPEAL AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER S .143(3) READ WITH S.147 DATED 28.7.2010 WAS PREF ERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) CHALLENGING INTER ALIA THE VALIDITY OF THE SAID ASSESSMENT AND THE LEARNED CIT(A) VIDE HIS APPELL A TE ORDER D A TED 9.5.2011 CANCELLED THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S .143(3) READ WITH S. 147 HO L DIN G TH A T THE REOPENING O F TH E ASSESSMENT ITSELF WAS BAD IN LAW. AS FURTHER SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE SAID ORDER O F THE LEARNED CIT(A) CANCELLING THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S.143(3) READ WI TH S.147 HAS BEEN UPH E LD BY THE HYDERABAD BENCH OF THE TRIBUNAL IN ITS ORDER DATED 9 TH JULY, 2014 PASSED IN ITA N O .1351/HYD/2014. ALTHOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE DEPARTMENT MIGHT HAVE CHALLENGED THE SAID ORDER OF T HE TRIBUNAL BY FILING AN APPEAL BEFORE THE HONBL E ANDHRA PRADESH HIGH COURT, THERE IS NOTHING BROUGHT ON RECORD TO SHOW THAT ANY SUCH APPEAL HAS BEEN FIL E D BY THE DEPARTMENT OR MORE SO, THE ORDER OF THE T R IBUNAL HAS BEEN REVERSED OR DI S TU R BED BY THE HON' BLE HIGH COURT. THE POSITION AS IT STANDS TODAY THUS I S THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S .143(3) READ WITH S.147 VIDE HIS ORDER DATED 28.7.2010 NO MORE SURVIVES AND CONSEQUENTLY, THE PROCEEDINGS EMANATING FROM THE SAID ORDER IN C LU D IN G TH E IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX UNDER S.263 HAVE BECOME INFRUCTUOUS. ACCOR D INGLY, WE SET ASIDE THE I TA NO. 732/H YD/201 3 M/S. NAVA BHARAT V ENTURES LIMITED, HYDERABAD 6 IMPU G N E D ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX UNDER S.263 AS INFRUCTUOU S AND ALLOW THIS APP EAL O F THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 27 TH AUGUST, 2014 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 27 TH AUGUST, 2014 COPY FORWARDED TO: 1. M/S. NAVA BHARAT VENTURES LIMITED, 6 - 2 - 1109/1, RAJ BHAVAN ROAD, SOMAJIGUDA, HYDERABAD 500 082 2 . ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 16(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX IV HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S