Corvine Chemicals & Pharma Ltd., Bidar V. DCIT, Gulbarga

ITA 755/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0628 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-11-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 27-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: GOVIND BHATT
• Keywords: Reassessment proceedings
• Section: 80HHC; 234B; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.755/BANG/2009 ASSESSMENT YEAR : 2003-04 CORVINE CHEMICALS & PHARMA LTD., PLOT NO.135-E, KOLHAR INDUSTRIAL AREA, BIDAR. : APPELLANT VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE I, GULBARGA. : RESPONDENT APPELLANT BY : SHRI GOVIND BHATT RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS), HUBLI DATED 22.1.2009 FOR THE AY; 200 3-04. 2. THE GROUNDS NO.1 AND 6 RAISED BY THE ASSESSEE AR E GENERAL IN NATURE AND DO NOT REQUIRE ADJUDICATION. THE OTHER GROUNDS ARE REPRODUCED BELOW: 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN INITIATING THE ITA NO.755/B/09 PAGE 2 OF 5 PROCEEDINGS U/S. 147 WITHOUT PROPERLY CONSIDERING T HE SUBMISSIONS MADE BEFORE HIM. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N REDUCING THE DEDUCTION U/.S 80 IB FROM THE TOTAL INCOME FOR THE PURPOSE OF ARRIVING AT THE DEDUCTION U/S. 80HHC. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE DETERMINATION OF DEDUCTION U/S. 8 0HHC AT RS.41,88,273/- BY THE ASSESSING OFFICER AS AGAINST THE CLAIM OF DEDUCTION OF RS.68,46,021 MADE BY THE APPELLANT. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE LEVY OF INTEREST U/S. 234B OF RS. 4,36,304/- AND U/S 234C OF RS.71,345/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER INITIATED REASSESSMENT PROCEEDINGS AFTER OBSERVING THAT RESTR ICTING THE DEDUCTION U/S. 80HHC TO THE EXTENT OF DEDUCTION 80IB WAS NOT CONSIDERED THOUGH THE ASSESSEE CLAIMED BOTH THE DEDUCTIONS U/S. 80IB AND 80HHC ON THE SAME BUSINESS PROFIT, WHICH RESULTED IN EXCESSIVE ALLOWA NCE OF DEDUCTION UNDER CHAPTER VI-A. NOTICE U/S. 148 WAS ISSUED TO THE AS SESSEE WITH A COPY OF THE REASONS RECORDED. THE ASSESSEES OBJECTIONS TO THE REOPENING OF THE ASSESSMENT WERE REJECTED AND THE AO PROCEEDED TO CO MPLETE THE REASSESSMENT PROCEEDINGS. THE AO HELD THAT WHEN AN ASSESSEE IS ENTITLED TO BOTH THE DEDUCTION U/S. 80HHC AND 80IB, THE DEDU CTION U/S. 80HHC WILL BE AVAILABLE ON PROFITS DERIVED FROM EXPORT BUSINES S AFTER REDUCING THE AMOUNT OF DEDUCTION ALLOWED U/S. 80IB. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS). 4. THE LD. CIT(APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: ITA NO.755/B/09 PAGE 3 OF 5 I HAVE GONE THROUGH ASSESSMENT ORDER AND SUBMISSI ON MADE BY THE AR AND CASE LAWS RELIED UPON BY HIM AND IT IS DECIDED THAT AS FAR AS DEDUCTION U/S. CHAPTER VI-A ARE CONCERNED SECTION 80A(2) HAS SET A CONDITION PRECEDENT THAT A GGREGATE AMOUNT OF DEDUCTION UNDER THIS CHAPTER SHALL NOT IN ANY CASE EXCEEDS GROSS TOTAL INCOME OF ASSESSEE. IN VIEW OF SAME PROVISIONS OF SECTION 80IB(13) ARE ALSO INTRODUCED WITH A VIEW TO IMPOSE A RESTRICTION BY PROVISIONS OF SECTION 80IA( 5) AND PROVISIONS OF SECTION 80HHC(4B) W.E.F. 01.04.1992. AFTER TAKING INTO CONSIDERATION THESE TECHNICAL PROVISIONS MATTE R IS VERY CLEAR THAT IT IS AN EXTENSION TO PUT AN END TO DISCUSSION OF GRANTING DEDUCTION UNDER CHAPTER VI-A AS REFERRED ABOVE. TH US, IT IS CLEAR BY EXISTING CASE LAWS (AR HAS NOT BROUGHT TO MY NOT ICE ANY OTHER JURISDICTIONAL CASE LAWS) THAT WORKING OF 80HHC MAD E BY THE DCIT, C-1, GULBARGA AS ANNEXURE TO ASSESSMENT ORDER IS HEREBY CONFIRMED. THEREFORE, NOTICE U/S. 148 ISSUED BY TH E AO IS ALSO HELD AS WITHIN PROVISIONS OF ACT. UNDER THE CIRCUM STANCES, ADDITION MADE BY THE AO IS HEREBY CONFIRMED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THE ISSUE RAISED IN THIS APPEAL I S COVERED BY THE DECISIONS OF THE TRIBUNAL. IN THE CASE OF ACIT V. ROGINI GARMENTS REPORTED IN 294 ITR (AT) 15 (CHENNAI)(SB) IT WAS OBSERVED AS UNDER: IN VIEW OF THE SPECIFIC RESTRICTION PROVIDED UNDER SECTION 80- IA(9), THE DEFINITION OF BUSINESS PROFIT AS CONTAIN ED IN CLAUSE (BAA) OF THE EXPLANATION BELOW SECTION 80HHC(4C) HAS TO B E CONSTRUED IN THE LIGHT OF THE RESTRICTIONS. CIRCULAR NO.772, DATED DECEMBER 23, 1998 [SEE (1999 ) 235 ITR (ST.)35] NOWHERE SUGGESTS THAT MORE THAN 100 PR CEN T DEDUCTION ON THE SAME PROFIT CAN BE GRANTED TO THE ASSESSEE UNDE R VARIOUS SECTIONS ENUMERATED IN CHAPTER VI-A. SECTION 80HHC IS PART OF CHAPTER VI-A. THE DEDUCTION CANNOT BE ALLOWED IGNO RING THE RESTRICTIVE CLAUSE CONTAINED IN SECTION 80-IA(9). THE RESTRICTIVE CLAUSE IN SECTION 80-IA MAKES IT ABUNDANTLY CLEAR T HAT WHEREVER DEDUCTION UNDER ANY OTHER SECTION OF CHAPTER VI-A(C ) IS CLAIMED, THE COMPUTATION WILL BE SUBJECT TO THE RESTRICTIONS LAID DOWN IN SECTION 80-IA(9). THERE IS ABSOLUTELY NO AMBIGUITY ON THIS ASPECT. RELIEF UNDER SECTION 80-IA SHOULD BE DEDUCTED FROM THE PROFITS AND GAINS OF THE BUSINESS BEFORE COMPUTING RELIEF UNDER SECTION 80HHC OF THE ACT. ITA NO.755/B/09 PAGE 4 OF 5 THEREFORE, THE RELIEF UNDER SECTION 80-IA SHOULD BE DEDUCTED FROM PROFITS AND GAINS OF BUSINESS BEFORE COMPUTING RELI EF UNDER SECTION 80HHC. 6.3.2. FURTHER, THE HONBLE I.T.A.T. DELHI SPECIAL BENCH IN THE CASE OF ACIT V. HINDUSTAN MINT AND AGRO PRODUCTS P.LTD REPORTED IN (2009) 315 ITR (AT) 401 (DELHI) [SB] HAD OBSERVED THAT, THE DEDUCTION TO BE ALLOWED UNDER ANY OTHER PROVISION OF CHAPTER VI-A O F THE INCOME-TAX ACT, 1961, WITH THE HEADING C IS TO BE REDUCED BY THE AMOUNT OF DEDUCTION ALLOWED UNDER SECTION 80-IB OR SECTION 80-IA OF THE ACT.. 6. IN LIGHT OF THE ABOVE DECISIONS OF THE TRIBUNAL, WE UPHOLD THE ORDER OF THE LD. CIT(APPEALS) IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WITH REGARD TO DEDUCTION U/S. 80HHC AND THEREBY DISMISS GROUND NOS. 3 & 4. WE ALSO HOLD THAT PROCEEDINGS U/S. 147 HAS ALSO BEE N RIGHTLY INITIATED BY THE ASSESSING OFFICER IN VIEW OF THE ABOVE DISCUSSI ON AND DISMISS GROUND NO.2. 7. AS REGARDS GROUND NO.5 IS CONCERNED REGARDING IN TEREST U/S. 234B AND 234C, IT IS CONSEQUENTIAL IN NATURE AND THEREFO RE WE DISMISS THE GROUND. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF NOVEMBER, 2009. SD/- SD/- (SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 20 TH NOVEMBER, 2009. DS/- ITA NO.755/B/09 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.