DCIT CC-38, MUMBAI V. EXCEL INDUSTRIES LTD, MUMBAI

ITA 773/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2574 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 1993-1994
• Appeal Filed On: 05-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: CHARUL TOPRANI
• Section: 80HHC; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VP & SHRI R.K. PANDA, AM I.T.A. NO. 773/MUM/2009 (ASSESSMENT YEAR 1993-94) DCIT, CC-38 R. NO. 32(1), GROUND FLOOR, AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. EXCEL INDUSTRIES LTD. 184-187 EXCEL ESTATE, S.V. ROAD, JOAGESHWARI (W) MUMBAI-400 108 PAN: AAACE2488F APPELLANT RESPONDENT APPELLANT BY: SHRI NAVEEN GUPTA RESPONDENT BY: MS. CHARUL TOPRANI O R D E R DATE OF HEARING: 17.12.2009 DATE OF ORDER: 23.12.2009 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 26.11.2008 OF THE CIT(A) CENTRAL-VI, MUMBAI, RELATING TO ASSESSMENT YEAR 1993-94. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING ASSESSEE S STAND OF ADDING BACK TRADING LOSS DERIVED FROM EXPO RT FOR COMPUTING ADJUSTED PROFIT OF BUSINESS FOR WORKI NG OUT DEDUCTION U/S. 80HHC. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING APE X COURTS DECISION IN THE CASE OF M/S. IPCA LABORATOR IES LTD. WHERE INCREASE IN THE DEDUCTION ON ACCOUNT OF NEGATIVE PROFIT WAS NOT ALLOWED. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT IN THIS CASE ORDER GIVING EFFECT TO THE ITATS ORDER WAS GIVEN ON 16 TH MARCH, 2005 WHICH WAS RECTIFIED U/S. 154 OF THE I.T. ACT, 1961 ON 20 TH MAY, 2005. IN THE ORDER GIVING EFFECT THE DEDUCTION U/S. 80HHC WAS COMPUTED BY THE ASSESSING OFFICER SETTING OFF I.T.A. NO. 773/MUM/2009 M/S. EXCEL INDUSTRIES LTD. =================== 2 OF LOSS IN EXPORT TRADING WITH EXPORT PROFIT FROM M ANUFACTURED GOODS. THIS WAS DONE KEEPING IN VIEW THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF IPCA LABORATORIES LTD., 266 ITR 521. S UBSEQUENTLY, THE ASSESSING OFFICER NOTICED FROM THE RECORDS THAT WHI LE CALCULATING ELIGIBLE DEDUCTION U/S. 80HHC, ADJUSTED PROFITS OF THE BUSIN ESS WERE TAKEN AT RS.20,60,34,006. THIS WAS ARRIVED AT BY TAKING REV ISED TOTAL PROFITS OF THE BUSINESS AT RS.20,43,64,399 AND ADDED THERETO LOSS IN EXPORT OF TRADING GOODS OF RS.16,69,607. THEN THE ASSESSING OFFICER OBSERVED THAT THERE IS A MISTAKE APPARENT FROM RECORD FOR WHICH HE ISSUED A NOTICE U/S. 154 TO THE ASSESSEE. THE ASSESSEE REPLIED TO THE ASSESSING OF FICER STATING THAT ON THE BASIS OF FORMULA GIVEN, LOSS BEING NEGATIVE PROFIT, THEREFORE, BY THE PRINCIPLES OF SIMPLE ARITHMETIC THE SAME IS ADDED B ACK AS TWO NEGATIVES RESULT INTO POSITIVE. NOT BEING SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND HOLDING THAT THE SAME IS NOT IN CONFOR MITY WITH THE PROVISIONS OF SECTION 80AB, THE ASSESSING OFFICER R EJECTED THE SUBMISSIONS OF THE ASSESSEE AND RECOMPUTED THE DEDUCTION U/S. 8 0HHC. 4. IN APPEAL THE LEARNED CIT(A) FOLLOWING THE ORDERS O F HIS PREDECESSOR IN ASSESSEES OWN CASE FOR A.YS. 1992-9 3 AND 2000-01 ALLOWED THE APPEAL BY THE ASSESSEE. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. AFTER HEARING BOTH THE SIDES, WE FIND THE CIT(A) WH ILE ALLOWING THE APPEAL OF THE ASSESSEE HAS FOLLOWED THE DECISION OF HIS PREDECESSOR FOR THE A.YS. 1992-93 AND 2000-01. WE FIND THE CIT(A) IN H IS ORDER DATED 14.07.2008 FOR A.Y. 1992-93 AT PARA 7 OF THE ORDER HAS HELD AS UNDER: 7. I HAVE CONSIDERED THE FACTS OF THE ISSUES AS WE LL AS THE WRITTEN SUBMISSIONS MADE BY THE AR OF THE APPELLANT AND FIND MERIT IN THEM. WITHOUT GOING INTO THE TECHNICAL IS SUES, THIS ISSUE IS CLEARLY COVERED BY THE ORDER OF MY PREDECE SSOR QUOTED BY THE AR OF THE APPELLANT IN THEIR FAVOUR. I ALSO FIND MERIT IN THE SUBMISSIONS OF THE APPELLANT RELYING ON THE RAT IO OF THE DECISION OF THE SUPREME COURT IN THE CASE OF A.M. M OOSA VS. CIT (294 ITR 1) WHEREIN AFTER CONSIDERING THE PROVI SIONS OF SECTION 80AB, IT HAD BEEN HELD AS UNDER: I.T.A. NO. 773/MUM/2009 M/S. EXCEL INDUSTRIES LTD. =================== 3 EVEN UNDER SECTION 80HHC(3)(C)(I) THE PROFIT IS TO BE THE ADJUSTED PROFIT OF BUSINESS. THE ADJUSTED PROFIT OF THE BUSINESS MEANS A PROFIT AS REDUCED BY THE PROFIT DERIVED FROM BUSINESS OF EXPORTS OUT OF INDIA OF TRADING GOODS. THUS, IN CALCULATING THE PROFITS UNDER SUB-SECTION (3)(C)(I) ONE NECESSARILY HAS TO REDUCE THE PROFITS UNDER SUB-SECTION (3)(C)( II). AS SEEN ABOVE, THE TERM PROFIT MEANS POSITIVE PROFIT. THUS IF THERE IS LOSS THEN THOSE LOSSES IN EXPORT OF TRADING GOODS HAVE TO BE ADJUSTED. THE CANNOT BE IGNORED. IN VIEW OF THE ABOVE, IT IS HELD THAT THE LOSS DERI VED FROM EXPORT OF TRADED GOODS SHOULD BE ADDED BACK TO THE PROFITS OF THE BUSINESS WHILE COMPUTING THE ADJUSTED PROFITS O F THE BUSINESS AS REQUIRED BY CLAUSE (B) OF THE EXPLANATI ON BELOW SECTION 80HHC(3) FOR ARRIVING AT THE AMOUNT OF DEDU CTION ELIGIBLE UNDER SUB-SECTION 3(C)(I). HENCE, THIS GR OUND OF APPEAL IS ALLOWED. 6. THE LEARNED DR COULD NOT CONTROVERT THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT NO APPEAL HAS BEEN FI LED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) FOR THE A.YS. 1992-93 WHICH HAS AGAIN BEEN FOLLOWED IN 2000-01. THUS THE DEPARTMENT HAS ACCEPTED THE ORDER OF THE CIT(A) ON THE SAME ISSUE FOR THE A.YS. 1992-93 AND 2000-01. IN A BSENCE OF ANY CONTRARY MATERIAL AGAINST THE ORDER OF THE CIT(A) FOR THE A. YS. 1992-93 AND 2000-01 AND CONSIDERING THE FACT THAT THE CIT(A) IN THE IMP UGNED ASSESSMENT YEAR HAS FOLLOWED THE ORDERS OF HIS PREDECESSOR FOR THE ABOV E ASSESSMENT YEARS WHICH HAS ATTAINED FINALITY, WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY THE SAME IS UPHELD. THE GROUNDS RAISED BY THE REVE NUE ARE ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED ON 23 RD DECEMBER, 2009. SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 23 RD DECEMBER, 2009 I.T.A. NO. 773/MUM/2009 M/S. EXCEL INDUSTRIES LTD. =================== 4 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-XXIX, MUMBAI, (4) THE CIT-26, MUMBAI, (5) THE DR, E BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO