Income Tax Officer, Ward-16(2), Hyderabad V. M/s. Pellets Pharma Limited, Hyderabad

ITA 832/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66584 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: P VINOD
• Section: 80HHC; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 832/HYD/2012 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, APPELLANT WARD 16(2), HYDERABAD. VS. M/S PELLETS PHARMA LTD., RESPONDENT HYDERABAD (PAN/GIR NO. AADCP2142G/P-1091) APPELLANT BY : SHRI M.H. NAIK RESPONDENT BY : SHRI P. VINOD DATE OF HEARING : 31/12/2012 DATE OF PRONOUNCEMENT : 31/12/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE CIT(A)-V, HYDERABAD DATED 09/03/2012 F OR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF PHARMAC EUTICALS PELLETS. DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE COMPANY FILED ITS RETURN OF INCOME ON 30/10/2007 ADMITTING NIL INCOME AFTER CLAIMING DEDUCTION U/S 10B OF THE ACT AT RS. 1,73,9 8,047/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) OF THE ACT ITA NO. 832HYD/12 M/S PELLETS PHARMA LTD. 2 BY RECALCULATING THE DEDUCTION U/S 10B AND DETERMIN ING THE TOTAL INCOME AT RS. 11,99,538/-. 3. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE CIT(A) CHALLENGING THE ACTION OF THE ASSESSING OFFI CER IN RESTRICTING THE DEDUCTION U/S 10B TO RS. 1,62,76,650/- AS THE A SSESSING OFFICER WHILE CALCULATING THE DEDUCTION U/S 10B HAS EXCLUDE D FREIGHT AND INSURANCE CHARGES AMOUNTING TO RS. 21,88,646 FROM E XPORT TURNOVER. 4. BEFORE THE CIT(A), THE ASSESSEE ARGUED THAT WHIL E EXCLUDING THE FREIGHT AND INSURANCE OF RS. 21,88,646/- FROM E XPORT TURNOVER, THE ASSESSING OFFICER OUGHT TO HAVE EXCLUDED THE SA ME FROM TOTAL TURNOVER. FOR THIS PROPOSITION, THE ASSESSEE RELIED UPON THE DECISION OF HONBLE ITAT, CHENNAI D SPECIAL BENCH IN THE C ASE OF ITO VS. SAK SOFT LTD. [2009] 121 TTJ (CHENNAI)(SB) 865 AND OTHERS. 5. THE CIT(A) FOLLOWING THE SPECIAL BENCH DECISION OF ITAT,. CHENNAI BENCH IN THE CASE OF SAK SOFT LTD. (SUPRA) HELD THAT FOR THE PURPOSE OF COMPUTATION OF EXEMPTION U/S 10B OF THE ACT, THE OCEAN FREIGHT CHARGES AND INSURANCE RELATED TO THE ABOVE SHOULD BE REDUCED FROM THE EXPORT TURNOVER AS WELL AS FROM TH E TOTAL TURNOVER. HE, THEREFORE, ALLOWED THE APPEAL OF THE ASSESSEE. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE HONBLE CIT(A) ERRED IN LAW AND FACTS OF THE CASE. 2. THE CIT(A) ALSO ERRED IN NOT APPRECIATING THE FA CT THAT IT WAS NEVER THE INTENTION OF THE LEGISLATION WHILE INCORP ORATING ITA NO. 832HYD/12 M/S PELLETS PHARMA LTD. 3 EXPLANATION 2(IV) TO SECTION 10B TO EXTEND SIMILAR TREATMENT TO BOTH EXPORT TURNOVER AND TOTAL TURNOVER. IT ITS INT ENTION WAS TO EXTEND SIMILAR TREATMENT TO TOTAL TURNOVER, IT SHOU LD HAVE BEEN EXPLICITLY PROVIDED TO EXCLUDE FREIGHT ATTRIBUTABLE TO THE EXPORT OF GOODS EVEN FROM THE TOTAL TURNOVER AS IT WAS DON E IN THE CASE OF 80HHC WHERE THE LAW AS VERY MUCH CLEAR IN D EFINING BOTH TERMS EXPORT TURNOVER AND TOTAL TURNOVER . AS EXPLANATION (B) & (BA) TO SUB-CLAUSE 4C OF SECTION 80HHC OF THE INCOME-TAX ACT CLEARLY DEFERENCE BOTH THE TERMS . THE VERY PURPOSE FOR WHICH THE LEGISLATURE HAS NOT INCLUDED SIMILAR PROVISIONS FOR SECTION 10B CLEARLY REVEALS THE TREA TMENT SOUGHT FOR EXPORT TURNOVER AS DIFFERENTIATED FROM TURNOVER FOR THE PURPOSE OF EXEMPTION U/S 10B OF THE ACT. 7. WE HAVE HEARD THE ARGUMENTS OF LEARNED DR SHRI M .H. NAIK AND THE LEARNED COUNSEL FOR THE ASSESSEE SHRI P. VI NOD. WE FIND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED B Y THE SPECIAL BENCH DECISION OF ITAT, CHENNAI BENCH (SUPRA) WHERE IN THE SPECIAL BENCH HELD AS UNDER:- THAT PARITY TO BE MAINTAINED WITH EXPORT TURNOVER. EXPENSES ON FREIGHT TELECOMMUNICATION CHARGES OR INSURANCE A TTRIBUTABLE TO DELIVERY OF ARTICLES OR THINGS OF COMPUTER SOFTW ARE, REQUIRED TO BE EXCLUDED FROM EXPORT TURNOVER, ARE ALSO TO BE EXCLUDED FROM TOTAL TURNOVER FOR COMPUTING EXEMPTION U/S 10B . IT WAS FURTHER HELD THAT WHATEVER EXCLUDED FROM THE EXPORT TURNOVER SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER FOR THE PURPOSE OF SECTION 10A. THE SPECIAL BENCH FURTHER O BSERVED AS UNDER: THE PARITIES HAVE COMPLIED SEVERAL ORDERS OF THE CH ENNAI AND BANGALORE BENCHES OF THE TRIBUNAL IN WHICH IT H AS BEEN HELD THAT WHATEVER IS EXCLUDED FROM THE EXPORT TURNOVER SHOULD ALSO BE EXCLUDED FROM THE TOTAL TUR NOVER FOR THE PURPOSES OF SECTION 10A & 10B OF THE ACT. W E ARE GENERALLY IN AGREEMENT WITH THE CONCLUSION REACHED IN THESE ORDERS, WHICH ARE NOT BEING DEALT WITH INDIVI DUALLY. 8. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY TH E SPECIAL BENCH OF ITAT, CHENNAI (SUPRA), WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A) IN ALLOWING THE APPEAL OF THE ASSESSE E, THEREFORE, THE ORDER OF THE CIT(A) IS CONFIRMED. ITA NO. 832HYD/12 M/S PELLETS PHARMA LTD. 4 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 31/12/2012 UPON CONCLUSION OF HEARING. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 31 ST DECEMBER, 2012. KV COPY TO:- 1) ITO-16(2), HYDERABAD 2) M/S PELLETS PHARMA LTD., D.NO. 5-7-53, SANGEET NAGA R, KUKATPALLY, HYDERABAD 500 072. 3) THE CIT (A)-V, HYDERABAD 4) THE CIT-IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER