MANOJ KUMAR JOHARI, Sikar V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, Sikar

ITA 839/JPR/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9476 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Business income
• Section: 143(3); 80IB; 28; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 839/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 MANOJ KUMAR JOHARI, PROP.- THE ART PALACE, OUTSIDE CHURU GATE, RAMGARH- SHEKHAWATI, SIKAR. CUKE VS. A.C.I.T., CIRCLE- SIKAR. PAN NO.: ADWPJ 8870 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIKASH RAJVANSHI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/12/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/12/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25/09/2017 OF LD. CIT (A)-3, JAIPUR ARISING FROM TH E ORDER PASSED U/S 154 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR T HE A.Y. 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACT IN HOL DING THAT DUTY DRAWBACK AND SALE OF EXPORT LICENCE RECEIVED AS SUB SIDY FROM GOVERNMENT OF INDIA AMOUNTING TO RS. 1,84,99,161/- BY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE INCOM E TAX ACT, 1961. HE ALSO IGNORED THE TOPMAN EXPORTS (SC) & MEGHALAYA ST EELS LTD. (SC) AND JODHPUR ITAT DECISIONS. ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 2 ALSO LD. CIT(A) AND A.O. ERRED THAT AFTER RETROSPE CTIVE AMENDMENT IN SECTION 28 OF THE INCOME TAX ACT, DEPB IS PART OF B USINESS INCOME IN VIEW OF THE TOPMAN EXPORTS (SC) & MEGHALAYA STEELS LTD. (SC) JUDGMENT, HENCE WRONG 154 MADE BY A.O. MAY BE ANNUL LED AND RELIEF MAY BE GRANTED TO ASSESSEE. 2. THE APPELLANT PRAYS YOUR HONOR TO ADD, AMEND, OR ALTER ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 2. THE ASSESSEE IS A MANUFACTURER AND EXPORTER OF HA NDICRAFTS ITEMS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS CLAIMED DEDUCTION U/S 80IB OF THE ACT OF RS. 31,17,420/-. THE ASSESSIN G OFFICER WHILE PASSING THE ASSESSMENT U/S 143(3) OF THE ACT, DISAL LOWED THE CLAIM OF DEDUCTION U/S 80IB BY HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80IB OF THE ACT. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND THE LD. CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT TO THE EXTENT OF 95% OF THE AMOUNT WHICH COMES TO RS. 29,61,550/-. 4. ON FURTHER APPEAL BY THE REVENUE, THIS TRIBUNAL H AS ALSO CONFIRMED THE ORDER OF THE LD. CIT(A) ALLOWING THE CLAIM TO THE EXTENT OF 95%. IN THE MEAN TIME, THE ASSESSING OFFICER HAS PASSED GIVING EFFECT ORDER TO THE ORDER OF THE LD. CIT(A) AND ALLOWED THE DEDUCTION U/S 80IB OF THE ACT TO THE TUNE OF RS. 29,61,550/-. SUBSEQUENTLY, THE ASSE SSING OFFICER HAS PASSED ORDER U/S 154 OF THE ACT ON 26/10/2015 WHEREB Y THE DEDUCTION ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 3 U/S 80IB OF THE ACT WAS RECOMPUTED AFTER MAKING A DI SALLOWANCE IN RESPECT OF DUTY DRAWBACK AND SALE OF IMPORT LICENCE. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED ENTIRE CLAIM OF DED UCTION U/S 80IB OF THE ACT BY OBSERVING THAT IF THE SAID AMOUNT OF DEPB/DU TY DRAWBACK IS EXCLUDED FROM THE PROFITS OF THE ASSESSEE THEN A NE GATIVE INCOME HAS RESULTED. 5. THE ASSESSEE CHALLENGED THE SAID ACTION OF THE AS SESSING OFFICER IN THE ORDER PASSED U/S 154 OF THE ACT BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 6. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT ONCE THE CLAIM OF THE ASSESSEE U/S 80IB OF THE ACT WAS ALLOWED BY THE TRIBUNAL WHICH HAS ATTAINED THE FINALITY, THE ASSESSING OFFIC ER IS NOT JUSTIFIED IN DISALLOWING THE CLAIM WHILE PASSING THE ORDER U/S 154 OF THE ACT. THUS, THE LD AR HAS CONTENDED THAT IT WAS BEYOND THE JURIS DICTION OF THE ASSESSING OFFICER TO DISALLOW THE CLAIM OF THE ASSES SEE WHILE PASSING THE IMPUGNED ORDER U/S 154 OF THE ACT. ALTERNATIVELY, T HE LD AR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM BY HOLDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY IND IA 317 ITR 218 (SC) WHEREAS IN THE SUBSEQUENT DECISIONS IN CASE OF CIT V S. MEGHALAYA STEELS LTD. 383 ITR 2017 AS WELL AS IN THE CASE OF TOPMAN EXP ORTS VS. CIT 342 ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 4 ITR 0049. THE DUTY DRAWBACK AND DEPB SHALL BE PART OF THE BUSINESS INCOME OF THE ASSESSEE AND CONSEQUENTLY THE CLAIM O F DEDUCTION U/S 80IB OF THE ACT HAS TO BE ALLOWED AS PER THE FORMULA BY C ONSIDERING THESE TWO RECEIPTS AS PART OF THE BUSINESS PROFITS OF THE UND ERTAKING. THE LD AR HAS ALSO RELIED UPON THE DECISION OF NAGPUR BENCH OF TH E TRIBUNAL IN THE CASE OF ITO VS AIR DEVELOPERS 122 ITD 0125 AND THE DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI MANOJ KUMAR JOHARI IN D.B. INCOME TAX APPEAL NO. 47/2011 AND THE DECISION OF HO N'BLE SUPREME COURT IN THE TOPMAN EXPORTS VS CIT (SUPRA) AND THE DECISION IN THE CASE OF CIT VS. MEGHALAYA STEELS (SUPRA). THUS, THE LD AR HAS SUBMITTED THAT THE PROFITS OF DEPB AND DUTY DRAWBACK SHALL BE PART OF THE BUSINESS PROFIT FOR THE PURPOSE OF DEDUCTION U/S 80IB OF THE ACT. H E HAS RELIED UPON THE ORDER OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CA SE OF M/S SURAJ EXPORTS INDIA VS ITO IN ITA NO. 336/JODH/2011, 360/ JODH/2012 AND 386/JODH/2011 DECISION DATED 31/1/2013. 7. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT WHILE PASSING THE ASSESSMENT U/S 143(3) OF THE ACT, THE ASSESSING OFF ICER HAS DECIDED THE ISSUE OF ALLOWABILITY OF CLAIM U/S 80IB OF THE ACT I N RESPECT OF DUTY DRAWBACK AND DEPB, HOWEVER, SINCE THE ASSESSING OFFIC ER HAS DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE U/S 80IB OF THE AC T BY HOLDING THAT THE ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 5 ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION, THEREFO RE, NO SEPARATE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON ACC OUNT OF DISALLOWANCE IN RESPECT OF DEPB AND DUTY DRAWBACK. THE LD. DR HAS FURTHER SUBMITTED THAT THIS ISSUE WAS DECIDED AGAINS T THE ASSESSEE BY THE LD. CIT(A) IN THE FIRST ROUND OF LITIGATION AND FURT HER THE ASSESSEE DID NOT PRESS THIS ISSUE BEFORE THE TRIBUNAL AND IT WAS ACCOR DINGLY DISMISSED IN THE CROSS APPEAL FILED BY THE ASSESSEE. THUS, WHILE P ASSING THE GIVING EFFECT ORDER, THE ASSESSING OFFICER HAS ALLOWED THE ENTIRE CLAIM WITHOUT MAKING A CORRECT COMPUTATION OF THE DEDUCTION BY EX CLUDING DEPB AND DUTY DRAWBACK AMOUNT. SUBSEQUENTLY, THE ASSESSING OF FICER HAS RECTIFIED THE SAID ORDER U/S 154 OF THE ACT AND RECOMPUTED TH E DEDUCTION AFTER EXCLUDING THE DEPB AND DUTY DRAWBACK WHICH IS WITHIN T HE AMBIT OF THE PROVISIONS OF SECTION 154 OF THE ACT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AS FAR AS THE JURISDICTION OF T HE ASSESSING OFFICER TO PASS THE ORDER U/S 154 OF THE ACT IS CONCERNED, WE N OTE THAT WHILE PASSING THE ASSESSMENT U/S 143(3) OF THE ACT, THE A SSESSING OFFICER HAS CLEARLY TAKEN A DECISION THAT THE AMOUNT OF DEPB AN D DUTY DRAWBACK IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. FUR THER THE ASSESSING ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 6 OFFICER HAD ALSO DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE U/S 80IB BY HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUC TION U/S 80IB OF THE ACT. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF DEDUCT ION U/S 80IB OF THE ACT TO THE EXTENT OF 95% AND FURTHER THE ISSUE OF C LAIM OF DEDUCTION IN RESPECT OF DUTY DRAWBACK AND DEPB WAS DECIDED AGAINST THE ASSESSEE. ON FURTHER APPEALS BY THE REVENUE AS WELL AS THE ASS ESSEE, THIS TRIBUNAL THOUGH CONFIRMED THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IB OF THE ACT TO THE EXTENT OF 9 5%, HOWEVER, SINCE THE ASSESSEE DID NOT PRESS THE ISSUE IN RESPECT OF THE DENIAL OF THE CLAIM IN RESPECT OF THE DUTY DRAWBACK AND SALE OF EXPORT OF L ICENCE, THEREFORE, THE SAID ISSUE WAS ALSO DECIDED AGAINST THE ASSESSEE AND CONSEQUENTLY, THE ORDER OF THE LD. CIT(A) WAS CONFIRMED BY THE TRIBUNAL. THEREFORE, THE ISSUE ON MERITS REGARDING THE DISALLOWANCE OF DEDUCT ION U/S 80IB OF THE ACT IN RESPECT OF THE DUTY DRAWBACK AND SALE OF EXPO RT OF LICENCE WAS DECIDED AGAINST THE ASSESSEE DURING THE ASSESSMENT PASSED U/S 143(3) OF THE ACT WHICH WAS CONFIRMED BY THE LD. CIT(A) AS WELL A S BY THIS TRIBUNAL. THE ASSESSING OFFICER WHILE PASSING THE GIVING EFFECT ORDER, HAS ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IB TO THE EXTENT OF 95% BUT DID NOT MAKE ADJUSTMENT IN RESPECT OF THE DUTY DRAWBACK AND DEPB . THEREFORE, THE ASSESSING OFFICER HAS PASSED THE IMPUGNED ORDER U/S 154 OF THE ACT TO MAKE NECESSARY DISALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT IN RESPECT ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 7 OF THE DUTY DRAWBACK AND DEPB WHICH IN OUR VIEW IS VE RY MUCH IN THE AMBIT OF THE PROVISIONS OF SECTION 154 OF THE ACT A S THE ASSESSING OFFICER HAS NOT TAKEN ANY FRESH DECISION ON THIS ISSUE WHILE PASSING THE IMPUGNED ORDER U/S 154 OF THE ACT BUT RECOMPUTED THE DEDUCTI ON IN TERMS OF THE ISSUE ALREADY DECIDED UP TO THE STAGE OF THIS TRIBUN AL. HENCE, WE DO NOT FIND ANY SUBSTANCE OR MERITS IN THE OBJECTION AND G ROUNDS OF THE ASSESSEE CHALLENGING THE JURISDICTION OF THE ASSESSING OFFIC ER. 8.1 AS REGARDS THE TOTAL DISALLOWANCE OF CLAIM U/S 8 0IB OF THE ACT, WE FIND THAT THERE ARE VARIOUS DECISIONS AS RELIED UP ON BY THE ASSESSEE WHEREIN IT HAS BEEN HELD THAT DUTY DRAWBACK AND DEPB LICENCE ARE VERY MUCH PART OF PROFITS AND GAINS OF THE UNDERTAKING A ND THEREFORE WHILE COMPUTING THE DEDUCTION U/S 80IB THIS AMOUNT SHALL BE INCLUDED IN THE PROFITS OF THE BUSINESS, HOWEVER, WILL BE EXCLUDED FR OM THE EXPORT TURNOVER. THE ASSESSEE HAS FILED REVISED COMPUTATION OF DEDUCTION BY CONSIDERING THE AMOUNT REDUCED FROM THE EXPORT TURN OVER, HOWEVER, THIS IS A FACTUAL ASPECT OF COMPUTATION OF DEDUCTION. AC CORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST O F JUSTICE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER T O RECOMPUTED THE DEDUCTION U/S 80IB OF THE ACT BY CONSIDERING THE RE VISED COMPUTATION FILED BY THE ASSESSEE AS WELL AS THE VARIOUS DECISIO NS WHEREIN IT WAS HELD ITA 839/JP/2017_ MANOJ KR. JOHARI VS ACIT 8 THAT THE DUTY DRAWBACK AND DEPB ARE PART OF THE BUS INESS PROFITS, THOUGH, THE SAME ARE NOT PART OF THE EXPORT TURNOVE R. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE DEDU CTION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17 TH DECEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI MANOJ KUMAR JOHARI, SIKAR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE- SIKAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 839/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR