SAMSONITE SOUTH ASIA P.LTD, MUMBAI V. DCIT 8(1)(OSD), MUMBAI

ITA 8423/MUM/2011

• Counselvise Citation: 842319914 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 12-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Retrospective amendment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 115JB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C SHARMA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 8423/MUM/2011 ASSESSMENT YEAR: 2005-06 SAMSONITE SOUTH ASIA PVT. LTD. 401, ACKRUTI STAR, 4 TH FLOOR, OPP. ACKRUTI CENTRE POINT BUILDING, CENTRAL ROAD, MIDC ANDHERI (E), MUMBAI-. 400 093 VS. DCIT 8(1) (OSD) MUMBAI. (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAACS 8598 L APPELLANT BY : SHRI FIROZE B. ANDHYARUJINA RESPONDENT BY : SHRI R.K. SAHU DATE OF HEARING : 16.01.2014 DATE OF PRONOUNCEMENT : 24.01.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -18, MUMBAI DATED 31.10.2011 FOR THE ASSE SSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN UPHOLDING THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO U/S 147 OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE A COMPANY ENGAGED I N THE BUSINESS OF MANUFACTURE AND DISTRIBUTION OF MOULDED LUGGAGE (HA RD LUGGAGE) FILED ITS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.14,45,540/- U NDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT AND A BOOK PROFIT OF RS.7,40,63, 638/- UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. THE ASSESSEES CASE WAS S ELECTED FOR SCRUTINY AND THE ITA NO. 8423/MUM/2011 SAMSONITE SOUTH ASIA PVT. LTD. ASSESSMENT YEAR: 2005-06 2 ORDER WAS PASSED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.82,91,400/- UNDER THE NORMAL PROVISIONS AND BOOK PROFIT U/S 115 JB AT RS.8,07,03,625/-. THEREAFTER, THE ASSESSMENT WAS RE OPENED UNDER SECTION 148 OF THE ACT TO DISALLOW THE DEDUCTION OF RS.5,51,09,808 /- ON ACCOUNT OF THE PROFIT ELIGIBLE U/S 80HHC OF THE ACT FOR THE PURPOSE OF DETERMINING BOOK PROFIT U/S 115JB OF THE ACT. CONSEQUENT UPON THE REOPENING, THE AO PASSED T HE ORDER U/S 143(3) READ WITH SECTION 147, DISALLOWING THE DEDUCTION OF RS.5,51,0 9,808/- CLAIMED BY THE ASSESSEE IN CONNECTION WITH THE PROFITS ELIGIBLE FOR DEDUCTI ON U/S 80HHC WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. ON APPEAL, THE LD .CIT(A), AMONG OTHER THINGS, HELD THAT THE REOPENING OF THE ASSESSMENT IS VALID. AGGR IEVED BY THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE HAS V EHEMENTLY ARGUED THAT ALL THE MATERIALS FACTS AND DOCUMENTS HAVE BEEN PLACED BEFO RE THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDING AND THE AO HAS CONSIDERED THE SAME BEFORE PASSING THE ORDER U/S 143(3) OF THE ACT. THE ASSESSEE HAS MADE TRUE AND FULL DISCLOSURE OF ALL THE FACTS AT THE TIME OF ORIGINAL ASSESSMENT AND THE SA ME HAS BEEN TAKEN INTO CONSIDERATION BY THE AO. THE AO HAS APPLIED HIS MIN D AT THE TIME OF THE PASSING OF THE ORIGINAL ORDER AND AS SUCH REOPENING THE ASSESS MENT U/S 147 AMOUNTS TO MERE CHANGE OF OPINION. FURTHER, THE LD.COUNSEL, BY DRAW ING OUR ATTENTION TO THE CHRONOLOGY OF EVENTS PERTAINING TO THE ORIGINAL ASS ESSMENT PROCEEDING, POST ASSESSMENT ENQUIRY, REASSESSMENT PROCEEDING AND THE FIRST APPELLATE PROCEEDINGS, IN THE LIGHT OF THE CHANGE OF LEGAL POSITION ON THE IS SUE OF ALLOWABILITY OF THE CLAIM OF DEDUCTION U/S 80HHC IN THE CONTEXT OF THE DECISIONS OF THE HIGH COURT AND THE SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD AND THE RETROSPECTIVE AMENDMENT DELETING CLAUSE (IV) OF 115JB CLAUSE (2), HAS CONTE NDED THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE REOPENING PROCEEDING IN ITIATED BY THE AO. RELIANCE HAS ALSO BEEN PLACED BY THE LD.COUNSEL ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RALLIS INDIA LTD. VS. ACIT 323 ITR 54 (BOM). ON THE OTHER HAND THE LD. DR HAS STATED THAT THE LD.CIT(A) IS JUSTIFIED IN CO NFIRMING THE REOPENING OF THE ASSESSMENT MADE BY THE AO BY RELYING ON THE DECISIO NS OF THE PUNJAB & HARYANA HIGH COURT IN THE CASES OF COCA COLA INDIA INC. VS. ACIT 309 ITR 194 & PUNJAB STATE ITA NO. 8423/MUM/2011 SAMSONITE SOUTH ASIA PVT. LTD. ASSESSMENT YEAR: 2005-06 3 CO-OP. SUPPLY MARKETING FEDERATION LTD VS. JCIT 226 CTR 140 (PUNJ. & HAR.), THE DECISIONS OF THE HONBLE APEX COURT IN THE CASES OF ALA FIRM VS. CIT 189 ITR 285 (SC) & THE MAHARAJ KUMAR KAMAL SINGH VS. CIT (1959) 35 ITR (SC) AND THE DECISION OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. NOVAPON INDIA LTD. 236 ITR 746 (AP) IN SUPPORT OF THE REVENUES CASE. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE CRUX OF THE MATTER PE RTAINING TO THE VALIDITY OF REOPENING OF THE ASSESSMENT REVOLVES AROUND THE CHA NGE OF LEGAL POSITION AS REGARDS THE ALLOWABILITY OF THE PROFIT ELIGIBLE FOR DEDUCTI ON U/S 80 HHC WHILE COMPUTING THE BOOK PROFIT AS PER EXPLANATION TO SECTION 115JB CLA USE 2 OF THE ACT. 5.1 THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. AJANTA PHARMA LTD. 318 ITR 252 (BOM), VIDE ORDER DATED 07.05.2009 HAS HELD THA T FOR THE PURPOSE OF CALCULATING BOOK PROFIT UNDER EXPLANATION (1) (IV) TO SECTION 1 15JB CLAUSE 2, THE EXPORT PROFITS TO EXCLUDE FROM BOOK PROFIT WOULD BE EXPORT PROFITS AL LOWED AS A DEDUCTION U/S 80HHC AFTER RESTRICTING DEDUCTION AS PER PROVISIONS OF SU BSECTION (1B) OF SECTION 80HHC AND NOT EXPORT PROFITS CALCULATED AS PER SUBSECTION 3 AND 3(A) OF SECTION 80HHC BEFORE APPLYING RESTRICTION CONTAINED IN SUBSECTION (1B) OF SECTION 80HHC. SUBSEQUENTLY, THE HONBLE APEX COURT PASSED THE ORD ER REVERSING/OVERRULING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF AJANTA PHARMA LTD. (327 ITR 305) . THEREAFTER, TO OVERCOME THE DIFFICULTY CREATED BY THE SAID DECISION OF THE HONBLE APEX COURT, FINANCE ACT 2011 HAS BEEN PASSE D BY THE PARLIAMENT WHICH RESULTED IN DELETING CLAUSE (VI) OF 115JB 2 WITH RE TROSPECTIVE EFFECT FROM 01.04.2005. 5.2 THE PERUSAL OF SAID CHANGE IN THE LEGAL POSITIO N, THE EVENTS THAT HAVE TAKEN PLACE IN THE ASSESSEES CASE AND REASONS RECORDED B Y THE AO FOR REOPENING SUGGESTS THAT THE NOTICE DATED 15.02.2010 U/S 148 FOR REOPEN ING OF THE ASSESSMENT U/S 147 HAS BEEN ISSUED BY THE AO IS IN THE LIGHT OF THE DE CISION OF THE BOMBAY HIGH COURT IN THE CASE OF AJANTA PHARMA UNDER WHICH THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE. IT IS NOTED THAT THE NOTICE DATED 15.02.2010 U/S 148 F OR REOPENING OF THE ASSESSMENT U/S 147 HAS BEEN ISSUED BY THE AO ON THE BASIS OF T HE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF AJANTA PHARMA LTD. DATED 07.05 .2009. THIS IS AN IMPORTANT ITA NO. 8423/MUM/2011 SAMSONITE SOUTH ASIA PVT. LTD. ASSESSMENT YEAR: 2005-06 4 FACTOR TO DECIDE WHETHER THE REOPENING OF THE ASSES SMENT IS VALID OR NOT. IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT THE HON BLE APEX COURT IN THE CASE OF MAHARAJ KUMAR KAMAL SINGH (SUPRA) HAS HELD THAT THE DECISION OF THE PRIVY CO UNCIL IS INFORMATION WITHIN THE MEANING OF SECTION 34(1) ( B) OF 1922 ACT AND THE DECISION JUSTIFIES A BELIEF OF ITO THAT THE ASSESSEES INCOM E HAS ESCAPED FROM ASSESSMENT FOR THE RELEVANT YEAR. THE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF NOVAPON INDIA LTD. (SUPRA) HAS HELD THAT JUDGMENTS THAT ARE RELEVANT BUT NOT CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT WOULD CONSTITUTE INFOR MATION WITHIN THE MEANING OF SECTION 147 (B) OF THE ACT. THE RATIO OF THESE DECI SIONS SUPPORT THE PROPOSITION THAT ON THE BASIS OF ANY RECENT JUDICIAL DECISION WHICH SUBSEQUENTLY COMES TO THE KNOWLEDGE OF THE AO, THE AO CAN REOPEN THE ASSESSME NT BASED ON SUCH INFORMATION. 5.3 IT IS THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS DRAWN THE ATTENTION OF THE AO TO THE DECISION OF TH E HONBLE APEX COURT OVERRULING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE A JANTA PHARMA VIDE THE WRITTEN SUBMISSION FILED BY THE ASSESSEE ON 14.09.2010 DURING THE REOPENING/ASSESSMENT PROCEEDINGS. HOWEVER, THE REASSESSMENT ORDER U/S 14 3(3) READ WITH 147 OF THE ACT HAS BEEN PASSED BY THE AO VIDE ORDER DATED 13.09.20 10 (WHICH POSSIBLY MAY BE BACK DATED ACCORDING TO THE ASSESSEE) WITHOUT CONSI DERING THE DECISION OF THE HONBLE APEX COURT. IN THIS CONTEXT, ASSUMING THAT THE REASSESSMENT ORDER HAS BEEN PASSED BY THE AO IGNORING THE DECISION OF THE HONB E APEX COURT AS CLAIMED BY THE ASSESSEE, IN OUR VIEW, THE SAME CANNOT BE THE BASIS TO HOLD THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO IS VITIATED. MOREOV ER, IT IS PERTINENT TO MENTION THAT WHEN THE MATTER TRAVELLED TO THE FIRST APPELLATE AU THORITY, THE LD.CIT(A) PASSED THE ORDER ON 31.10.2011 AND AT THE TIME OF PASSING THE SAID ORDER BY THE LD.CIT(A), THE FINANCE ACT, 2011 DELETING THE PROVISIONS OF CLAUSE (VI) OF 115JB 2 OF THE ACT WAS AVAILABLE SINCE THE SAME HAS BEEN PASSED ON 08.04.2 011. NEEDLESS TO MENTION THAT AS PER THE RETROSPECTIVE AMENDMENT, THE CLAIM OF TH E ASSESSEE IS NOT JUSTIFIED. 5.4 AS REGARDS THE DECISION RELIED BY THE LD.COUNS EL FOR THE ASSESSEE IN THE CASE OF RALLIS INDIA LTD. (SUPRA), IT IS PERTINENT TO ME NTION THAT THE SAID DECISION OF THE BOMBAY HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE FOR THE REASON THAT ITA NO. 8423/MUM/2011 SAMSONITE SOUTH ASIA PVT. LTD. ASSESSMENT YEAR: 2005-06 5 THE AMENDMENT HAS BEEN BROUGHT AFTER THE NOTICE HAS BEEN ISSUED BY THE ASSESSING OFFICER SEEKING TO REOPEN THE ASSESSMENT AND THE AM ENDMENT IN QUESTION WAS NOT AVAILABLE ON THE DATE OF ISSUE OF THE NOTICE WHEREA S IN THE CASE OF THE PRESENT ASSESSEE ON THE DATE OF NOTICE THE DECISION OF THE BOMBAY HIGH COURT HAS BEEN IN PLACE. IN VIEW OF THE ABOVE AFOREMENTIONED DISCUSSI ON, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD.CIT(A) IN UPHOLDING THE V ALIDITY OF REOPENING OF THE ASSESSMENT MADE BY THE AO AND THE SAME IS UPHELD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JANUARY, 2014. SD/- SD/- (R.C. SHARMA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.01.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.