Light Alloy Products Limited, CHENNAI V. ACIT, CHENNAI

ITA 849/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51947 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 06-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: K SRINIVASAN
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NOS.848 & 849/MDS/2011 (ASSESSMENT YEARS : 2002-03 AND 2004-05 ) M/S LIGHT ALLOY PRODUCTS LTD 67, CHAMIERS ROAD CHENNAI 600 028 VS THE ACIT COMPANY CIRCLE II(4) CHENNAI [PAN AAACL1256C ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.SRINIVASAN, CA RESPONDENT BY : SHRI ANIRUDH RAI, CIT/DR DATE OF HEARING : 11.10.2011 DATE OF PRONOUNCEMENT : 11.10.2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE LD. CIT(A), CHENNAI, BUT PAS SED ON 25.2.1011, PERTAINING TO ASSESSMENT YEARS 2002-03 AND 2004-05, RESPECTIVELY. AS COMMON ISSUE IS INVOLVED IN THESE APPEALS, WE A RE DISPOSING OF THEM BY A COMMON ORDER, FOR THE SAKE OF CONVENIEN CE AND BREVITY. ITA 848 & 849/11 :- 2 -: 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF AUTOMOTI VE COMPONENTS MADE OF ALUMINIUM CASTINGS. THE SUBJECT MATTER OF THE THESE APPEALS IS LIMITED TO THE QUESTION AS TO WHETHER REDUCING THE CLAIM OF DEDUCTION U/S 80HHC BY REDUCING THE ELIGIBLE PROFIT FOR DEDUCTION U/S 80HHC BY THE DEDUCTION ALLOWED U/S 80-IB, IS AS PE R LAW OR NOT. IN THE OPINION OF THE ASSESSEE, THE ASSESSING OFFICER IS NOT CORRECT IN REDUCING THE ELIGIBLE DEDUCTION U/S 80HHC BY THE DE DUCTION ALLOWABLE U/S 80-IB. FOR THIS CONTENTION, SUPPORT WAS DRAWN FROM THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF SCM CREATIONS VS ACIT, 304 ITR 319. THE LD. CIT(A) HAS HELD THAT THE DECISION IN SCM CREATIONS(SUPRA) IS NO LONGER A GOO D LAW BECAUSE IN THAT CASE IT HAS BEEN HELD THAT DEDUCTION U/S 80- IB SHOULD NOT BE REDUCED FROM THE DEDUCTION ELIGIBLE U/S 80HHC. BUT THIS VIEW HAS BEEN REVERSED BY THE HON'BLE JURISDICTIONAL HIGH CO URTS LATER DECISION RENDERED IN THE CASE OF GENERAL OPTICS (ASIA) LTD VS DY. CIT, 315 ITR 400. NOW, THE ASSESSEE IS AGGRIEVED. IDENTICAL ISS UES HAVE BEEN RAISED IN BOTH THE ASSESSMENT YEARS. 3. AFTER HEARING BOTH SIDES, WE ARE OF THE CONSIDERED OPINION THAT THE ORDER OF THE LD. CIT(A) HAS TO BE CONFIRME D ON THIS POINT. THE ITA 848 & 849/11 :- 3 -: SPECIAL BENCH IN THE CASE OF ACIT VS ROGINI GARMENT S, 294 ITR (AT) 15 (CHENNAI)[SPECIAL BENCH], TOOK THE VIEW THAT TH E PROFITS U/S SECTION 80-IB HAS TO BE REDUCED IN COMPUTING DEDUCTION U/S 80HHC. THIS VIEW HAS BEEN CONFIRMED BY THE RATIO OF THE SUBSEQUENT D ECISION RENDERED IN THE CASE OF GENERAL OPTICS (ASIA) LTD (SUPRA) O N SIMILAR ISSUE. IN SO FAR AS RULE OF APPLICATION OF PRECEDENTS IS CONCER NED, A LATER(SUBSEQUENT) DECISION WHICH IS MORE RECENT AND RENDERED AFTER CONSIDERING THE EARLIER DECISION BY THE SAME HIGH C OURT, HAS TO BE TREATED AS THE LAW RULING THE FIELD ON THAT SUBJECT . IN THE CASE OF GENERAL OPTICS (ASIA) LTD, THE HON'BLE JURISDICTION AL HIGH COURT HAS HELD AS UNDER: FOR THE ASSESSMENT YEARS 1998-99 AND 1999-2000, T HE ASSESSEE MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR T HE OPTIC DIVISION AND THE OPTO ELECTRICAL DIVISION. I T CLAIMED DEDUCTION UNDER SECTION 80-IA OF THE INCOME-TAX ACT , 1961, AT 100 PERCENT AND ALSO CLAIMED DEDUCTION UNDER SEC TION 80HHC FOR EXPORTS CARRIED OUT FROM THE OPTIC DIVISI ON. THE ASSESSING OFFICER LIMITED THE DEDUCTION CLAIMED UND ER SECTION 80HHC INVOKING THE PROVISIONS UNDER SECTION 80- IA(9). THE TRIBUNAL HELD THAT THE RELIEF UNDER SEC TION 80-IA SHOULD BE DEDUCTED FROM PROFITS AND GAINS OF BUSINE SS BEFORE COMPUTING RELIEF UNDER SECTION 80HHC. ON AP PEAL: HELD, ALLOWING THE APPEAL, THAT THE TRIBUNAL FOLLOW ED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL WHICH RELATED TO THE PERIOD SUBSEQUENT TO THE DATE WHICH THE AMEN DMENT CAME INTO FORCE WITH EFFECT FROM APRIL 1, 1999. TH US, THE TRIBUNAL ERRED IN APPLYING IT TO THE ASSESSMENT YEA R 1998- 99 WHEN THE AMENDMENT HAD NOT YET COME INTO EFFECT. THE ASSESSEE WAS ENTITLED TO DEDUCTION ONLY FOR THE ASSESSMENT YEAR 1998-99. ITA 848 & 849/11 :- 4 -: 4. ACCORDINGLY, IN OUR CONSIDERED OPINION, THE DECISIO N TAKEN BY THE LD. CIT(A) HAS TO BE UPHELD. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ST AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 11.10.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 11 TH OCTOBER, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR