Appeal details
Counselvise Citation
860819914 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-08-2013
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2004-2005
Appeal Filed On
21-12-2011
Judgement Text
B IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H, MUMBAI !' , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO , AM ./I.T.A. NO.8607/M/2011 (AY: 2003-2004) ./I.T.A. NO.8608/M/2011 (AY: 2004-2005) ./I.T.A. NO.8609/M/2011 (AY: 2000-2001) BANBURY IMPEX P. LTD., 40 APOORVA INDL. ESTATE, MAKWANA RAOD, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI-59. & / VS. ACIT - 9(1), MUMBAI. ' $ ./PAN : AAACB 5759 Q ( '( /APPELLANT) .. ( )*'( / RESPONDENT) '( + , / APPELLANT BY : SHRI RONAK DOSHI )*'( + , / RESPONDENT BY : SHRI PARESH JOHRI, DR & + -$ /DATE OF HEARING : 1.7.2013 ./0 + -$ /DATE OF PRONOUNCEMENT : 2.8.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION AND ALL THE THREE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE DIFFERENT ORDERS OF CIT (A)-19, MUMBAI COMMONLY DATED 28.09.2011 FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 RESPECTIVELY. SINCE, THE ISSUES RAISED IN ALL THE THREE APPEALS ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE, ALL THE THREE APPEALS ARE CLUBBED, HEARD COMBINEDLY AND BEING DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS. 2. THE GROUNDS RAISED BY THE ASSESSEE IN ALL THE T HREE APPEALS ARE IDENTICAL, THEREFORE, WE SHALL TAKE UP THE GROUNDS RAISED IN I TA NO. 8607/M/2011 (AY: 2003- 2004) WHICH READ AS UNDER: GROUND NO.I-DIRECTIONS OF HONBLE ITAT NOT BEING FO LLOWED 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT (A) ERRED IN UPHOLDING THE ACTION F THE AO IN NOT FOLLOWING THE DIRECTIN OF HONBLE ITAT TO RECOMPUTE THE 2 DEDUCTION U/S 80HHC IN LIGHT OF THE JUDGMENT IN THE CASE OF TOPMAN EXPORTS VS. ITO (33 SOT 337) (TM) (SB), ON THE GROUND THAT THE HONBLE BOMB AY HIGH COURT HAS TAKEN A CONTRARY VIEW IN THE CASE OF CIT VS. KALPATARU COLOURS & CHE MICALS (328 ITR 451) (BOM). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AIO ON THE GROUND THAT WHEN A POINT I S CONCLUDED BY A DECISION OF A HONBLE ITAT, A JUDGMENT IN REFERENCE NOT APPEALED AGAINST, WHETHER RIGHT OR WRONG IS BINDING BETWEEN THE PARTIES IN PARTICULAR CASE BY VIRTUE OF SECTION 254(4) OF THE INCOME TAX ACT, 1961. 3. THE APPELLANT PRAYS THAT THE DISALLOWANCE BE DELETE D. GROUND NO.II - DISALLOWANCE OF DEDUCTION U/S 80HHC 1. WITHOUT PREJUDICE TO GROUND NO.1, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE AO DESPITE THE FACT THAT DURING THE YEAR THERE WAS NO DUTY DRAWBACK CREDIT AVAILABL E ON CUSTOMS DUTY, AND THEREFORE, THERE WAS NO POSSIBILITY OF ENFORCING THE CONDITION OF CO MPARISON OF TWO RATES ENVISAGED IN STATUTORY PROVISIONS OF SECTION 80HHC (3). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT (A) AND AO FAILED TO APPRECIATE THAT WHERE THERE WAS NO POSSIBILITY OF M AKING A CONDITION WORKABLE, IT WILL BE A TRAVESTY OF JUSTICE TO DENY THE BENEFIT FOR THE SOL E REASON THAT THE APPELLANT COULD NOT COMPLY WITH A STATUTORY CONDITION. 3. THE APPELLANT PRAYS THAT THE SAID DISALLOWANCE BE D ELETED. GROUND NO.III - DISALLOWANCE MADE IN RESPECT OF SAL VAGE VALUE 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO REGARDING DISALLOWANCE MADE ON ACC OUNT OF SALVAGE VALUE DETERMINED BY INSURANCE COMPANY, DESPITE NECESSARY EVIDENCES BEIN G PRODUCED, PURSUANT TO DIRECTIONS OF HONBLE ITAT. 2. THE APPELLANT PRAYS THAT THE SAID DISALLOWANCE BE D ELETED. 3. PRELIMINARY ISSUE - CONDONATION : DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, SHRI RONAK DOSHI LD COUNSEL FOR THE ASSESSEE RAISED A PRELIMINARY ISSUE RELATING CONDONATION AND MENTIONED THAT ASSESSEE FILED A LETTER REQUEST ING FOR CONDONATION OF DELAY OF 4 DAYS IN FILING ALL THE THREE APPEALS BEFORE THE TRIBUNAL VIDE THE LETTER DATED 20.12.2011, SUPPORTED BY AN A FFIDAVIT WITH SAME DATE, GIVING THE REASON WHICH READS AS UNDER: OUR OFFICE BOY HAD PRESENTED FOR FILING THE APPEAL MEMOS TO THE HONBLE ITAT IN FORM NO.36 FOR FOUR YEARS IE FOR AYS 2001-02, 2002-03, 2 003-04 AND 2004-05. HOWEVER, IT APPEARS THAT OUR OFFICE BOY PRESENTED ONLY ONE COPY FOR EACH YEAR INSTEAD OF THREE COPIES; AS A RESULT, THREE YEARS APPEALS FOR AY 200 0-01, 2002-03 AND 2003-04 HAVE BEEN FILED ON YOUR RECORDS BUT ONLY ONE SET EACH. U NDER THESE CIRCUMSTANCES (I) THERE IS A DELAY OF ONE/TWO DAYS IN FILING THE APPEAL FOR AY2004-05; (II) THERE IS A DEFECT IN FILING THE APPEALS FOR AYS 2001-02, 2002-03 AND 200 3-04 IN AS MUCH AS ONLY ONE SET OF EACH YEARS APPEALS AND (III) THE COMPANY DOES NOT HAVE APPROPRIATE ACKNOWLEDGEMENTS FOR THE APPEALS FOR AY 2000-01 AND 2003-04. 4. LD COUNSEL PRAYED FOR CONDONATION OF THE DELA Y IN VIEW OF THE REASONS MENTIONED ABOVE AND ALSO THE SMALLNESS OF DELAY. LD DR OPPOSED THE SAME DUTIFULLY. CONSIDERING THE ABOVE AS WELL AS THE SMALLNESS OF D ELAY OF 4 DAYS, WE ARE OF THE 3 OPINION THAT THE CONDONATION OF DELAY SHOULD BE GRA NTED AND APPEAL SHOULD BE HEARD. HAVING DECIDED THE PRELIMINARY ISSUE, WE SHA LL TAKE UP THE GROUNDS. 5. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A COMPANY, ENGAGED IN THE BUSINESS OF EXPORT FABRICS. ASSESSE E FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 1,00,27,580/- AFT ER CLAIMING DEDUCTION U/S 80HHC OF RS. 1,02,25,309/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AFTER DISALLOWING THE DEDUCTION U/S 80HHC OF RS. 1,02,25, 309/-, DEPRECIATION U/S 50C OF RS. 92,997/-, LOSS CLAIMED ON ACCOUNT OF FIRE AMOUN TING TO RS. 1,38,772/- AND EXCHANGE FLUCTUATION LOSS OF RS. 3,06,829/-. AGGRI EVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 6. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, CIT (A) CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE AND PARTLY ALLOWED THE APPEAL GIVING RELIEF TO THE ASSESSEE WITH REGARD TO EXCHAN GE FLUCTUATION LOSS. AGGRIEVED WITH THE DECISION OF CIT (A), ASSESSEE FILED AN APP EAL BEFORE THE ITAT. THE ITAT, MUMBAI VIDE ITS ORDER DATED 11.9.2009 SET ASIDE THE MATTER TO THE FILES OF THE AO FOR RECOMPUTING THE DEDUCTION U/S 80HHC IN ACCORDANCE W ITH THE VIEW TAKEN BY THE SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS VS. ITO, 318 ITR 87. AS THE DECISION IN THE CASE OF TOPMAN EXPORTS HAS BEEN OVERRULED BY THE JUDGMENT IN THE CASE OF KALPATARU COLOURS & CHEMICALS VIDE ITA NO. 2887 OF 2009, , AO ASSESSED THE INCOME OF THE ASSESSEE AS RS. 2,04,23,897/-. ON APPEAL OF THE ASSESSEE AGAINST THE DECISION OF AO, CIT (A) CONFIRMED THE DECISION OF AO. AGGRI EVED WITH THE DECISION OF CIT (A), AGAIN ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE SAME ISSUE. 7. BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KA LPATARU COLOURS & CHEMICALS (SUPRA) WAS SET ASIDE BY THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXOPORTS VS. CIT [2012] 205 TAXMAN 119/18. THEREFORE, THE A SSESSEE IS ENTITLED TO DEDUCTION U/S 80HHC OF THE ACT. 8. ON THE OTHER HAND LD DR RELIED ON THE ORDER OF T HE REVENUE AUTHORITIES. 4 9. WE HAVE HEARD BOTH THE PARTIES, AND PERUSED THE MATERIAL PLACED BEFORE US AND ALSO THE JUDGMENT OF HONBLE SUPREME COURT IN T HE CASE OF TOPMAN EXPORTS VS. CIT (SUPRA). IN VIEW OF THE BINDING JUDGMENT OF HO NBLE SUPREME COURT IN TOPMAN EXPORTS (SUPRA), WHEREBY THE JUDGMENT IN THE CASE O F KALPATARU COLOURS & CHEMICALS (SUPRA) IS NO LONGER A GOOD LAW, WE ARE OF THE CONS IDERED OPINION THAT THE ISSUE RAISED GROUND NO.1 & 2 HAS TO BE SET ASIDE TO THE F ILES OF THE AO FOR EXAMINING THE ISSUE AFRESH IN THE LIGHT OF THE HONBLE SUPREME CO URT JUDGMENT IN THE CASE OF TOPMAN EXPORTS (SUPRA). AO IS DIRECTED TO FOLLOW T HE PRINCIPLE LAID DOWN IN THE SAID APEX COURT JUDGMENT IN THE CASE TOPMAN EXPORTS (SUP RA) WHILE DECIDING THE ISSUE AFRESH. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 & 2 RAISED BY THE ASSESSEE ARE ALLOWED PROTANTO . 10. GROUND NO.3 IS COMMON IN ALL THE THREE APPEALS AND IT RELATES TO THE SALVAGE VALUE AMOUNTING TO RS. 96,175/-. THIS IS THE SECOND ROU ND OF PROCEEDINGS. DURING THE FIRST ROUND, BASING ON THE INFORMATION ABOUT TH E DETERMINATION OF SALVAGE VALUE BY THE INSURANCE COMPANY, AO CAME TO THE CONCLUSION THAT A SUM OF RS. 96,175/- WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. AO MADE ADDITION ACCORDINGLY, IN THIS REGARD, THE TRIBUNAL HELD AS FOLLOWS. AS REGARDS THE REMAINING PART OF ADDITION OF RS. 96 ,175/-, BEING THE MARKET VALUE OF SALVAGE STOCK, AGAIN IT IS NOT CLEAR AS TO HOW THE ASSESSEE SOLD THE SALVAGE THE AMOUNT OF WHICH WAS DETERMINED BY THE INSURANCE COMPANY AT THIS FIGURE. THE ASSESSEE IS REQUIRED TO LEAD EVIDENCE ABOUT THE FATE OF THE SALVAGE STOCK, WHICH AMOUNT W AS DETERMINED BY THE INSURANCE COMPANY AS THE VALUE OF THE LEFT OVER. THE ASSESSING OFFIC ER IS DIRECTED TO DECIDED THIS POINT ALSO AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING TO THE ASS ESSEE. 11. GIVING SCANTY DETAILS, THE CIT (A) DISMISSED TH E APPEAL OF THE ASSESSEE AND THE RELEVANT PARAS READ AS FOLLOWS. 8. GROUND NO.3 IS AGAINST THE ADDITION OF RS. 96175/- TOWARDS SALVAGE VALUE. 8.1. THE HONBLE ITAT HAS DIRECTED THAT THE ASSESSE E IS REQUIRED TO LEAD EVIDENCE ABOUT THE VALUE OF SALVAGE STOCK DETERMINED BY INSU RANCE COMPANY. THE APPELLANT HAD SUBMITTED THAT THE DAMAGE STOCK WAS JUST THROWN OUT AND HAS NO REALIZABLE VALUE WAS NOT SUPPORTED BY ANY INDEPENDENT VERIFIABLE EVI DENCE. 8.2. IN APPEAL THE SAME PLEA WAS REITERATED AND THE ADDITION WAS WEAKLY CONTESTED. IN THE ABSENCE OF ANY SUBSTANTIVE EVIDE NCE AS DESIRED BY HONBLE ITAT, THE ADDITION BY AO IS SUSTAINED. GROUND NO.3 IS DI SMISSED. 12. DURING THE PROCEEDINGS BEFORE US AND IN REPLY T O THE QUERY FROM THE BENCH, LD COUNSEL COULD NOT DEMONSTRATE THE BASIS FOR THE SAID AMOUNT OF RS. 96,175/- AND THE SOURCE OF THIS FIGURE BEFORE AO TO COME TO THE CONCLUSION THAT THE SAID AMOUNT 5 CONSISTS SALVAGE VALUE OF THE MATERIAL SPOILED IN T HE FIRE WHICH IS WORTH OF RS. 1,94,508/- TOWARDS YARN OF 2160 KGS. IT IS THE CLAI M OF THE ASSESSEE THAT THE SAID CLAIM IS AN ADDITIONAL CLAIM IN ADDITION TO THE ORI GINAL CLAIM OF LOSS DUE TO FIRE AMOUNTING TO RS. 6,46,980/-. THE ASSESSEE FILED A DOCUMENT DATED NIL, WHICH IS SIGNED BY THE DIRECTOR, JAINCO SYNTEX PVT. LTD CERT IFYING ABOUT THE UNREALIZATION OF ANY MONEY FROM THE SAID YARN CLAIMED TO HAVE BEEN S POILED BY THE FIRE. BONAFIDE OF THE DOCUMENT WAS ALSO NOT DEMONSTRATED BY THE LD CO UNSEL BEFORE US. WE STRUCK UP BETWEEN THE AOS ASSERTION THAT THE SAID AMOUNT OF RS. 96,175/- CONSTITUTES SALVAGE VALUE AS DETERMINED BY THE AO AND THE ASSESSEES CL AIM THAT THE YARN IS DUMPED AND NO SALVAGE VALUE WAS RECEIVED BY THE ASSESSEE. DESPITE THE SECOND ROUND, NO CLARITY IS EMERGING VIS--VIS ABOVE CONTRARY STANDS OF THE PARTIES IN DISPUTE. CIT (A) HAS NOT ATTENDED TO THIS ISSUE MEANINGFULLY BY GIVI NG A SPEAKING ORDER. THEREFORE, IN TUNE WITH OUR DIRECTION REPRODUCED ABOVE, WE ARE OF THE OPINION THAT THE MATTER SHOULD BE REMANDED TO THE FILES OF THE CIT (A) FOR WANT OF A DETAILED SPEAKING ORDER ON THIS ISSUE AFTER GOING INTO THE RELEVANT DOCUMEN TS OF THE INSURANCE COMPANY WHICH DETERMINES SUM OF RS. 96,175/-. CIT (A) SHAL L GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ASSESSEE IS DIRE CTED TO FILED RELEVANT PAPERS MENTIONED ABOVE. ACCORDINGLY, THE ISSUE IS SET ASI DE AND THE GROUND NO.3 RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS ARE SET ASIDE. 13. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2.8.2013 SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 1& 2.8.2013 . & . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. 2- ( ) / THE CIT(A)- 6 4. 2- / CIT 5. 3 45 )-& , , / DR, ITAT, MUMBAI 6. 5!6 7 / GUARD FILE. *3- )- //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
