Bloom Decor Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 873/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80504 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 21-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: JAIMIN DAVE
• Keywords: Retrospective amendment
• Section: 143(3); 80HHC; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTA NT MEMBER M/S BLOOM DCOR LIMITED 2F, SUMEL, S.G. HIGHWAY, THALTEJ, AHMEDABAD PAN: AAACB6221B (APPELLANT) VS DCIT, CIRCLE-1, AHMEDABAD (RESPONDENT) ASSESSEE BY: SRI JAIMIN DAVE, A.R. REVENUE BY: SRI V.K. SINGH, SR. D.R. DATE OF HEARING : 29-10-2014 DATE OF PRONOUNCEMENT : 14-11-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-VI, AHMEDABAD DATED 10-01-2011 FOR A.Y. 2001-02. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF MANUFACTURING OF DECORATIVE AND INDUSTRIAL LAMINATE D SHEETS. IT FILED ITS RETURN OF INCOME FOR A.Y. 2001-02 ON 30-10-2001 DEC LARING TOTAL INCOME OF ITA NO. 873/AHD/2011 ASSESSMENT YEAR 2001-02 I.T.A NO. 873/AHD/2011 A.Y. 2001-02 PAGE NO M/S. BLOOM DCOR LTD VS. DCIT 2 RS. 29,07,659/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 29-02-2004 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,58,51,774/- BY DISALLOWING THE CLAIM OF DEDUCTION U/S. 80IA & 80HHC OF THE ACT. AGGRIEV ED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO G RANTED PARTIAL RELIEF U/S. 80HHC OF THE ACT. THEREAFTER THE MATTER WAS C ARRIED BEFORE HONBLE TRIBUNAL BY ASSESSEE AS WELL AS REVENUE. WITH RESP ECT TO DEDUCTION U/S. 80HHC ON THE SALE VALUE OF DEPB LICENSE, THE HONBL E TRIBUNAL VIDE ORDER DATED 06-06-2008 IN ITA NO. 3186 & 2977/AHD/2004 RE STORED THE ISSUE TO THE FILE OF AO FOR CONSIDERING THE ISSUE AFRESH. P URSUANT TO THE DIRECTIONS OF THE TRIBUNAL, AO VIDE ORDER DATED 31-03-2009 PAS SED U/S. 143(3) R.W.S. 254 OF THE ACT DETERMINED THE TOTAL INCOME AT RS. 1 ,35,92,524/- WHEREBY THE ASSESSEE WAS GRANTED DEDUCTION OF RS. 42,91,864 /- U/S. 80HHC OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIE D THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 10-01-2011 DISMISSED TH E APPEAL THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), AS SESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING CONCI SE GROUNDS. 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN C ONFIRMING ACTION OF AO IN EXCLUDING 90% OF DEPB RECEIPT WHILE COMPUTING ELIGI BLE BUSINESS PROFITS FOR DEDUCTION U/S. 80HHC OF THE ACT. LD. CIT (A) R ELIED ON JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN KALPTARU COLOURS & CHE MICALS (328 ITR 451) NOW OVERRULED BY HON'BLE SUPREME COURT IN TOPM AN EXPORTS VS CIT (342 ITR 49). LEARNED CIT(A) OUGHT TO HAVE HELD THA T ONLY PROFIT ON SALE OF DEPB LICENSE TO BE EXCLUDED FROM ELIGIBLE BUSINESS PROFITS FOR COMPUTING DEDUCTION U/S 80HHC OF THE ACT. IT BE SO HELD NOW. 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE, LD. CIT(A) ERRED IN FACTS AND LAW IN HOLDING THAT THE APPELLANT HEREIN WAS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80HHC IN VIEW OF THE THIRD PROVISO TO SUB- SECTION (3) OF SECTION 80HHC. LD. CLT(A) OUGHT TO HAVE HELD THAT THE THIRD PROVISO TO SUB-SECTION (3) OF SECTION 80HHC ITSELF IS DECLARED ULTRA VIRES BY HON'BLE GUJARAT HIGH COURT IN AVANI EXPORTS (348 ITR 391) AND HENCE IT HAS NO APPLICATION TO THE PRESENT CASE. IT BE SO HE LD NOW. 3. LD. CIT(A) ERRED IN FACTS AND IN LAW IN LEV YING INTEREST U/S 234B OF THE ACT INSPITE OF THE FACT THAT THE ADDITION WAS MADE ON ACCOUNT OF THE I.T.A NO. 873/AHD/2011 A.Y. 2001-02 PAGE NO M/S. BLOOM DCOR LTD VS. DCIT 3 RETROSPECTIVE AMENDMENT IN ACT. LD. CLT(A) OUGHT TO HAVE HELD THAT IN VIEW OF SUN PETROCHEMICAL INTEREST CANNOT BE LEVIED ON ADDITION MADE ON ACCOUNT OF RETROSPECTIVE AMENDMENTS IN THE ACT. IT BE SO HELD. 4. INITIATION OF PENALTY U/S 27L(1)(C) OF THE ACT IS NOT JUSTIFIED. 4. BEFORE US LD. AR AT THE OUTSET SUBMITTED THAT T HE ONLY ISSUE IS WITH RESPECT TO DEDUCTION U/S. 80HHC ON THE DEPB RECEIPT S. LD. AR SUBMITTED THAT AO WHILE COMPUTING DEDUCTION U/S. 80HHC HAD RE DUCED THE ENTIRE SALE PROCEEDS OF THE DEPB WHEREAS THE ONLY THE PROF IT ON THE SALE OF DEPB SHOULD HAVE BEEN REDUCED FOR WORKING OUT THE D EDUCTION. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) RELYING ON THE DE CISION OF BOMBAY HIGH COURT IN THE CASE OF KALPTARU POWER REPORTED IN 328 ITR 451 UPHELD THE ORDER OF AO BUT HOWEVER THE AFORESAID DECISION OF T HE BOMBAY HIGH COURT HAS BEEN REVERSED BY APEX COURT IN THE CASE OF TOPM AN EXPORTS 342 ITR 49 (SC). LD. AR FURTHER SUBMITTED THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF AVANI EXPORTS (2012) 348 ITR 391 (GUJ) QUASHED THE AMENDMENT MADE BY TAXATION LAW AND (AMENDMENT) ACT 2005 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 1998 AND HELD THAT THE OPERATION OF AMENDMENT BY WAY OF ADDING SECOND, THIRD, FOURTH AN D FIFTH PROVISO TO S. 80HHC(3) COULD BE GIVEN EFFECT FROM THE DATE OF AME NDMENT. LD. AR FURTHER RELIED ON THE DECISION IN THE CASE OF AVANI EXPORTS VS. CIT REPORTED IN (2012) 348 ITR 391 (GUJ). HE THEREFORE SUBMITTE D THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO TO DECIDE TH E ISSUE AFTER CONSIDERING THE DECISION IN THE CASE OF TOPMAN EXPORTS (SUPRA) AND AVANI EXPORTS (SUPRA). LD. DR ON THE OTHER HAND SUPPORTED THE OR DER OF AO AND LD. CIT(A) 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DISPUTE IN THE PRESENT CAS E IS WITH RESPECT TO I.T.A NO. 873/AHD/2011 A.Y. 2001-02 PAGE NO M/S. BLOOM DCOR LTD VS. DCIT 4 DENIAL OF DEDUCTION U/S. 80HHC OF THE ACT ON THE DE PB CREDITS. WE FIND THAT WITH RESPECT TO DEDUCTION U/S. 80HHC WITH RESP ECT TO DEPB CREDITS, THE HONBLE APEX COURT IN THE CASE OF TOPMAN EXPORT S (SUPRA) HAS HELD THAT PROFIT ON TRANSFER OF DEPB WOULD BE THE SALE V ALUE OF DEPB LESS ITS FACE VALUE, WHICH REPRESENTS THE PROFITS OF DEPB. IT FURTHER HELD THAT THE ENTIRE SUM RECEIVED ON TRANSFER OF DEPB IS NOT CHAR GEABLE AND DEPB IS CHARGEABLE AS INCOME U/S. 28(IIID) OF THE ACT IN TH E YEAR IN WHICH SUCH PERSON APPLIES FOR DEPB CREDIT AGAINST THE EXPORTS WHEREAS THE PROFIT ON TRANSFER IS CHARGEABLE AS INCOME U/S. 28(IIID) IN T HE HANDS OF THE ASSESSEE IN THE YEAR IN WHICH IT TRANSFERS. 6. IN THE PRESENT CASE, WE FIND THAT THE AO AND LD. CIT(A) HAD NOT EXAMINED THE ISSUE OF DEDUCTION U/S. 80HHC IN THE L IGHT OF THE AFORESAID DECISION OF APEX COURT. WE FURTHER FIND THAT LD. C IT(A) HAS RELIED ON THE DECISION IN THE CASE OF KALPTARU COLOURS AND CHEMIC ALS LTD. WHICH HAS BEEN SET ASIDE BY HONBLE APEX COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA). BEFORE US LD. AR HAS ALSO RELIED ON THE D ECISION OF AVANI EXPORTS VS. CIT (SUPRA). BUT WE FIND THAT THE AFORESAID DE CISIONS WERE NOT BEFORE THE AO AND LD. CIT(A) WHEN THE MATTER WAS DECIDED. WE ARE THEREFORE OF THE VIEW THAT THE MATTER NEEDS TO BE RE-EXAMINED IN THE LIGHT OF THE DECISION OF APEX COURT IN THE CASE OF TOPMAN EXPORT S (SUPRA) AND THE DECISION OF HONBLE HIGH COURT IN THE CASE OF AVANI EXPORTS. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF AO FOR HIM TO DECI DE THE ISSUE OF DEDUCTION U/S. 80HHC IN THE LIGHT OF THE AFORESAID DECISIONS OF APEX COURT, HIGH COURT & AS PER LAW. NEEDLESS TO STATE THAT AO SHAL L GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE RES ULT THE GROUNDS OF THE ASSSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. I.T.A NO. 873/AHD/2011 A.Y. 2001-02 PAGE NO M/S. BLOOM DCOR LTD VS. DCIT 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 14/11/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,