Euro Footwear Ltd., Kanpur V. ACIT, Kanpur

ITA 877/LKW/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83435 (ITAT-LUCKNOW)
• Duration Of Justice: 5 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-11-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 29-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARE BEING DISPOSED OF; AND ASSESSMENT YEAR
• Keywords: Principle of natural justice
• Section: 80HHC; 80IB; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.877 & 878/LKW/2008 ASSESSMENT YEARS:2003 - 04 & 2004 - 05 M/S EURO FOOTWEAR LTD., 417 - 419, KRISHNA TOWER, 15/63, CIVIL LINES, KANPUR. PAN:AAACE6805E VS. A.C.I.T. - VI, KANPUR. (APPELLANT) (RESPONDENT) ITA NOS.61 & 62/LKW/2009 ASSESSMENT YEARS:2003 - 04 & 2004 - 05 A.C.I.T. - VI, KANPUR. VS. M/S EURO FOOTWEAR LTD., 417 - 419, KRISHNA TOWER, 15/63, CIVIL LINES, KANPUR. PAN:AAACE6805E (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR ASSESSMENT YEAR 2003 - 04 & 2004 - 05, WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A) - I, KANPUR BOTH DATED 17/11/2008. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ASSESSEE BY SHRI P. K. KAPOOR, C.A. REVENUE BY SHRI C. P. SINGH, D. R. DATE OF HEARING 13/11/2014 DATE OF PRONOUNCEMENT 1 8 /12/2014 2 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE I.E. I.T.A. NO.877/LKW/20 08 FOR ASSESSMENT YEAR 2003 - 2004. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE 'CIT(A)' H AS ERRED IN LAW AND ON FACTS IN HOLDING THAT 'AS PER LAW THE AMOUNT OF DEPB IS NOT LIABLE TO BE INCLUDED FOR THE PURPOSE OF DEDUCTION U/S. 80 HHC AND ACTION TAKEN BY THE ASSESSING OFFICER IN ORDER', AND ON THAT BASIS IN UPHOLDING THE EXCLUSION OF SUMS AGGR EGATING RS.1,28,27,486/ - FROM THE COMPUTATION OF PROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 HHC. 2. BECAUSE EXCLUSION OF THE SAID SUM OF RS.1,28,27,486/ - FROM THE COMPUTATION OF ELIGIBLE PROFIT IS CONTRARY TO THE LETTER AND SPIRIT OF LAW AND THE SAME IS EVEN VIOLATIVE OF THE WELL LAID RULE OF CONSTRUCTION, TO THE EFFECT THAT 'BENEFICIAL PROVISIONS SHOULD BE CONSTRUED LIBERALLY'. 3. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT 'EXPORT INCENTIVES & DUTY DRAW BACK IS AN AMOUNT WHICH IS DIRECTLY LINKED TO THE ACTIVITY OF EXPORT AND SUCH INCENTIVE/INCOME CANNOT BE ATTRIBUTED TO BE DERIVED OR ARISEN DIRECTLY FROM INDUSTRIAL OPERATIONS OF THE CONCERN ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IA' AND ON THAT BASIS IN EXCLUDING THE SUMS AMOU NTING TO RS.1,83,03,833/ - FROM THE COMPUTATION OF PROFIT ELIGIBLE FOR RELIEF UNDER SECTION 80 IB. 4. BECAUSE ON A DUE CONSIDERATION OF THE PRINCIPLE THAT 'IN CASE OF CONFLICT IN JUDICIAL OPINION, THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED', TH E 'CIT(A)' SHOULD HAVE UPHELD THE APPELLANT'S CLAIM FOR INCLUSION OF THE SAID SUM OF RS.1,83,03,833/ - IN THE COMPUTATION OF ELIGIBLE PROFIT, FOR THE PURPOSES OF QUANTIFICATION OF CLAIM FOR EXEMPTION UNDER SECTION 80IB OF THE 'ACT'. 5. BECAUSE THE ORDER AP PEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE BEFORE US THAT IN RESPECT OF ALLOWABILITY OF DEDUCTION U/S 80HHC FOR EXPORT INCENTIVE, BEING DEPB OF RS.1,28,27,486/ - , THE MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER 3 FOR A FRESH DECISION IN THE LIGHT OF JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF TOPMAN EXPORTS VS. CIT [2012] 342 ITR 49 (SC). REGARDING THE SECOND ISSUE, AS PER GROUND NO. 3 & 4, IT WAS FAIRLY CONCEDED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT 317 ITR 218 (SC). 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT FOR THE FIRST ISSUE I.E. ALLOWABILITY OF DEDUCTION U/S 80HHC IN RESPECT OF EXPORT INCENTIVE , PER THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA), ONLY PROFIT ON SALE OF DEPB HAS TO BE CONSIDERED FOR R EDUCTION FROM BUSINESS PROFIT AND NOT THE ENTIRE SALE PROCEEDS OF DEPB. IT WAS ALSO HELD THAT FOR THE PURPOSE OF COM PUTING PROFIT ON SALE OF DEPB, FAC E VALUE OF DEPB SHOULD BE CONSIDERED AS COST OF DEPB. S INCE THIS ISSUE WAS NOT DECIDED BY AUTHORITIES BELOW IN THIS MANNER, WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE TH IS MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION ON THIS ASPECT IN THE LIGHT OF TH I S JUDGMENT OF HON'BLE APEX COURT. GROUND NO. 1 & 2 ARE ALLOWED FOR STATISTICAL PURPOSES. 6. REGARDING THE SECOND ISSUE AS PER GROUND NO. 3 & 4, WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA VS. CIT 317 ITR 218 (SC) WHEREIN IT WAS HELD THAT DEDUCTION U/S 80IB IS NOT ALLOWABLE IN RESPECT OF EXPORT INCENTIVE IN THE FORM OF DDB AND DEPB. ACCORDINGLY, ON THIS ISSUE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, GROUND NO. 3 & 4 ARE REJECTED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 4 8. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2003 - 04 I.E. I.T.A. NO.61/LKW/2009. IN THIS APPEAL , THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT DEDUCTION U/S 80HHC IS LIABLE TO BE COMPUTED INDEPENDENTLY WITHOUT REDUCING THE AMOUNT OF DEDUCTION U/S 80IA OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT TWO DEDUCTIONS U/S 80HHC AND 80IA ARE NOT GOVERNED BY THE PROVISIONS OF SECTION 80IA(9) OF THE INCOME TAX ACT, 1961 AND ARE MU TUALLY EXCLUSIVELY TO BE CONSIDERED. 3. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER RESTORED. 9. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMEN T ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002 - 03 IN I.T.A. NO.4 8/LKW/06 DATED 30/06/2006, COPY OF WHICH IS AVAILABLE ON PAGE NO. 1 TO 10 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT IT WAS HELD BY THE TRIBUNAL THAT DEDUCTION U/S 80HHC AND 80IB HAVE TO BE INDEPENDENTLY COMPUTED AND THEY HAVE TO BE CIRCUMSCRIBED BY THE OVERALL LIMIT AS PRESCRIBED U/S 80A(2) OF THE ACT ONLY. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF JT. ACIT VS. MANDIDEEP ENGINEERING AND PACKING INDIA PVT. LTD. [2007] 292 ITR 1 (SC) WHEREIN IT WAS HELD THAT SE CTION 80HHC AND 80 - I ARE INDEPENDENT OF EACH OTHER AND THEREFORE, A NEW INDUSTRIAL UNIT CAN CLAIM DEDUCTION UNDER BOTH THE SECTIONS ON THE GROSS TOTAL INCOME INDEPENDENTLY. 10. WE FIND THAT IN ASSESSMENT YEAR 2002 - 03 IN ASSESSEES OWN CASE, SIMILAR ISSUE WAS BEFORE THE TRIBUNAL AND AS PER PARA 19 OF ITS DECISION, IT WAS HELD THAT 5 DEDUCTION U/S 80HHC AND 80 - IB HAVE TO BE INDEPENDENTLY COMPUTED AND THEY HAVE TO BE CIRCUMSCRIBED BY THE OVERALL LIMIT AS PRESCRIBED U/S 80A(2) OF THE ACT ONLY. SINCE THE FACTS IN THE PRESENT YEAR ARE IDENTICAL TO THE FACTS OF THAT YEAR , WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW AND HENCE, RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION IN ASSESSEES OWN CASE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) BECAUSE THIS DECI SION OF CIT(A) IS IN LINE WITH THE TRIBUNAL DECISION. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 11. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05 I.E. I.T.A. NO.878/LKW/2008. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT 'AS PER LAW THE AMOUNT OF DEPB IS NOT LIABLE TO BE INCLUDED FOR THE PURPOSE OF DEDUCTION U/S. 80 HHC AND ACTION TAKEN BY THE ASSESSING OFFICER IN ORDER', AND ON THAT BASIS IN UPHOLDING THE EXCLUSION OF SUMS AGGREGATING RS.1,19,75,244/ - FROM THE COMPUTATION OF PROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 HHC. 2. BECAUSE EXCLUSION OF THE SAID SUM OF RS.1,19,75,244/ - FROM THE COMPUTATION OF ELIGIBLE PROFIT IS CONT RARY TO THE LETTER AND SPIRIT OF LAW AND THE SAME IS EVEN VIOLATIVE OF THE WELL LAID RULE OF CONSTRUCTION, TO THE EFFECT THAT 'BENEFICIAL PROVISIONS SHOULD BE CONSTRUED LIBERALLY'. 3. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT 'EXP ORT INCENTIVES & DUTY DRAW BACK IS AN AMOUNT WHICH IS DIRECTLY LINKED TO THE ACTIVITY OF EXPORT AND SUCH INCENTIVE/INCOME CANNOT BE ATTRIBUTED TO BE DERIVED OR ARISEN DIRECTLY FROM INDUSTRIAL OPERATIONS OF THE CONCERN ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0 IA', AND ON THAT BASIS IN EXCLUDING THE SUMS AMOUNTING TO RS.1,62,64,747/ - FROM THE COMPUTATION OF PROFIT ELIGIBLE FOR RELIEF UNDER SECTION 80 IB. 6 4. BECAUSE ON A DUE CONSIDERATION OF THE PRINCIPLE THAT 'IN CASE OF CONFLICT IN JUDICIAL OPINION, THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED', THE 'CIT(A)' SHOULD HAVE UPHELD THE APPELLANT'S CLAIM FOR INCLUSION OF THE SAID SUM OF RS,L,62,64,747/ - IN THE COMPUTATION OF ELIGIBLE PROFIT, FOR THE PURPOSES OF QUANTIFICATION OF CLAIM FOR EXEMPTION UNDER SECTION 80IB OF THE 'ACT'. 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 12. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT IN THIS YEAR ALSO, SAME TWO ISSUES ARE INVOLVED AS IN ASSESSMENT YEAR 2003 - 04 AND SAME CAN BE DECIDED ON SIMILAR LINE. IN ASSESSMENT YEAR 2003 - 04, WE HAVE DECIDED THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION TO THE ASSESSEE U/S 80HHC IN RESPECT OF EXPORT INCENTIVE IN THIS MANNER THAT THE MATTER BE RESTORED TO ASSESSING OFFICER FOR A FRESH DECISION IN THE LIGHT OF JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA). ACCORDINGLY, IN THIS YEAR ALSO, THIS ISSUE IS RESTORED BACK TO ASSESSING OFFICER FOR FRESH DECISION WITH SIMILAR DIRECTIONS. ACCORDINGLY, GROUND NO . 1 & 2 ARE ALLOWED FOR STATISTICAL PURPOSES. 13. IN GROUND NO. 3 & 4, THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S 80IB IN RESPECT OF EXPORT INCENTIVE WAS DECIDED AGAINST THE ASSESSEE FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF LIBE RTY INDIA (SUPRA) AND THEREFORE, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND GROUND NO. 3 & 4 ARE REJECTED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 15. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2004 - 05 IN I.T.A. NO.62/LKW/2009. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS YEAR: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT DEDUCTION U/S 80HHC IS 7 LIABLE TO BE COMPUTED INDEPENDENTLY WITHOUT REDUCING THE AMOUNT OF DEDUCTION U/S 80IA OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT TWO DEDUCTIONS U/S 80HHC AND 80IA ARE NOT GOVERNED BY THE PROV ISIONS OF SECTION 80IA(9) OF THE INCOME TAX ACT, 1961 AND ARE MUTUALLY EXCLUSIVELY TO BE CONSIDERED. 3. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER RES TORED. 16. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT IN THIS YEAR ALSO, THE GROUNDS ARE SAME AS WERE RAISED BY THE REVENUE IN ASSESSMENT YEAR 2003 - 04 AND SAME CAN BE DECIDED ON SIMILAR LINE. IN ASSESSMENT YEAR 2003 - 04, THIS ISSUE WAS DECIDED AGAINST T HE REVENUE AND IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002 - 03 . ACCORDINGLY, IN THE PRESENT YEAR, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 17. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 18. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND BOTH APPEALS OF THE REVENUE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /1 2 /2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR