GTN Exports ltd, Aluva V. ACIT, Ernakulam

ITA 902/COCH/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8237 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 03-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: RADHESH BHATCA
• Keywords: Cost of acquisition; Set aside
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.902/COCH/2007 ASSESSMENT YEAR:2004-05 GTN EXPORTS LTD., ALWAYE. AABCG2838G VS. THE ASSIST. C OMMISSIONER OF INCOME-TAX, CIRCLE-1(2), ERNAKULAM. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RADHESH BHAT,CA RESPONDENT BY SHRI TJ VINCENT, D.R. O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(APPEALS)-II, KOCHI DATED 25-09 -2007. THE ASSESSMENT YEAR INVOLVED IS 2004-05. 2. THE FACTS RELEVANT ARE THAT THE ASSESSEE IS A CO MPANY AND FOR THIS ASSESSMENT YEAR ASSESSEE ADMITTED A TO TAL INCOME OF MORE THAN RS.1.49 CRORES. THE ASSESSEE WAS DERIVING INCOME FROM MANUFACTURE OF WOVEN FABRICS A ND ENGINEERING GOODS AND TRADING IN GARMENTS AND ENGIN EERING GOODS. ASSESSEE CLAIMED 80HHC DEDUCTION ON THE EXP ORT SALES MADE BY THEM AMOUNTING TO MORE THAN RS 10 CRO RES. THE ASSESSING OFFICER AFTER HEARING THE ASSESSEE HE LD THAT AS PER THE AMENDED PROVISO, THE ASSESSEE IS NOT IN A P OSITION TO ITA NO. 902/COCH/2007 2 PROVE THE ELIGIBILITY OF DEDUCTION U/S.80HHC. THE REFORE, HE RESTRICTED THE INCOME QUALIFYING FOR ELIGIBLE DEDUC TION U/S.80HHC AS IN THE COMPUTATION FOUND IN THE LAST P ARA. OF THE ASSESSMENT ORDER. 3. ON APPEAL TO THE CIT(APPEALS), IT IS THE CONTENT ION OF THE LD. REPRESENTATIVE OF THE ASSESSEE THAT THE ALL OWANCE OF DEDUCTION OF DEPB BENEFITS HAS TO BE IN ACCORDANCE WITH LAW AND THE FACTUAL POSITION BEING THAT THE DUTY DRAW B ACK WAS NOT AVAILABLE TO THE MAJORITY OF THE ENGINEERING PR ODUCTS OF THE ASSESSEE, WHICH WAS EXPORTED BY THE ASSESSEE. HENCE THE PROVISO TO SECTION 80HHC AS AMENDED BY THE FINA NCE ACT (NO.2) ACT 2005 HAS NO APPLICABLE. FURTHER, THE A SSESSEE HAS NOT EARNED ANY PROFIT ON THE TRANSFER OF DEPB B ENEFIT AND HENCE THERE IS NO AMOUNT UNDER SECTION 28(IIID) OF THE I.T. ACT. ALTERNATIVELY, IN ANY CASE THE AMOUNT R EALIZED BEING REIMBURSEMENT OF COST, PROFIT ON TRANSFER CAN NOT BE COMPUTED, CHARGING PROVISIONS CANNOT BE PUT INTO EF FECT, IS THE SUBMISSION OF THE ASSESSEE WHICH WAS NEGATIVED BY THE LD. CIT(APPEALS), AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. REPRESENTATIVE OF THE ASSE SSEE AT LENGTH. NOW THIS ISSUE IS CLARIFIED BY THE DECISI ON OF THE ITA NO. 902/COCH/2007 3 SPECIAL BENCH, IN THE CASE OF M/S. TOPMAN EXPORTS REPORTED AS 318 ITR (AT) 87 [ ITA NO.5769/MUM/2006 A.Y.2002-03 DT. 11-8-2009 ] PARTICULARLY AT PARA.78 PAGE NO.145 WHEREIN THE SPECIAL BENCH HELD THAT ONLY THE PROFIT ELEMENT ON THE SALE OF DEPB, THAT IS THE AMOUNT IN EXCESS OF SALE PROCEEDS OVER THE FACE VALUE, IS COVERED U/S.28(IIID). AT THE SAME TIME, SPECIAL BENCH HAS ALSO HELD THAT THE FACE VAL UE OF DEPB CANNOT BE REDUCED FROM THE PURCHASE COST BUT I S SEPARATE INCOME U/S.28(IIIB), WHICH ACCRUES AT THE TIME OF MAKING APPLICATION PURSUANT TO EXPORTS. NOW THIS CLARIFICATION BY THE SPECIAL BENCH WILL SETTLE THE ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH, WE SET ASIDE THE ORDER OF THE AUTHORITIES BE LOW AND REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR PROPER ADJUDICATION ON MERITS, BY FOLLOWING THE DIR ECTION OF THE SPECIAL BENCH OF INCOME-TAX APPELLATE TRIBUNAL, MUMBAI, IN THE CASE OF M/S. TOPMAN EXPORTS. 5. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 05 TH FEBRUARY,2010. PM. ITA NO. 902/COCH/2007 4 COPY FORWARDED TO: 1. GTN EXPORTS LTD., ALWAYE. 2. THE ACIT., CIRCLE-1(2), ERNAKULAM. 3. CIT(A)-II, KOCHI 4. CIT, KOCHI 5. D.R. BY ORDER SD/- ASSISTANT REGISTRAR