M/S. MAMYA SHAH (PROP OF M/S. AQUARIOUS IMPEX), V. THE ITO WD-12(3)(2),

ITA 9092/MUM/2004

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8240 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 19-11-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 15-12-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: KAPIL K JAIN
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI P.M. JAGTAP (A.M.) ITA NO. 9092/MUM /2004 ASSESSMENT YEAR : 2001-02 SMT. MAYA S. SHAH, PROPRIETOR OF M/S AQUARIUS IMPEX, 41-A, TODI INDUSTRIAL ESTATE, SUN MILL COMPOUND, LOWER PAREL, MUMBAI 400 013. PAN AAPPS2598J VS. THE INCOME TAX OFFICER, WARD 12(3)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI KAPIL K. JAIN DEPARTMENT BY : SHRI DINESH KUMAR DATE OF HEARING 19-11-2012 DATE OF PRONOUNCEMENT 19-11-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 8-10-2004 PASSED BY THE LD. CIT(A) XII, MUMB AI FOR THE A.Y. 2001-02. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF READYMADE GARMENT EX PORTS. THE RETURN WAS FILED DECLARING TOTAL INCOME OF RS. 3,08,830/- AFTER CLAIMING DEDUCTION OF RS. 10,00,165/- U/S 80HHC OF THE INCOM E TAX ACT, 1961 (THE ACT). DURING THE COURSE OF ASSESSMENT PROCEED ING, ON EXAMINATION ITA NO. 9092/MUM/2004 2 OF ASSESSEES WORKING OF SECTION 80HHC OF THE ACT, IT WAS, INTER ALIA, OBSERVED BY THE A.O. THAT THERE IS A LOSS OF RS. 27 ,53,627/- AS PER WORKING OF SECTION 80 HHC OF THE ACT GIVEN BY THE A SSESSEE APPEARING AT PAGE 3 OF THE ASSESSMENT ORDER AS UNDER:- SALES , EXPORT SALES 4,57,16,628/- RATE DIFFERENCE 4,52,956/- 4,61,69,584/- ADD: LOCAL SALES 42,69,804/- TOTAL TURNOVER RS. 5,04,39,388/- ============== BUSINESS PROFIT AS PER P&L A/C. LESS: 90% OF THE FOLLOWING - I) DUTY DRAWBACK 45,77,170/- II) INTEREST RECEIVED 1,22,844/- III) MISCELLANEOUS INCOME 58,724/- 47,58,738/- 90% OF RS. 47,58,738/- RS. 42,82,864/- (-) RS. 27,53,627/- THEREFORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTIO N U/S 80HHC OF THE ACT AND ACCORDINGLY THE ASSESSEE WAS ASKED TO EXPLAIN A S TO WHY IN VIEW OF THE DECISION IN IPCA LABORATORIES LTD. (25 ITR 401) (MUM) DEDUCTION U/S 80HHC OF THE ACT SHOULD NOT BE DISALLOWED. THE A.O. AFTER CONSIDERING THE ASSESSEES EXPLANATION CLAIMING THAT THE ASSESS EE IS ENTITLED FOR DEDUCTION U/S 80HHC OF THE ACT OF RS. 10,00,165/- H ELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80HHC OF THE ACT AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME O F RS. 13,09,000/- VIDE ORDER DTD. 19-12-2003 PASSED U/S 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) FOLLOWING VARIOUS DECISIONS INCLUDING TH E DECISION OF HONBLE APEX COURT IN IPCA LABORATORIES LTD. HELD THAT THE ASSESSEE IS NOT ITA NO. 9092/MUM/2004 3 ENTITLED TO FOR DEDUCTION U/S 80HHC OF THE ACT AS T HE NET RESULT OF THE APPELLANTS EXPORT BUSINESS IS A NEGATIVE FIGURE I. E. LOSS AND, HENCE, UPHELD THE ORDER PASSED BY THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED `COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW IN CONFIRMING THE CONTENTION OF THE LEARNED ASSESSING OFFICER, THAT T HE DISALLOWANCE FOR CLAIM OF THE DEDUCTION U/S 80HHC CLAIMED BY THE APP ELLANT COMPANY. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE APPELLANT COMPANY IS A 100% EXP ORTER CLAIMING THE DEDUCTION U/S 80 HHC(3), WHICH SPELL OUT THE FORMUL A FOR CALCULATION OF DEDUCTION AND SUCH FORMULA SHOULD BE VIEWED IN TOTA LITY. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80HHC R S. 10,00,165/- BEING 80% OF ELIGIBLE EXPORT PROFIT OF RS. 12,50,20 6/-. HE FURTHER SUBMITS THAT IN VIEW OF THE RETROSPECTIVE AMENDMENT MADE UNDER THE FIFTH PROVISIONS TO SECTION 80HHC (3) OF THE ACT WH EREBY THE SET OFF OF NEGATIVE EXPORT PROFIT WITH 90% EXPORT INCENTIVES I .E. DUTY DRAWBACK ETC. IS ALLOWED AND NET EXPORT PROFIT IS ELIGIBLE FOR DE DUCTION U/S 80HHC OF THE ACT. HE FURTHER SUBMITS THAT THE EXPORT TURNOVER I S ALSO LESS THAN RS. 10 CRORES. HOWEVER, HE SUBMITS THAT HE HAS NO OBJECTIO N, IF, IN THE INTEREST OF JUSTICE, THE ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. ITA NO. 9092/MUM/2004 4 5. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND THE LD. CIT(A) SUBMITS THAT HE HAS NO OBJE CTION IF THE MATTER IS SEND BACK TO THE FILE OF THE A.O. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUT E THAT THE IMPUGNED ASSESSMENT WAS MADE PRIOR TO THE AMENDMENT MADE U/S 80HHC OF THE ACT BY INSERTING FIFTH PROVISO BY THE TAXATION LAWS (AMENDMENT) ACT, 2005 W.R.E.F. 1-4-1992. IN VIEW OF THE AFORESAID RE TROSPECTIVE AMENDMENT, WE ARE OF THE VIEW THAT, IN THE INTEREST OF JUSTICE , THE MATTER SHOULD GO BACK TO THE FILE OF THE A.O. AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND REST ORE BACK THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH I N THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GRO UNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATIST ICAL PURPOSE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19-11-2012. SD/- (P.M. JAGTAP ) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 19-11-2012. ITA NO. 9092/MUM/2004 5 RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XII, MUMB AI 4. COMMISSIONER OF INCOME TAX XII, MUMBAI. 5. DEPARTMENTAL REPRESENTATIVE, BENCH K, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI