VALIANT GLASS WOKS P. LTD, MUMBAI V. DCIT CEN CIR 39, MUMBAI

ITA 9137/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8925 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2002-2003
• Appeal Filed On: 29-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SHANKARLAL JAIN
• Section: 143(3); 80HHC; 153A; 234B; 147; 148; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F BENCH BEFORE SHRI I.P. BANSAL (JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.9137/MUM/2010 ASSESSMENT YEAR: 2002-03 M/S. VALIANT GLASS WORKS PVT. LTD. C/O. SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265, PRINCESS STREET, MUMBAI 400002. PAN NO. AAACV1224E VS. DY. CIT, CENTRAL CIRCLE-39, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : M R. SHANKARLAL JAIN RESPONDENT BY : M R. ABHINAY KUMBHAR DATE OF HEARI NG : 13.09 .2012 DATE OF PRONOUNCEMENT : 21.09.2012 ORDER PER B.RAMAKOTAIAH, AM : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE CIT(A)-41, MUMBAI DATED 06.12.2010. 2. THE GROUNDS RAISED ARE AS UNDER : 1. LD. CIT(A) ERRED IN CONFIRMING CALCULATION OF D EDUCTION U/S 80HHC AS MADE BY THE LD. ASSESSING OFFICER AND NOT ALLOWING DEDUCTION ON DEPB LICENCE ACCRUED TO THE A SSESSEE DURING THE YEAR AGAINST MAKING EXPORT WITHOUT PROPE RLY APPRECIATING THE FACTS OF THE CASE AND LAW APPLICAB LE THERETO. ITA NO.9137/MUM/2010 M/S. VALIANT GLASS WORKS PVT. LTD. 2 2. LD.CIT(A) SHOULD HAVE APPRECIATED THAT UNDER EXPLANATION (BAA) TO SECTION 80HHC, ONLY AMOUNT REQ UIRED TO BE REDUCED IS PROFIT EARED ON TRANSFER OF DEPB AND NOT WHOLE AMOUNT OF DEPB LICENCE. 3. LD.CIT(A) ERRED IN OBSERVING THAT INTEREST U/S 2 34A AND 234B BEING MANDATORY IS LEVIABLE WITHOUT APPRECIATI NG THE FACT THAT UNDER THE PROVISIONS OF THESE SECTIONS IN CASE OF ASSESSMENT U/S 153A INTEREST CAN BE IMPOSED ONLY ON ENHANCED INCOME BEING ENHANCED WHILE MAKING ASSESSM ENT U/S 153A. NO ENHANCEMENT OF INTEREST U/S 243A AND/O R U/S 234B IS PERMISSIBLE. 4. LD. CIT(A) ERRED IN NOT FOLLOWING THE CBDT CIRCU LAR 2 OF 2006 PROVIDING THAT NO PENAL INTEREST BE IMPOSED ON ADDITIONAL DEMAND CREATED ON ACCOUNT OF DEPB. 5. APPELLANT PRAY THAT PROPER DEDUCTION BE ALLOWED U/S 80HHC AND INTEREST U/S 234A AND 234B BE DELETED. 6. APPELLANT CRAVE YOUR HONOURS LEAVE TO ADD, ALTE R OR AMEND ANY GROUND OF APPEAL AT THE TIME OF HEARING O F BEFORE. 3. IN THE COURSE OF ARGUMENT , THE LD. COUNSEL DID NOT PRESS THE ISSUE RELATED TO THE GROUND NO. 4 AND THE ISSUE RELATED TO SEC. 234B IN GROUND NO.5. 4. WE HAVE HEARD THE LD. COUNSEL AND THE LD.DR IN T HIS REGARD. 5. GROUND NOS. 1 & 2 PERTAIN TO CALCULATION OF DEDU CTION OF DEPB ACCRUED TO THE ASSESSEE DURING THE YEAR AGAINST THE EXPORTS. THE ASSESSING OFFICER IN THE ORDER U/S. 143(3) R.W S 15 3A STATED THAT THE DEDUCTION CLAIMED IN SECTION 80HHC AMOUNTING TO RS. 3,08,86,105/- WAS DISALLOWED WHILE COMPLETING ASSESSMENT U/S 143(3)/1 54 OF THE INCOME TAX ACT 1961. AFTER, STATING THIS FACT, THE ASSESS ING OFFICER HOWEVER, MENTIONED THAT THE DEDUCTION U/S 80HHC ON ACCOUNT O F DEPB WAS CLAIMED ON THE BASIS OF DECISION OF M/S. TOPMAN EXP ORTS OF ITAT MUMBAI SPECIAL BENCH. SINCE, THIS DECISION WAS NOT ACCEPTABLE BY THE ITA NO.9137/MUM/2010 M/S. VALIANT GLASS WORKS PVT. LTD. 3 DEPARTMENT, HE HELD THAT THE DEDUCTION ON ACCOUNT O F DEPB WAS AGAIN DISALLOWED IN THIS IMPUGNED ORDER. 5.1 THE LD. CIT(A) HAS ADJUDICATED THE ISSUE AGAINS T THE ASSESSEE FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. KALPATARU COLOURS AND CHEMICALS DATED 29.0 6.2010. THE ASSESSEE AGGRIEVED WITH THE SAID DECISION SUBMITTE D THAT THE ISSUE IS NOW COVERED IN FAVOR OF THE ASSESSEE BY THE ORDER O F THE HONBLE SUPREME COURT IN THE CASE OF M/S. TOPMAN EXPORTS VS. CIT (3 42 ITR 49 (SC)); THEREFORE, THE GROUNDS ARE TO BE ALLOWED. 6. WE HAVE CONSIDERED THE ISSUE. EVEN THOUGH, ON LE GAL PRINCIPLE, THE ISSUE IS IN FAVOR OF THE ASSESSEE AS THE HONBLE SU PREME COURT HAS DECIDED THE ISSUE IN THE CASE OF M/S TOPMAN EXPORT (SUPRA), WHAT IS TO BE NOTICED IS THAT THE DISALLOWANCE WAS ORIGINALLY MADE U/S 143(3). NOTHING WAS PLACED ON RECORD WHETHER ANY ORDER ON T HAT ISSUE WAS PASSED BY ANY OTHER HIGHER AUTHORITY. IN THE ABSENCE OF ANY RECOR D BEFORE US, IT IS NOT POSSIBLE TO ADJUDICATE ON THIS ORDER WHEREIN ORIGINAL DISALLOWANCE MADE U/S 143(3) EARLIER WAS REPEATED. THEREFORE, WHILE ACCEPTING IN PRINCIPLE THAT THE GROUNDS ARE TO BE A LLOWED IN FAVOR OF THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO EXAMIN E THE RECORD AND RE- COMPUTE THE INCOME ACCORDINGLY ON THE BASIS OF THE ORDERS IN ANY APPEAL ON ORDER U/S 143(3) PASSED ORIGINALLY. GROUNDS ARE CONSIDERED ALLOWED. 7. GROUND NO. 3 PERTAINS TO LEVY OF INTEREST U/S 23 4A. 7.1 WITHOUT ANY DISCUSSION ON THE ISSUE THE ASSESSI NG OFFICER LEVIED INTEREST U/S SECTION 234A IN THE ORDER. THE ASSESS EE CHALLENGED THE LEVY OF INTEREST BEFORE THE CIT(A) STATING THAT ASSESSI NG OFFICER IMPOSED THE INTEREST OF ` 4,60,260/- UNDER THE PROVISIONS OF SEC. 234A WITH OUT APPRECIATING THE FACT THAT INTEREST CAN BE IMPOSED ON THE TAX PAYABLE ON THE INCOME ENHANCED IN THE ORDER PASSED U/S 153A. T HE LD.CIT(A) ITA NO.9137/MUM/2010 M/S. VALIANT GLASS WORKS PVT. LTD. 4 DIRECTED THE ASSESSING OFFICER TO CHARGE INTEREST U/S 234A AS IT IS CONSEQUENTIAL AND MANDATORY. 8. BEFORE US, THE LD. COUNSEL SUBMITTED THAT INTERE ST CAN BE ALLOWED U/S 234A(3) AND THE ASSESSING OFFICER HAS NOT FOLL OWED THE PROVISIONS OF THE ACT. THE LD. DR RELIED ON THE ORDER OF CIT(A). 9. WE HAVE CONSIDERED THE ISSUE. THE PROVISIONS OF SECTION 234A(3) WHICH ARE APPLICABLE IS AS UNDER: INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOM E. 234A: (1). (2).. (3) WHERE THE RETURN OF INCOME FOR A NY ASSESSMENT YEAR, REQUIRED BY A NOTICE UNDER SECTION 148 72 [OR SECTION 153A ] ISSUED 73 [AFTER THE DETERMINATION OF INCOME UNDER SUB-SECTION (1) OF SE CTION 143 OR] AFTER THE COMPLETION OF AN ASSESSMENT UNDER SUB-SECTION (3) O F SECTION 143 OR SECTION 144 OR SECTION 147 , IS FURNISHED AFTER THE EXPIRY OF THE TIME ALLOWED UNDER SUCH NOTICE, OR IS NOT FURNISHED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 74 [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY IMMEDIATELY FOLLOWING THE EXPIRY OF THE TIME ALLOWE D AS AFORESAID, AND, ( A ) WHERE THE RETURN IS FURNISHED AFTER THE EXPIRY O F THE TIME AFORESAID, ENDING ON THE DATE OF FURNISHING THE RETURN; OR ( B ) WHERE NO RETURN HAS BEEN FURNISHED, ENDING ON TH E DATE OF COMPLETION OF THE REASSESSMENT OR RECOMPUTATION UND ER SECTION 147 75 [OR REASSESSMENT UNDERSECTION 153A ], ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERMINED ON THE BASIS OF SUCH REASSESSMENT OR RECOMPUTATION EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED 76 [UNDER SUB-SECTION (1) OF SECTION 143 OR] ON THE BASIS OF THE EARLIER ASSESSMENT AFORESAID. ITA NO.9137/MUM/2010 M/S. VALIANT GLASS WORKS PVT. LTD. 5 THE PROVISION IS VERY CLEAR. INTEREST CAN BE LEVIED ONLY ON THE DIFFERENCE BETWEEN THE ORIGINAL ASSESSED INCOME AND REVISED AS SESSED INCOME, IF THERE IS DEFAULT. SINCE THE BASIS FOR LEVY OF INTE REST COULD NOT BE VERIFIED BY US, THE ASSESSING OFFICER IS DIRECTED TO FOLLOW THE PROVISIONS OF 234A(3) AND LEVY THE INTEREST AFTER GIVING OPPORTUNITY OF HEARING TO ASSESSEE. ACCORDINGLY, THE GROUND IS ALLOWED. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST SE PTEMBER, 2012 SD/- ( I.P. BANSAL ) JUDICIAL MEMBER SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER MUMBAI, DATED 21 ST SEPTEMBER, 2012 RASIKA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME TAX 41, MUMBAI 4. THE COMMISSIONER OF INCOME TAX, MUMBAI 5. THE DEPARTMENTAL REPRESENTATIVE, BENCH F MUMBA I //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI