ACIT, New Delhi V. M/s Paramount Impex (P) Ltd., New Delhi

ITA 93/DEL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7480 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-03-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 07-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Question of law; Competent authority
• Section: 80HHC; 80IB; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : FRIDAY : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.93/DEL/2010 ASSESSMENT YEAR : 2001-02 ACIT, CIRCLE 14 (1), ROOM NO.415, 4 TH FLOOR, CR BUILDING, NEW DELHI. VS. PARAMOUNT IMPEX (P) LTD., C-8/8834, VASANT KUNJ, NEW DELHI. PAN : AAACP7279B (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI SALIL MISHRA, DR ORDER U/S 260(1) OF THE IT ACT, 1961 PER I.P. BANSAL, JUDICIAL MEMBER EARLIER THE PRESENT APPEAL WAS DECIDED BY THE TRIBUN AL VIDE ORDER DATED 9 TH MARCH, 2010 IN ITA NO.93/DEL/2010. IN THE SAID ORDE R THE ISSUE REGARDING GRANT OF DEDUCTION U/S 80HHC ON DEPB C REDITS WAS DECIDED IN FAVOUR OF THE ASSESSEE FOLLOWING THE SPECIAL BENCH DECISION IN THE CASE OF TOPMAN EXPORTS VS. ITO (ITA NO.5769/MUM /2006). THE REVENUE BEING AGGRIEVED BY THE SAID ORDER OF THE TRI BUNAL HAD PREFERRED AN APPEAL BEFORE HONBLE DELHI HIGH COURT AND VIDE ORDER DATED 18 TH FEBRUARY, 2011, HONBLE HIGH COURT IN ITA NO.12/20 11 HAS RESTORED THE MATTER BACK TO THE FILE OF THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- 1. ALL THESE APPEALS INVOLVED COMMON QUESTION OF LAW . FOR THE SAKE OF CONVENIENCE, WE CAN REPRODUCE THE QUESTIONS O F LAW FRAMED IN ONE OF THESE APPEALS:- ITA NO.93/DEL/2010 2 '(A) WHETHER ON A CORRECT INTERPRETATION OF THE RELEVANT STATUTORY PROVISIONS, TRIBUNAL WAS JUSTIFIED IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80HHC OF THE ACT IN RESPECT OF 'PROFIT' ON SALE OF DEPB? (B)WHETHER ON THE FACTS OF THE PRESENT CASE, TRIBUNAL WAS JUSTIFIED IN LAW IN IMPLIEDLY HOLDING THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION AS PER THE FIRST PROVISO BELOW SUB-SECTION 3 OF SECTION 80HHC IN RESPECT OF DEPB CREDIT UTILIZED BY THE ASSESSEE?' 2. THE ORDERS PASSED BY THE TRIBUNAL IN ALL THESE CAS ES ARE BRIEF BECAUSE OF THE REASON THAT THE TRIBUNAL HAS SIMPLY FOLL OWED (WHICH IT WAS SUPPOSED TO) THE DECISION OF THE ITAT SPE CIAL BENCH, MUMBAI IN THE CASE OF TOPMAN EXPORT VS. ITO [I TA NO. 5769/MUM./2006 DECIDED ON DATED 11TH AUGUST, 2009.]. B Y THAT JUDGMENT, THE SPECIAL BENCH OF THE ITA NO. ITA 12/2011 & ORS. CONNECTED MATTERS PAGE 5 OF 6 TRIBUNAL HAS HELD THAT THE FACE VALUE OF DEPB IS CHARGEABLE TO TAX U/S 28 (IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DE PB IS FILED WITH THE COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFIT I N SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28 (IIID) AT THE TIME OF ITS SALE. 3. THE REVENUE HAD FILED THE APPEAL IN THE HIGH COURT ADJUDICATE AT BOMBAY AGAINST THE AFORESAID DECISION OF THE SPECIAL BENCH OF THE ITAT. THE BOMBAY HIGH COURT HAS REVERSED THE DECIS ION OF THE TRIBUNAL AND THE JUDGMENT OF THE BOMBAY HIGH COURT I S REPORTED AS COMMISSIONER OF INCOME TAX VS. KALPATARU COLOURS COMMISSIONER OF INCOME TAX VS. KALPATARU COLOURS COMMISSIONER OF INCOME TAX VS. KALPATARU COLOURS COMMISSIONER OF INCOME TAX VS. KALPATARU COLOURS AND CHEMICALS, AND CHEMICALS, AND CHEMICALS, AND CHEMICALS, 328 ITR 451. 4. SINCE THE TRIBUNAL HAD SIMPLY FOLLOWED SPECIAL BE NCH DECISION IN TOPMAN EXPORTS TOPMAN EXPORTS TOPMAN EXPORTS TOPMAN EXPORTS (SUPRA) WHICH STANDS OVER RULED, WE S ET ASIDE THE ORDER PASSED BY THE TRIBUNAL IN ALL THESE CASES AN D REMIT THE CASES BACK TO THE TRIBUNAL TO DECIDE THESE APPEALS ON M ERITS AFTER TAKING INTO ACCOUNT FACTUAL POSITION IN ALL THESE CA SES. 5. THESE APPEALS STAND DISPOSED OF ON ABOVE TERMS. 2. THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE, HOWEVE R, NONE WAS PRESENT ON THE DATE OF HEARING, THEREFORE, WE PRO CEEDED TO DECIDE THE PRESENT APPEAL EX PARTE QUA THE ASSESSEE AS PER THE DIRECTIONS OF HONBLE HIGH COURT. ACCORDING TO THE AFOREMENTIONE D DIRECTIONS OF HONBLE HIGH COURT, THE PRESENT APPEAL WAS FIXED TO D ECIDE THE ISSUE ITA NO.93/DEL/2010 3 REGARDING GRANT OF DEDUCTION U/S 80HHC IN RESPECT OF DEPB CREDITS. THE CLAIM OF DEDUCTION U/S 80HHC ON DEPB CREDITS WAS D ISALLOWED BY THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATIONS:- FURTHER ASSESSEES ATTENTION WAS DRAWN TO AMENDMENT IN SEC 80HHC VIDE TAXATION ACT 2005, W.E.F. 1.4.1998 VID E WHICH ASSESSEE HAS TO FULFILL CERTAIN CONDITIONS FOR BENEFIT OF DEPB RECEIPTS WHILE CALCULATING DEDUCTION U/S 80HHC. ASSES SEE SUBMITTED THAT SINCE TURNOVER IS MORE THAN 10 CRORE AND V ARIOUS CONDITIONS ENUMERATED IN THE PROVISO ARE NOT SATISFIED B Y THE ASSESSEE, THE BENEFIT OF DEPB CREDIT FOR CALCULATION OF DEDUCTION U/S 80HHC MAY BE WITHDRAWN. CALCULATION OF DEDUCTION U/S 80HHC EXPORT INCENTIVE OF RS.1,23,74,437 INCLUDES DEPB = RS.1,01,95,128 DRAWBACK=RS.21,56,021 SIL = RS.23,288 TOTAL INCOME RS.16,35,14,789 EXPORT TURNOVER RS.16,35,14,789 BUS. INCOME ASSESSED RS.87,43,660 90% OF DUTY DRAWBACK 0.9*21,56,021=19,40,419 DEDUCTION U/S 80HHC (8743660-11136993)* 163514789 + 19,40,419*163514789 163514789 163514789 = (-23,93,333 + 19,40,419) DEDUCTIONS U/S 80HHC IS NIL INCOME IS COMPUTED AS UNDER INCOME ASSESSED AS PER ORDER U/S 143 (3) DATED 16/2/2004 BEFORE GIVING DEDUCTION RS.87,43 ,660 DEDUCTION U/S 80HHC NIL DEDUCTION U/S 80IB NIL ASSESSED INCOME RS.87,43,660 3. LD. CIT (A) HAS ALLOWED THE RELIEF TO THE ASSESSEE FO LLOWING THE DECISION OF ITAT GIVEN IN EARLIER YEAR IN RESPECT OF ASSESSMENT YEAR 2003-04. 4. FROM THE ABOVE FACTS, IT IS CLEAR THAT THE EXPORT TURNOVER OF THE ASSESSEE EXCEEDS ` 10 CRORE AND ACCORDING TO THE SUBMISSION S MADE ITA NO.93/DEL/2010 4 BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, IT DOES NOT FU LFILL THE CONDITIONS REQUIRED IN THE PROVISO. HOWEVER, IT IS NO T SPECIFIED EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT (A) THAT HOW THE ASSESSEE DOES NOT FULFILL THE TWIN CONDITIONS LAID DOWN I N THE RELEVANT PROVISO. IF THE ASSESSEE DOES NOT FULFILL THOSE TWO CONDI TIONS, THEN, THE ASSESSEE WILL NOT BE ENTITLED TO DEDUCTION U/S 80HHC. F OR THIS, REFERENCE CAN BE MADE TO THE FOLLOWING OBSERVATIONS O F THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU CO LOURS AND CHEMICALS (2010) 328 ITR 451 (BOM) WHEREIN THEIR LOR DSHIPS HAVE HELD AS UNDER:- ADMITTEDLY, IN THE ASSESSMENT YEAR IN QUESTION, THE ASSE SSEE HAD AN EXPORT TURNOVER EXCEEDING RS.10 CRORES AND DID NOT FULFILL THE CONDITIONS SET OUT IN THE THIRD PROVISO TO SECTION 80HHC ( 3), INTRODUCED BY THE FINANCE ACT OF 2005. AS A RESULT, THE ASSESSEE WAS NOT ENTITLED TO A DEDUCTION UNDER SECTION 80HHC ON THE AMOUNT RECEIVED ON TRANSFER OF DEPB. 5. IN THIS VIEW OF THE SITUATION, WE RESTORE THIS ISSUE T O THE FILE OF ASSESSING OFFICER TO PASS A SPEAKING ORDER ON THIS ASPECT AN D CONSIDER THE CLAIM OF THE ASSESSEE U/S 80HHC IN THE LIGHT OF THE AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT. WE DIRECT ACC ORDINGLY. 6. IN THE RESULT, FOR STATISTICAL PURPOSES THE APPEAL FI LED BY THE REVENUE IS ALLOWED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.01.2 012. SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 20.01.2012. DK ITA NO.93/DEL/2010 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES