M/S. SARAF EXPORT, CHURU V. DCIT, JHUNJHUNU

ITA 964/JPR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4928 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: D S BOHRA
• Keywords: Depreciation
• Section: 80IB; 28; 154; 15

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI H.M. MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER) I.T.A. NO. 964/JP/2011 ASSTT. YEAR- 2008-09 M/S SARAF EXPORTS DEPUTY COMMISSIONER OF RIICO INDUSTRIAL AREA VRS. INCOME TAX, SARDARSAHAR, CHURU. CIRCLE-JHUNJHUNU PAN NO. AATFS9394N (APPELLANT) (RESPONDENT) I.T.A. NO. 739/JP/2012 ASSTT. YEAR- 2009-10 M/S SARAF EXPORT PALACE ASSTT. COMMISSIONER OF RIICO INDUSTRIAL AREA VRS. INCOME TAX, SARDARSAHAR, CHURU. CIRCLE-JHUNJHUNU PAN NO. AABMFS0322G (APPELLANT) (RESPONDENT) I.T.A. NO. 819/JP/2013 ASSTT. YEAR- 2009-10 SARAF SEASONING UDYOG ASSTT. COMMISSIONER OF RIICO INDUSTRIAL AREA VRS. INCOME TAX, SARDARSAHAR, CHURU. CIRCLE-JHUNJHUNU PAN NO. AAEFS1613H (APPELLANT) (RESPONDENT) ASSESSEES BY:- SHRI SURESH OJHA & SHRI D.S. BOHRA DEPARTMENT BY:- SHRI D.C. SHARMA, D.R. DATE OF HEARING : 17/12/2013 DATE OF PRONOUNCEMENT : 17/12/2013 2 O R D E R PER: BENCH. THESE APPEALS BY THE ASSESSEES ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-III, JAIPUR AS FOLLOWING DETAILS:- APPEAL NO. ORDER DATED ASSESSMENT YEAR. I.T.A. NO. 964/JP/2011 23/08/2011 2008-09 I.T.A. NO. 739/JP/2012 24/07/2012 2009-10 I.T.A. NO. 819/JP/2013 17/09/2013 2009-10 2. IN ALL THESE APPEALS, COMMON ISSUE IS INVOLVED, WHICH RELATES TO SUSTENANCE OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB OF THE I.T. ACT, 1961 (HEREINAFTER TO BE REFERRED AS THE ACT), ON ACCOUNT OF DEPB AND DUTY DRAW BACK (DDB). 3. DURING THE COURSE OF HEARING, LD. COUNSEL FOR TH E ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEES VIDE ORDER DATED 12/10/2012 OF THE ITAT JODHPUR BENCH, JODHPUR IN IT A NO. 22 & 23/JODH/2012 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPEC TIVELY IN THE CASE OF M/S SARRAF EXPORT, RIICO INDUSTRIAL AREA, SARDARSAHAR, CHURU V/S ITO, WARD-2, CHURU. COPY OF THE SAID ORDER WAS FURNISHED. IT WAS FURTHER STATED THAT THE ABOVE SAID ORDER HAS BEEN FOLLOWED IN ITA NO. 171/JODH/20 11 FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE OF THE SAME ASSESSEE I.E. M/S S ARRAF EXPORT, RIICO INDUSTRIAL AREA, SARDARSAHAR, CHURU V/S ITO, WARD-2 , CHURU VIDE ORDER DATED 31/7/2013. 3 4. IN HIS RIVAL SUBMISSIONS, THE LD. D.R. ALTHOUGH SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFOR ESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACT S HAS ALREADY BEEN ADJUDICATED BY THE I.T.A.T. JODHPUR BENCH, JODHPUR IN THE AFORE SAID REFERRED TO CASE OF M/S SARRAF EXPORT, RIICO INDUSTRIAL AREA, SARDARSAHAR, CHURU V/S ITO, WARD-2, CHURU IN I.T.A. NOS. 22 & 23/JODH/2012 FOR THE ASSE SSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY, WHEREIN RELEVANT FINDINGS HAV E BEEN GIVEN VIDE PARAS 2.2 TO 2.9 WHICH READ AS UNDER:- 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE SECTIONS OF THE ACT REFERRED TO AND THE DECISIONS R ELIED ON, BY THE PARTIES. AFTER CONSIDERING THEM IN ENTIRETY VIS-A-V IS THE FACTS OF THIS CASE, WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF T HE APPELLANT. 2.3 THE AMENDED SECTION CAME INTO FORCE W.E.F. 01-0 4-1998. THIS AMENDMENT WAS BROUGHT INTO BY INSERTING CLAUSE (III D), WHICH READS AS UNDER:- SECTION 28 THE FOLLOWING INCOME SHALL BE CHARGEAB LE TO INCOME TAX UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION:- .. . 4 (IIID) ANY PROFIT ON THE TRANSFER OF THE DUTY ENTI TLEMENT PASS BOOK SCHEME, BEING THE DUTY REMISSION SCHEME UNDER THE E XPORT AND IMPORT POLICY FORMULATED AND AMENDED U/S 5 OF THE F OREIGN TRADE (DEVELOPMENT AND REGULATION ACT, 1992) (22 OF 1992) 2.4 THE HON'BLE RAJASTHAN HIGH COURT AFTER CONSIDE RING THE AMENDED SECTION HAS GIVEN THE FOLLOWING VERDICT. WHETHER PROFIT UPON SALE OF DEPB LICENSE SHALL BE ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT TREATING IT AS PROFIT FROM INDUSTRIAL UNDERTAKING? HELD YES, IN VIEW OF THE NEWLY INSERTE D CLAUSE (IIID) IN SECTION 28 OF THE ACT W.E.F. 01-04-1998. 2.5 BEFORE ARRIVING AT THE ABOVE CONCLUSION, THEIR LORDSHIPS HAVE CAREFULLY CONSIDERED AND REFERRED TO THE FOLLOWING DECISIONS. CIT VS. STERLING FOODS, 237 ITR 569 (SC) PANADIAN CHEMICALS VS. CIT, 262 ITR 278 (SC) B. DESRAJ VS. CIT, 301 ITR 439 (SC) CIT VS. SHARDA GUM AND CHEMICALS, 28 ITR 116 (RAJ .) 2.6 NOW, LET US EXAMINE THE PROVISIONS OF SECTION 8 0IB WHICH READS AS UNDER:- 80IB. DEDUCTION IN RESPECT OF PROFITS AND GAINS FR OM CERTAIN INDUSTRIAL UNDERTAKING OTHER THAN INFRASTRUCTURE UN DERTAKINGS.. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDE S ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRE D TO IN SUB- SECTIONS (3 TO 11), (11A) AND (11B) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCEN TAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THI S SECTION. 5 2.7 IT IS AN UNDENIABLE AND UNDISPUTED FACT THAT AS SESSING OFFICER HAS PASSED THE IMPUGNED ORDER BASED ON THE VERDICT GIVE N IN LIBERTY INDIA (SUPRA). THE PERUSAL OF THE JUDGEMENT REVEALS THAT THEIR LORDSHIPS HAVE NOT CONSIDERED THE AMENDED PROVISION . AS AGAINST WHICH IS RIGHTLY POINTED BY BY THE LD. AR, THE HON' BLE RAJASTHAN HIGH COURT IN THE DECISION OF SARAF SEASONING UDHYO G (SUPRA) HAVE DISCUSSED AND RELIED ON EVEN THE AMENDED PROVISION. FURTHER IT IS TRITE THAT WHEN ANY AMENDED PROVISION IS NOT CONSID ERED OR FOR THAT MATTER, ANY RELEVANT PROVISION OF THE ACT IS NOT CO NSIDERED WHILE GIVING A JUDGEMENT, IT IS TREATED AS IN PER CURIUM . 2.8 THE HON'BLE HIGH COURT HAS TAKEN ITS VIEW WHILE DECIDING THE CASE OF CHOKSHI CONTRACTS (P) LTD. IN 251 ITR 587 (RAJ.) THAT IN CASE AMENDED PROVISIONS OF THE ACT ARE NOT CONSIDERED TH E JUDGEMENT LOOSES THE CHARACTER OF A BINDING NATURE. THE COURT HAS ALSO HELD AS UNDER:- COMING TO THE JUDGEMENT RELIED ON BY THE LD. COUNS EL FOR THE REVENUE IN SHREE ENGINEERS CASE, WE ARE OF THE OPI NION THAT THE ANSWER QUESTION NO. 3 WHICH WAS REFERRED BY THE TRIBUNAL HAS BEEN RENDERED SOLELY WITH THE DEFERENCE TO THE EARLIER DECISION OF THE COURT IN VISHNU OIL AND DAL MILLS CASE (1996) 218 ITR 71 (RAJ.) ONLY WITHOUT NOTICING THE RELEVANT PROVISIONS OF SECTION 80A AND 80AB AND SECTION 80B( 5) AND ALSO SECTION 80HH(9). IT MAY BE NOTICED THAT THE DE CISION IN VISHNU OIL AND DAL MILLS CASE (1996), 218 ITR 71 (R AJ.) DEALT WITH THE QUESTION WHETHER IN COMPUTING THE GR OSS TOTAL INCOME FOR THE PURPOSE OF CHAPTER VI-A REQUIRES ADJ USTMENTS OF UNABSORBED CARRIED FORWARD LOSS OR UNABSORBED CA RRIED 6 FORWARD DEPRECIATION IN TERMS OF PART D OF CHAPTER IV OR IN TERMS OF CHAPTER VI OF THE ACT, WHICH AS SEEN ABOVE HAS TO BE COMPUTED WITHOUT TAKING INTO ACCOUNT THE PROVISIONS OF CHAPTER VI-A, BUT AFTER TAKING INTO ACCOUNT OTHER P ROVISIONS OF ACT WHETHER UNDER CHAPTER IV OR CHAPTER VI. HO WEVER, THE COURT WAS NOT DEALING WITH THE INTERACTION OF T HE VARIOUS SECTIONS CONTAINED IN CHAPTER VI-A ON THE ISSUE OF DEDUCTION OF ANY AMOUNT WHICH IS TO BE ALLOWED UNDER CHAPTR V I-A. THUS THE DECISION RENDERED IN SHREE ENGINEERS CASE WITHOUT DEFERENCE TO THE RELEVANT PROVISIONS OF THE ACT MER ELY BY DEFERENCE TO VISHNU OIL MILLS CASE (1996), 218 ITR 71 (RAJ.) WAS PER INCURIAM AND CANNOT BE TAKEN AS A BINDING PRECEDENT AND DOES NOT ASSIST THE REVENUE IN ANY MA NNER. 2.9 SIMILAR VIEW HAS BEEN TAKEN BY THE JODHPUR BENC H IN THE CASE OF M/S. BOTHRA INTERNATIONAL, JODHPUR IN ITA NO. 37/JU /2011 A.Y. (2002-03) DATED 21-09-2012. THEREFORE, THE DECISION OF LIBERTY INDIA WILL NOT RULE THE FIELD AFTER AMENDMENT. MORE OVER, IN ANY OTHER CASE, THE ISSUE BECOMES A DEBATABLE ONE IN TH E LIGHT OF THE ABOVE DECISION. IT IS SETTLED POSITION OF LAW THAT WHERE ANY ISSUE IS DEBATABLE, IT CANNOT BE CORRECTED U/S 154 OF THE AC T. IN THIS REGARD, THE HON'BLE APEX COURT IN THE CASE OF T.S. BALARAM (ITO) VS. VOLKART BROTHERS AND OTHERS REPORTED IN 82 ITR 50(S C) IS RELEVANT WHEREIN AN ACTION TAKEN BY ASSESSING OFFICER U/S 15 4 OF THE ACT WAS FOUND TO BE ILLEGAL. THE HON'BLE APEX COURT HAS HELD THUS:- IN SATYANARAYN LAXMINARAYAN HEGDE V. MALLIKARJUN BHAVANAPPA TIRUMALE, THIS COURT WHILE SPELLING OUT THE SCOPE OF THE POWER OF A HIGH COURT UNDER ARTICLE 226 OF T HE 7 CONSTITUTION RULED THAT AN ERROR WHICH HAS TO BE ES TABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS WHER E THERE MAY CONCEIVABLY BE TWO OPINIONS CANNOT BE SAID TO B E AN ERROR APPARENT ON THE FACE OF THE RECORD. A DECISIO N ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FR OM THE RECORD-SEE SIDHRAMAPPA ANDANNAPPA MANVI V. COMMISSIONER OF INCOME-TAX (2). THE POWER OF THE OF FICERS MENTIONED IN SECTION 154 OF THE INCOME-TAX ACT, 196 1, TO CORRECT ANY MISTAKE APPARENT FROM THE RECORD. IN THIS CASE, IT IS NOT NECESSARY FOR US TO SPELL OUT THE D ISTINCTION BETWEEN THE EXPRESSIONS ERROR APPARENT ON THE FACE OF THE RECORD AND MISTAKE APPARENT FROM THE RECORD. BUT SUFFICE IT TO SAY THAT THE INCOME-TAX OFFICER WAS WHOLLY WR ONG IN HOLDING THAT THERE WAS A MISTAKE APPARENT FROM THE RECORD OF THE ASSESSMENTS OF THE FIRST RESPONDENT. WE HAVE FOUND THAT THE ALLOWANCE OF DEDUCTION IS N OT A GLARING, OBVIOUS, PATENT AND APPARENT FROM RECORD. HENCE, IT CANNOT B E RECTIFIED, IN VIEW OF OUR ABOVE DISCUSSION. ACCORDINGLY, WE ACCEPT THE APPEAL OF THE ASSESSEE AND SET ASIDE THE FINDING OF THE LD. CIT(A) BY REVERSING TH E SAME AND ALLOW THIS APPEAL. 6. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE, SO RESPECTFULLY FOLLOWI NG THE ORDER DATED 12/10/2012 OF THE ITAT JODHPUR BENCH, JODHPUR IN ITA NO. 22 & 23/JODH/2012 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY I N THE CASE OF M/S SARRAF EXPORT, RIICO INDUSTRIAL AREA, SARDARSAHAR, CHURU V /S ITO, WARD-2, CHURU 8 (SUPRA), WE SET ASIDE THE IMPUGNED ORDERS PASSED BY THE LD. CIT(A) AND THE CLAIM OF THE ASSESSEES FOR DEDUCTION U/S 80IB OF TH E ACT ON ACCOUNT OF DEPB AND DUTY DRAW BACK IS DIRECTED TO BE ALLOWED. 7. IN THE RESULT, THESE APPEALS BY THE ASSESSEES AR E ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 17/12/2013. ) SD/- SD/- (HARI OM MARATHA) (N.K. SAIN I) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 17/12/2013 * RANJAN COPY FORWARDED TO :- 1. APPELLANTS I. M/S SARAF EXPORTS, CHURU, II- M/ S SARAF EXPORT PALACE, CHURU AND III.- SARAF SEASONING UDYOG. 2. RESPONDENTS- I. THE DCIT, CIRCLE-JHUNJHUNU AND I I- THE ACIT, CIRCLE- JHUNJHUNU 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 964, 739 AND 819/JP/2011, 20 12 AND 2013) BY ORDER, AR ITAT JAIPUR.