M/s. Texcellence Overseas, Mumbai V. The Dy.CIT.,Cent.Circle-2(1), Ahmedabad

ITSSA 746/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0179 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-06-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 14-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Assessee Lawyers: P M MEHTA
• Keywords: Retrospective amendment
• Section: 80HHC; 153A; 80IB; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T(SS). A. NO. 745 TO 747 /AHD/2010 (ASSESSMENT YEAR: 2002- 03 TO 2004-05) M/S. TEXCELLENCE OVERSEAS PUSHPAWATI BUILDING NO. 2. 2 ND FLOOR, CHANDANWADI, GIRGAON ROAD, MUMBAI V/S THE DCIT, CENTRAL CIRCLE- 2(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACFT 8166E APPELLANT BY : SHRI P.M. MEHTA A.R. RESPONDENT BY : SHRI VIMALENDU VERMA CIT/D.R. ( )/ ORDER DATE OF HEARING : 19-06-2014 DATE OF PRONOUNCEMENT : 11 -07-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-III, AHMEDABAD DATED 11.08.2010 FOR A.YS. 2002-03 TO 200 4-05. 2. BEFORE US, BOTH THE PARTIES AT THE OUTSET SUBMITTED THAT THOUGH THE APPEALS ARE FOR 3 ASSESSMENT YEARS, BUT THE FACTS AND CIRCU MSTANCES OF ALL THE APPEALS ARE IDENTICAL EXCEPT FOR THE AMOUNTS AND TH EREFORE THE ARGUMENTS MADE BY THEM IN CASE OF ONE APPEAL WOULD BE APPLICA BLE TO ALL THE OTHER YEARS ALSO. WE THEREFORE FOR THE SAKE OF CONVENIENC E PROCEED TO DISPOSE OF ALL THE APPEALS BY WAY OF A CONSOLIDATED ORDER. WE PROCEED WITH THE FACTS FOR A.Y. 2002-03. IT(SS)A NOS. 745 TO 746/AHD/2010 . A.YS. 2002- 03 TO 2004- 05 2 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUF ACTURING OF MADE UP ARTICLES COMPRISING OF BED SHEETS, PILLOW COVERS ET C WHICH IS SOLD IN INTERNATIONAL MARKET. A SEARCH ACTION U/S 132 OF TH E ACT WAS CARRIED OUT IN THE GROUP CASES OF JINDAL GROUP ON 30.8.2007. A SEARCH WARRANT WAS ISSUED IN THE NAME OF THE ASSESSEE. PURSUANT TO SEC TION 153A NOTICE WAS SERVED ON ASSESSEE ON 13.2.2008 IN RESPONSE TO WHIC H ASSESSEE FILED ITS RETURN OF INCOME ON 12.5.2009 DECLARING TOTAL INCOM E OF RS 1,50,40,726/- THEREAFTER ASSESSMENT WAS FRAMED U/S 153A RWS 143(3 ) VIDE ORDER DATED 1.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS 3,09,37,440/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 11.8.2010 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSE E IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING CONCISE GROU NDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN REJECTING THE ASSESSEES CONTENTION THAT IT IS NOT AT ALL A FIT CASE FOR INV OKING THE PROVISIONS OF SECTION 153A. 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE CIT(A) SHOULD HAVE NOT UPHELD THE ADJUSTMENTS MADE BY THE ASSESSING OFFICE R IN REGARD TO THE ASSESSEES CLAIMS FOR DEDUCTION U/S. 80HHC AND 80IB. GROUND NO 1 WAS NOT PRESSED AND THEREFORE DISMISSED AS NOT PRESSED. GR. NO 2 IS WITH RESPECT TO CLAIM OF DEDUCTION U/S 80HHC AND 80IB. 5. A.O NOTICED THAT ASSESSEE HAD CLAIMED DEDUCTION U/S 80HHC ON DEPB BY TREATING IT AS EXPORT INCENTIVE WITHIN THE MEANI NG OF SECTION. 28(IIIA), IT(SS)A NOS. 745 TO 746/AHD/2010 . A.YS. 2002- 03 TO 2004- 05 3 (IIIB) AND (IIIC). A.O ALSO NOTICED THAT THE EXPORT TURNOVER OF THE ASSESSEE EXCEEDED RS 10 CRORES. AO WAS OF THE VIEW THAT THE RETROSPECTIVE AMENDMENTS MADE TO SECTION 80HHC(3) WEF 1.4.1998 WA S APPLICABLE TO THE ASSESSEE. HE WAS FURTHER OF THE VIEW THAT THE A MOUNT ACCRUED TOWARDS DEPB WAS BYE PRODUCT OF EXPORT ACTIVITIES AND ASSES SEE DID NOT HAVE TO SPEND ANY AMOUNT AND THEREFORE THE TOTAL COST OF AC QUISITION OF DEPB WOULD BE NIL AND THEREFORE WHATEVER AMOUNT ACCRUED TOWARDS DEPB OR RECEIVED ON ITS SALE SHOULD BE CONSIDERED AS PROFIT ON TRANSFER OF DEPB U/S 28(IIID) OF THE ACT. HE THEREFORE EXCLUDED 90% OF INCOME ACCRUED/RECEIVED ON ACCOUNT OF DEPB FROM ELIGIBLE P ROFITS AND WORKED OUT THE DEDUCTION U/S 80HHC AT RS 1,98,81,456/- AS AGAINST THE CLAIM OF RS 3,32,38,556/- BY THE ASSESSEE. WITH RESPECT TO C LAIM OF DEDUCTION U/S 80IB, AO DISALLOWED THE CLAIM OF ASSESSEE BY FOLLOW ING THE DECISION IN THE CASE OF ACIT VS HINDUSTAN MINT & AGRO PRODUCTS PVT LTD (2009) 119 ITD 107 (DEL) (SB) . 6. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) FOLLOWING THE DECISION OF HONBLE BO MBAY HC UPHELD THE ORDER OF AO. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, AT THE OUTSET THE LD. A.R. WITH RESPECT TO THE CLAIM OF DEDUCTION U/S 80HHC SUBMITTED THAT THE ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN THE CASE O F TOPMAN EXPORTS 342 ITR 49 (SC). HE ALSO PLACED RELIANCE ON THE DEC ISION OF AHMEDABD TRIBUNAL IN THE CASE OF JINDAL WORLDWIDE LTD VS DCI T (ITA NO 761, 762 & 790/AHD/2010 ORDER DATED 15.2.2013.. WITH RESPECT TO DEDUCTION U/S IT(SS)A NOS. 745 TO 746/AHD/2010 . A.YS. 2002- 03 TO 2004- 05 4 80IB, LD AR SUBMITTED THAT THE AO WITHOUT PASSING A SPEAKING ORDER DISMISSED THE CLAIM OF THE ASSESSEE. HE THEREFORE S UBMITTED THAT THE MATTER MAY BE REMITTED TO THE FILE OF AO TO WORK OU T THE DEDUCTION U/S 80HHC IN LIGHT OF THE AFORESAID DECISION OF APEX CO URT AND THE DEDUCTION U/S 80IB BY PASSING A SPEAKING ORDER. LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DISPUTE IN THE PRESENT CASE IS WITH RESPECT TO DENIAL OF DEDUCTION U/S 80HHC AND 80IB OF THE ACT. WITH RESPECT TO DEDUCTIO N U/S 80HHC, THE HON'BLE APEX COURT IN THE CASE OF TOPMAN EXPORTS (S UPRA) HAS HELD THAT PROFIT ON TRANSFER OF DEPB WOULD BE THE SALE VALUE OF DEPB LESS ITS FACE VALUE, WHICH REPRESENTS THE PROFIT OF DEPB. IT FURT HER HELD THAT THE ENTIRE SUM RECEIVED ON TRANSFER OF DEPB IS NOT CHARGEABLE AND DEPB IS CHARGEABLE AS INCOME U/S 28(IIIB) OF THE ACT IN THE YEAR IN WHICH SUCH PERSON APPLIES FOR DEPB CREDIT AGAINST THE EXPORTS WHEREAS THE PROFIT ON TRANSFER IS CHARGEABLE AS INCOME U/S 28(IIID) IN TH E HANDS OF THE ASSESSEE IN THE YEAR IN WHICH IT TRANSFERS. IN THE PRESENT C ASE, WE FIND THAT THE AO AND CIT(A) HAD NOT EXAMINED THE ISSUE OF DEDUCTION U/S 80HHC IN THE LIGHT OF THE AFORESAID DECISION OF APEX COURT. WE T HEREFORE FEEL THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF AO FOR H IM TO DECIDE THE ISSUE OF DEDUCTION U/S. 80HHC IN THE LIGHT OF THE AFORESAID DECISION OF APEX COURT. NEEDLESS TO STATE THAT AO SHALL GRANT ADEQUA TE OPPORTUNITY OF HEARING TO THE ASSESSEE. WITH RESPECT TO ASSESSEE'S CLAIM OF DEDUCTION U/S 80IB OF THE ACT, WE FIND THAT NEITHER AO NOR CIT(A) HAS DECIDED THE ISSUE BY WAY OF A SPEAKING ORDER. WE THEREFORE REMI T THE ISSUE OF IT(SS)A NOS. 745 TO 746/AHD/2010 . A.YS. 2002- 03 TO 2004- 05 5 DEDUCTION U/S 80IB ALSO TO THE FILE OF THE AO TO DE CIDE THE ISSUE AFRESH AS PER LAW AND BY PASSING A SPEAKING ORDER. 9. IN THE RESULT THE GROUNDS OF THE ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. ITA NO. 746 & 747/AHD/2010 (FOR A.Y. 2003-04, 2004-05) 10. SINCE IT IS ADMITTED BY BOTH THE PARTIES THAT THE F ACTS AND CIRCUMSTANCES THE FACTS OF GROUNDS IN ALL THE 3 YEARS ARE IDENTIC AL AND THEREFORE FOR THE REASONS GIVEN BY US HEREINABOVE WHILE DECIDING THE APPEAL FOR A.Y. 2002-03 (SUPRA) AND FOR THE SAME REASONS ALSO ALLOW THE GROUNDS IN THE PRESENT APPEALS FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11 -07 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD