ITO, CHENNAI V. M/s. P.A.Shoes, CHENNAI

MA 10/CHNY/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6847 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 19-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI
• Assessee Lawyers: S SRIDHAR
• Section: 80HHC; 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER .. M.P. NO. 10/MDS/2011 (IN I.T.A. NO. 47/MDS/2008) ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER, WARD XIV(3), CHENNAI 600 034. (PETITIONER) V. M/S P.A. SHOES, HIG, PHASE-I, NO.15, 3 RD MAIN ROAD, NOLAMBUR, CHENNAI 600 037. PAN : AAAFP5332N (RESPONDENT) PETITIONER BY : SHRI T.N. BETGIRI, JCIT RESPONDENT BY : SHRI S. SRI DHAR, ADVOCATE DATE OF HEARING : 26.08.2011 DATE OF PRONOUNCEMENT : 09.09.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS MISCELLANEOUS PETITION FILED BY THE REVENU E, ITS GRIEVANCE IS THAT THE TRIBUNAL HELD THAT ASSESSEE W AS ELIGIBLE FOR SET OFF AGAINST THE LOSS RESULTING OUT OF COMPUTATION U NDER CLAUSE SECTION 80HHC(3) OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AGAINST 90% OF ITS RECEIPTS FROM DUTY DRAWBACK AS WELL AS D EPB ENTITLEMENTS. AS PER THE REVENUE, DUTY DRAWBACK WAS AN ITEM MENTI ONED UNDER M.P. NO.10/MDS/11 2 (IIIC) OF SECTION 28 OF THE ACT, WHEREAS, DEPB ENTI TLEMENT WAS FALLING UNDER (IIID) OF SECTION 28 OF THE ACT AND THEREFORE , ONLY ONE OF THESE COULD BE CONSIDERED FOR SAID SET OFF. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD, DURIN G THE RELEVANT PREVIOUS YEAR, SET OFF AGAINST ITS LOSS COMPUTED AS PER CLAUSES (A) AND (B) OF SUB-SECTION (3) OF SECTION 80HHC OF THE ACT, 90% OF DUTY DRAWBACK AND 90% DEPB ENTITLEMENT BASED ON FIFTH PR OVISO TO SAID SECTION. ASSESSING OFFICER WAS, HOWEVER, OF THE OP INION THAT ONLY ONE OF THESE ITEMS COULD BE CONSIDERED FOR SET OFF UNDER THE SAID PROVISO AND THEREFORE, HE RECOMPUTED THE DEDUCTION UNDER SECTION 80HHC OF THE ACT ACCORDINGLY. 3. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ASSESSEE WAS NOT SUCCESSFUL ON THIS ISSUE. ON A FURTHER APPEAL FILE D BEFORE THIS TRIBUNAL, IT WAS HELD BY THE TRIBUNAL AT PARA 3.3 O F ITS ORDER AS UNDER:- 3.3 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RELEVANT RECORDS. WE FIND THAT THE FIFTH PROVISO TO SECTION 80HHC(3) READS AS UNDER:- PROVIDED ALSO THAT IN CASE THE COMPUTATION UNDER C LAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION IS A LOSS, M.P. NO.10/MDS/11 3 SUCH LOSS SHALL BE SET OFF AGAINST THE AMOUNT WHICH BEARS TO NINETY PER CENT OF - (A) ANY SUM REFERRED TO IN CLAUSE (IIIA) OR CLAUSE (IIIB ) OR CLAUSE (IIIC), AS THE CASE MAY BE, OR (B) ANY SUM REFERRED TO IN CLAUSE (IIID) OR CLAUSE (IIIE ), AS THE CASE MAY BE, OF SECTION 28, AS APPLICABLE IN THE CASE OF AN ASSESSEE REFERRED TO IN THE SECOND OR TH E THIRD OR THE FOURTH PROVISO, AS THE CASE MAY BE, THE SAME PORTION AS THE EXPORT TURNOVER BEARS TO TH E TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. A CAREFUL READING OF THE ABOVE PROVISION SHOWS THAT THE DISTINCTION IN ELIGIBILITY IS SOUGHT BETWEEN CLAUSE (A) AND (B) ABOVE. THIS MEANS THAT THE LOSS HAS TO BE SET OFF AGAINST THE AMOUNT WHICH BEARS TO 90% OF (A) OR (B) ABOVE. THE TERM OR MENTIONED IN CLAUSE (B) ABOVE MEANS THAT ANY SUCH WH ICH MAY BE REFERRED IN EITHER CLAUSE (IIID) OR CLAUSE (IIIE) O R BOTH. THIS MEANS THAT, IF SUMS ARE THERE BOTH IN (IIID) AND (I IIE), SUM OF BOTH WILL BE ELIGIBLE. HENCE, IN OUR OPINION, THE VIEW T AKEN BY THE LOWER AUTHORITIES IS NOT CORRECT. HENCE, WE SET ASIDE TH E SAME. 4. NOW BEFORE US, LEARNED D.R. SUBMITTED THAT WHERE AS DUTY DRAWBACK FELL UNDER SECTION 28(IIIC), DEPB ENTITLEM ENT FELL UNDER SECTION 28(IIID) OF THE ACT. THEREFORE, ACCORDING TO HIM, THE TRIBUNAL ADMITTED MISTAKE COMMITTED IN CONSIDERING THAT THES E ITEMS ARE UNDER SECTION 28(IIIB) AND 28(IIIC) RESPECTIVELY. M.P. NO.10/MDS/11 4 5. PER CONTRA, LEARNED A.R. SUBMITTED THAT THERE WA S NO MISTAKE WHATSOEVER COMMITTED BY THE TRIBUNAL SINCE THE ISSU E INVOLVED IS PROPERLY APPRECIATED AND THE DECISION GIVEN IN FAVO UR OF ASSESSEE. 6. WE HAVE PERUSED ORDER OF THE TRIBUNAL AS WELL AS REVENUES CONTENTION. THE TRIBUNAL HAD DEFINITELY PROCEEDED ON A FOOTING THAT THE AMOUNTS AGAINST WHICH LOSS WAS SET OFF BY THE A SSESSEE WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT, FELL UNDER SECTION 28 (IIIB) AND 28(IIIC) OF THE ACT. NEVERTH ELESS, WE FIND THAT DUTY DRAWBACK FALLS UNDER SECTION 28(IIIC), WHEREAS , DEPB ENTITLEMENT FALLS UNDER SECTION 28(IIID) OF THE ACT . THE RELEVANT FIFTH PROVISO RELIED ON BY THE TRIBUNAL, IS REPRODUCED HE REUNDER ONCE AGAIN FOR BREVITY :- PROVIDED ALSO THAT IN CASE THE COMPUTATION UNDER C LAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION IS A LOSS, SUCH LOSS SHALL BE SET OFF AGAINST THE AMOUNT WHICH BEARS TO NINETY PER CENT OF - (A) ANY SUM REFERRED TO IN CLAUSE (IIIA) OR CLAUSE (IIIB ) OR CLAUSE (IIIC), AS THE CASE MAY BE, OR (B) ANY SUM REFERRED TO IN CLAUSE (IIID) OR CLAUSE (IIIE ), AS THE CASE MAY BE, OF SECTION 28, AS APPLICABLE IN THE CASE OF AN ASSESSEE REFERRED TO IN THE SECOND OR TH E THIRD OR THE FOURTH PROVISO, AS THE CASE MAY BE, M.P. NO.10/MDS/11 5 THE SAME PORTION AS THE EXPORT TURNOVER BEARS TO TH E TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. IT IS CLEAR THEREIN THAT SECTION 28(IIIC) WOULD FAL L IN LIMB (A) AND SECTION 28(IIID) WOULD FALL UNDER LIMB (B). THERE IS A CLE AR MISTAKE COMMITTED ON LAW AS WELL AS FACTS HERE. WE ARE, THEREFORE, O F THE OPINION THAT IN SO FAR AS THE ISSUE RELATING TO COMPUTATION OF DEDU CTION UNDER SECTION 80HHC OF THE ACT AND SET OFF OF LOSS AS PROVIDED UN DER FIFTH PROVISO TO SECTION 80HHC(B) OF THE ACT, THE MATTER HAS TO B E RECALLED. WE, THEREFORE, RECALL THE ORDER OF THE TRIBUNAL IN SO F AR AS THE APPEAL RELATES TO THIS ISSUE. THE REGISTRY WILL FIX HEARI NG ON THIS ISSUE ALONE IN DUE COURSE. 7. IN THE RESULT, MISCELLANEOUS PETITION FILED BY T HE REVENUE STANDS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 9 TH SEPTEMBER, 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH SEPTEMBER, 2011. KRI. COPY TO: PETITIONER/RESPONDENT/CIT(A)/CIT/D.R./GUAR D FILE