Modgill Hosiery Exports Pvt. Ltd., Ludhiana V. ACIT, Ludhiana

MA 102/CHANDI/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5226 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 02-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Question of law
• Section: 80HHC; 80IB; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER M.A. NO. 102/CHD/2009 (IN ITA NOS. 197/CHD/2009) ASSESSMENT YEAR : 2004-05 M/S MODGIL HOSIERY EXPORTS PVT. LTD., VS. THE CIT(A ), LUDHIANA LUDHIANA PAN NO. AABCM-1393-G & M.A. NO. 103/CHD/2009 (IN ITA NO. 198/CHD/2009) ASSESSMENT YEAR : 2004-05 M/S MODGIL FASHION EXPORTS, VS. THE ACIT, CIRCLE -III, LUDHIANA LUDHIANA PAN NO. AAEFM1205H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ JAIN RESPONDENT BY: SHRI N.K.SAINI ORDER PER SUSHMA CHOWLA, JM THE TWO APPLICANTS HAVE FILED THESE TWO MISCELLANEO US APPLICATIONS AGAINST THE ORDER OF THE TRIBUNAL DATED 28.5.2009 I N ITA NOS. 197 & 198/CHD/2009 RELATING TO ASSESSMENT YEAR 2004-05. 2. BOTH APPLICANTS ARE AGGRIEVED BY THE OBSERVATION S MADE IN THE CONSOLIDATED ORDER OF THE TRIBUNAL VIDE ORDER DATE D 28.5.2009 AS UNDER;- 1. THE TRIBUNAL ORDER DATED 28.5.2009 APPEARING AT PAG E 4-8. IN PURSUANCE TO GROUND NO.4, THE DECLARATION U/S 2 158BA(1) WAS FURNISHED WITH WRITTEN SUBMISSION ON DATED 5.52009 APPEARING AT PAGE 33-35. THE COPY PROVIDED TO THE RESPONDENT DEPARTMENT. 2. IN PURSUANCE TO GROUND NO.6 THE RELIANCE WAS PLACED ON THE CASE OF ASSESSEE HIMSELF OF THE PRECEDING ASSESSMENT YEAR CONSIDERED BY DIVISIONAL BENCH AT PAGE 29 PARA 22 OF THE WRITTEN SUBMISSION AND PARA 4 OF THE WRITTEN NOTE. 3. THE PRAYER WAS MADE CONSIDER THE DECLARATION AND TH E DECISION OF THE COORDINATE BENCH IN PAGE 3 OF THE WRITTEN NOTE. 4. THE DECISION ON GROUND NO.4 DOES NOT CONSIDER THE DECLARATION AND ON GROUND NO.6 THE ORDER IS CONTRAR Y TO A CONSISTENT VIEW FAVORING THE ASSESSEE AND EVEN WRONG CONCLUSION RENDERED THROUGH FINDINGS ADOPTED. 3. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT IN P URSUANCE TO GROUND NO.4, A DECLARATION WAS FURNISHED UNDER SECTION 15 8 A (1) OF THE ACT WITH WRITTEN SUBMISSIONS DATED 5.5.2009 AND THE TRIBUNAL WHILE DECIDING THE ISSUE IN GROUND NO.4 HAS NOT CONSIDERED THE DECLARA TION OF THE ASSESSEE. 4. THE LD. AR FOR THE ASSESSEE IN RESPECT OF GROUND NO, 6 RAISED BY ASSESSEE POINTED OUT THAT THE ATTENTION OF THE BENC H WAS DRAWN TO THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSE SSMENT YEAR 2003-04 PLACED AT PAGES 19 TO 32 OF THE PAPER BOOK WHEREIN SIMILAR ISSUE WAS DECIDED FOLLOWING THE RATIO LAID DOWN BY THE HON'BL E MADRAS HIGH COURT IN SCM CREATIONS VS. ACIT IN TAX CASE APPEAL NOS. 310 & 311 OF 2008 AND M.P. NO. 242 OF 2008 DATED 6.3.2008. IT WAS FU RTHER POINTED OUT THAT THOUGH REFERENCE WAS MADE TO THE SAID ORDER IN ASSE SSEES OWN CASE BUT THE GROUND OF APPEAL RAISED BY THE ASSESSEE WAS DISMISS ED ALTHOUGH IN THE EARLIER ORDER, THE SAME GROUND WAS ALLOWED IN FAVOU R OF THE ASSESSEE AND THE ASSESSING OFFICER WAS DIRECTED TO RE-COMPUTE TH E DEDUCTION ALLOWABLE U/S 80HHC OF THE ACT. 3 5. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ALLEGED DEFECTS POINTED OUT BY THE LD. AR FOR THE ASSESSEE VIDE MIS C. APPLICATIONS ARE IN THE NATURE OF REVIEW AND OUTSIDE THE SCOPE OF SECTI ON 254(2) OF THE I.T.ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IN ITS APPEAL FILED BEFORE THE TRIBUNAL VI DE GROUND NO.4 HAD RAISED THE ISSUE IN RESPECT OF CLAIM OF DEDUCTION U /S 80IB OF THE ACT. THE CIT(A) VIDE PARA 3.1 AT PAGE 6 OF THE APPELLATE ORDER RELATING TO ASSESSMENT YEAR 2004-05 CONSIDERED THE DENIAL OF D EDUCTION U/S 80IB OF THE ACT IN RESPECT OF INSURANCE CLAIM, INTEREST ON INCOME TAX REFUND, ON SALE OF QUOTA, INTEREST ON FDRS, INTEREST SUBSIDY ON TUFF AND ON EXPORT INCENTIVES, BY THE ASSESSING OFFICER. THE ASSESSEE HAD ALSO RAISED A PLEA OF NETTING OF INTEREST PAID AGAINST INTEREST RECEIP TS. THE CIT(A) NOTED THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN RE SPECT OF EXPORT INCENTIVE AND INTEREST RECEIPTS IN THE CASE OF LIBE RTY INDIA, (293 ITR 520(P&H) HAD HELD THAT DEDUCTION U/S 80IB WAS NOT A LLOWABLE IN RESPECT OF DUTY DRAW BACK AND DEPB BENEFITS. IT WAS FURTHE R HELD IN LIBERTY FOOTWEAR 287 ITR 339 (P&H) THAT INTEREST INCOME MEA NT GROSS INTEREST AND NOT THE NET INTEREST. FOLLOWING THE SAID JUDGM ENT, THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN DENYING THE DEDUC TION U/S 80IB IN RESPECT OF INTEREST ON FDRS, INTEREST SUBSIDY ON TU FF, EXPORT INCENTIVES AND INTEREST ON INCOME TAX REFUND AND ON SALE OF QU OTA. IN APPEAL THE TRIBUNAL VIDE ORDER DATED 28.5.2009, IN PARA 4 HAD DISMISSED THE GROUND OF APPEAL RAISED BY THE ASSESSEE FOLLOWING THE RATI O LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN NAHAR EXPORT LTD (156 TAXMAN 304) AND LIBERTY INDIA LTD ITA NO. 590 OF 2005. HOWEVER, WE FIND THAT THE ASSESSEE HAD FILED A DECLARATION U/S 158 A OF THE A CT IN RESPECT OF THE 4 TREATMENT OF DUTY DRAW BACK RECEIVED BEING DERIVED FROM AN INDUSTRIAL UNDERTAKING, IN VIEW OF THE ISSUE BEING PENDING BEF ORE THE HON'BLE SUPREME COURT OF INDIA IN SLP(CIVIL) 24344/2007 AND SLP(CIVIL) 24563/2007 FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 IN TH E CASE OF MODGIL HOSIERY EXPORTS PVT LTD. 7. WHILE DECIDING THE ISSUE THE TRIBUNAL BY AN ERRO R THOUGH DECIDED THE ISSUE BUT DIRECTION TO THE ASSESSING OFFICER TO IMPLEMENT THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT ON THE SAID ISSUE . IN VIEW OF THE DECLARATION FILED BY THE ASSESSEE U/S 158A OF THE I NCOME TAX ACT, WAS NOT GIVEN. WE FIND THAT AN ERROR HAS CREPT IN THE ORDE R OF THE TRIBUNAL DATED 28.5.2009 IN PARA 4 WHEREIN A DIRECTION WAS NOT GIV EN IN VIEW OF THE DECLARATION FILED BY THE ASSESSEE U/S 158A(1) OF TH E INCOME TAX ACT. ACCORDINGLY, RECTIFYING THE ABOVE SAID MISTAKE IN T HE ORDER OF THE TRIBUNAL, WE HOLD THAT PARA 4 SHALL READ AS UNDER:- 4. THE NEXT GROUND IS THAT BECAUSE THE ACTION IS UNDER CHALLENGE ON THE FACTS AND LAW WITH REGARD TO THE CLAIM UNDER SE CTION 80 IB AMOUNTING TO RS. 11,84,503/-, AND RS.11,38,845/- RESPECTIVEL Y. DURING ARGUMENTS, THE LEARNED COUNSEL CONTENDED THAT THE ISSUE IS PEN DING UNDER SECTION 255(3) BEFORE THE SPECIAL BENCH. ON THE OTHER HAND , THE LEARNED SR DR DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT TH E DECISION IN 239 ITR 297 AND 113 ITR 84 (SC) ARE CLEARLY AGAIN ST THE ASSESSEE. OUR ATTENTION WAS ALSO INVITED TO THE DECISION FROM THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF LIBERTY INDIA LTD (ITA NO . 590 OF 2005). WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON THE FILE. WE HAVE FOUND THAT THE ARGUMENTS ADVA NCED BY THE ASSESSEE HAVE BEEN DULY CONSIDERED IN THE IMPUGNED ORDER. VARIOUS JUDICIAL PRONOUNCEMENTS HAS BEEN DISCUSSED, THEREFORE, RESPE CTFULLY FOLLOWING THE DECISION FROM THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NAHAR EXPORTS LTD (156 TAXMAN 304) AND LIBERTY INDIA LTD (ITA NO. 590 OF 5 2005), WE ARE OF THE VIEW, THAT THE INSURANCE CLAIM , INTEREST ON INCOME TAX REFUND, SALE OF KOTA, INTEREST ON FDRS, INTEREST SU BSIDY ON TUFF AND EXPORTS INCENTIVES ARE NOT DIRECTLY DERIVED FROM AN INDUSTRIAL UNDERTAKING, THEREFORE, THIS GROUND OF THE ASSESSEE IS HAVING NO MERIT, THE STAND OF THE LD CIT(A) IS UPHELD. HOWEVER, IN LINE WITH THE DECLARATION MADE BY THE ASSESSEE U/S 158A (I) OF THE ACT IN RES PECT OF IDENTICAL QUESTION OF LAW BEING PENDING BEFORE THE HON'BLE SU PREME COURT OF INDIA IN THE CASE OF MODGIL HOSIERY EXPORTS PVT LTD IN SLP(CIVIL) 24344/2007 AND SLP (CIVIL )24563/2007 FOR THE ASSES SMENT YEARS 2000-01 AND 2001-02 RESPECTIVELY, THE ASSESSING OFF ICER IS DIRECTED TO APPLY THE RATIO LAID DOWN BY THE HON'BLE SUPREME CO URT AND RECOMPUTE THE DEDUCTION U/S 80IB OF THE ACT ACCORDINGLY. 8. THE SECOND GRIEVANCE OF THE ASSESSEE VIDE PRESEN T MISC. APPLICATION IS IN RESPECT OF THE GROUND NO. 6 WHICH WAS IN RESPECT OF INTERPR ETATIONS OF THE PROVISIONS OF SECTION 80HHC READ WITH SECTION 80IA(9) READ WITH SECTION 8 0-IB(13) OF THE ACT. THE ASSESSEE HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE T RIBUNAL IN ASSESSEES OWN CASE VIDE ORDER PLACED AT PAGES 19 TO 32 OF THE PAPER BOOK. THE GROUND OF APPEAL RAISED BY THE ASSESSEE WAS DISMISSED IN VIEW OF THE EARLIER ORDER OF THE TRIBUNAL. HOWEVER, WE FIND THAT THAT THE TRIBUNAL VIDE ORDER DATED 26.6.2008 IN ASS ESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2003-04 VIDE PARA 22 AT PAGE 29 OF THE ORDER H AD UPHELD THE STAND OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION ALLOWABLE U/S 80HHC, KEEPING IN VIEW THE PRINCIPLES LAID DOWN IN ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 2001-02. HOWEVER, WHILE PASSING THE ORDER IN THE PRESENT APPEAL RELATING TO ASSESSMENT YEAR 2004-05, THE TRIBUNAL HAS DISMISSED THE GROUN D OF APPEAL RAISED BY THE ASSESSEE. 9. WE FIND AN ERROR HAS CREPT IN THE ORDER OF THE T RIBUNAL VIDE ITS OBSERVATION IN PARA 6 OF ORDER DATED 28.5.2009. THOUGH THE TRIBUNAL OBS ERVED THAT IT HAS NO POWER TO REVIEW ITS EARLIER ORDER BUT BY AN ERROR IN THE CONCLUSION , THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. ACCORDINGLY, WE RECTIFY OUR ORDER AND PARA 6 WOULD READ AS UNDER:- 6 6. THE NEXT GROUND I.E. GROUND NO. 6, RAISED IS THA T BECAUSE ON THE TRUE AND CORRECT INTERPRETATION OF T HE PROVISIONS OF SECTION 80HHC READ WITH SECTION 801A( 9) READ WITH SECTION 80 IB (13), THE TRIBUNAL HAS ERRED IN RESTRICTING THE CLAIM OF DEDUCTION TO THE ASSESSEE. DURING ARG UMENTS, THE LEARNED COUNSEL ADVANCED HIS ARGUMENTS, WHICH I S IDENTICAL TO THE GROUNDS RAISED. OUR ATTENTION WA S ALSO INVITED TO PAGES 19 TO 32 OF THE PAPER BOOK. ON TH E OTHER HAND, THE CONTENTION ON BEHALF OF THE REVENUE IS TH AT IN THE ABSENCE OF ANY DECISION FROM THE HON'BLE HIGHER FOR UM, THE IMPUGNED DECISION HAS TO BE FOLLOWED. AFTER HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT WE HAVE NO POWER TO REVIEW OUR EARLIER ORDER AND FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSM ENT YEAR 2003-04, WE DEEM IT EXPEDIENT TO UPHOLD THE STAND O F THE ASSESSEE ON THIS ASPECT. IN THE RESULT THE ASSESSI NG OFFICER IS DIRECTED TO RE-COMPUTE THE DEDUCTION ALLOWABLE U NDER SECTION 80HHC KEEPING IN VIEW THE PRINCIPLE LAID DO WN IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 IN ITA NO. 214/CHANDI/2005 ORDER DATED 19.2.2007. 10. IN VIEW OF THE ABOVE, BOTH THE MISC. APPLICATIO NS RAISED BY DIFFERENT ASSESSEES ARE ALLOWED AS INDICATED ABOVE. SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : NOVEMBER, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2010. SD/- SD/- (N.BARATHVAJA SANKAR) (SUSHMA CHOWLA) VICE PRESIDENT JUDICIAL MEMBER DATED : 30 TH NOVEMBER, 2010 7