The ACIT, Circle-1, Ahmedabad V. ABM Steel Pvt. Ltd., Ahmedabad

MA 163/AHD/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7922 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income
• Section: 80HHC; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER M.A.NO.163/AHD/2010 IN I.T.A. NO. 2703/ AHD/2004 (ASSESSMENT YEAR 2001-02) ACIT, CIRCLE 1, AHMEDABAD VS. M/S. ABM STEEL LTD., 64/A, GIDC, PHASE I, VATVA, AHMEDABAD PAN/GIR NO. : AABCA6004C (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI VINOD TANWANI, SR. DR RESPONDENT BY: SHRI S N SOPARKAR, AR DATE OF HEARING: 13.04.2012 DATE OF PRONOUNCEMENT: 27.04.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS MISCELLANEOUS APPLICATION IS FILED BY THE REV ENUE AND FOLLOWING CONTENTIONS ARE RAISED BY THE REVENUE IN THIS MISCELLANEOUS APPLICATION: 1. INCLUSION OF EXPORT INCENTIVE AND SALE OF DE PB LICENSE AS BUSINESS INCOME FOR PURPOSE OF CALCULATION OF DEDUC TION U/S.80HHC: THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DTD.0 5/03/2004 EXCLUDED THE INCOME OF RS.21,24,012/- ON ACCOUNT OF SALE OF DEPB LICENSE. THE ASSESSING OFFICER, AFTER ELABORATELY D ISCUSSING THE ISSUE IN THE LIGHT OF PROVISIONS OF FOREIGN TRADE ( DEVELOPMENT AND REGULATION) ACT, 1992, EXCLUDED THE SAID INCOME FRO M THE COMPUTATION OF DEDUCTION U/S.80HHC. M.A.NO.163 /AHD/2010 2 THE CIT(A), IN THE APPELLATE ORDER DTD.28/06/2004, ALLOWED THE APPEAL OF THE ASSESSEE AFTER NOTING, BASED ON VARIO US CASE LAWS AND INTERPRETATION OF THE GENERAL CLAUSES ACT THAT THE SALE OF DEPB LICENSE REMAINS COVERED U/S.28(IIIA) OF THE I. T. A CT. THE ID. CIT(A) ACCORDINGLY DIRECTED THE ASSESSING OFFICER T O INCLUDE THE INCOME IN DETERMINING THE DEDUCTION U/S.80HHC. NOW, THE HON'BLE ITAT, AGREEING WITH THE CIT(A), AN D NOTING THAT THE CIT(A) FOLLOWED THE ORDER OF THE TRIBUNAL IN TH E CASE OF PRATIBHA SYNTAX, CONFIRMED THE ORDER OF THE CIT(A). IT IS HOWEVER NOTED THAT LANDMARK AMENDMENT TO INCOME TAX ACT SPE CIALLY SECTIO'-28 WAS MADE BY THE TAXATION LAWS (AMENDMENT ) ACT W.R.E.F. 01/04/1998. VIDE THE I.T. AMENDMENT, CLAUS E (IIID) AND (IIIE) WERE INTRODUCED IN SECTION 28 OF THE I. T. A CT. FURTHER, AMENDMENTS WERE MADE IN SECTION 80HHC AS W ELL TO INCORPORATE THE CHANGES IN SEC.28. TO THESE AMENDME NTS, THE ISSUE OF SALE OF DEPB LICENSE WAS SPECIFICALLY INCLUDED I N THE PROVISIONS OF SEC.28 AND SEC.80HHC. BOTH THE ASSESSING OFFICER AND THE CIT(A), HAVING P ASSED THEIR RESPECTIVE ORDER BEFORE THE CONCERNED AMENDMENT, CO ULD NOT HAVE CONSIDERED THE CHANGES. HOWEVER, HON'BLE ITAT, HAS TO AN EXTENT ERRED IN NOT CONSIDERING THE EXPRESS PROVISION OF T HE ACT INTRODUCED RETROSPECTIVELY. IN MANY SIMILAR CASES, HON'BLE ITAT, AHMEDABAD ITSELF HAS SET ASIDE SUCH ISSUE TO THE FI LE OF THE AO FOR RE-CONSIDERATION IN VIEW OF THE AMENDED PROVISIONS OF THE ACT. HOWEVER, IN THE INSTANT CASE, THE ABOVE FACTS HAVE NOT BEEN CONSIDERED. AS THE NON CONSIDERATION OF THE AMENDED PROVISIONS OF THE ACT, WHILE DISPOSING OF THE APPEAL IS A MISTAKE APPARENT ON RECORD, THE SAME MAY KINDLY BE RECTIFIED. 2. INCLUSION OF NET PATTERN DEVELOPMENT CHARGES OF RS. 10,51,946/- IN THE TOTAL PROFIT FOR CALCULATION OF DEDUCTION U/ S.80HHC: THE HON'BLE ITAT HAS DISMISSED THE APPEAL OF THE RE VENUE RELYING ON THE REASONING AS GIVEN IN THE FIRST ISSUE AS MEN TIONED ABOVE. IT IS HOWEVER NOTED THAT THERE APPEARS TO BE A MIST AKE IN THE ORDER OF THE CIT(A) AS WELL AS THE ITAT. IN THE REVISED W ORKING OF DEDUCTION U/S.80HHC SUBMITTED BY THE ASSESSEE VIDE ITS SUBMISSION DTD.05/03/2004 AS WELL AS THE WORKING OF DEDUCTION U/S.80HHC FILED WITH THE FORM NO.10CCAC SUBMITTED B Y THE RETURN OF INCOME (COPIES ENCLOSED), THE ASSESSEE IT SELF HAD REDUCED 90% OF 'PATTERN DEVELOPMENT CHARGES' FROM THE PROFI TS OF THE BUSINESS. IT IS THEREFORE NOT CLEAR AS TO WHY THE A SSESSEE PREFERRED AN APPEAL ON THIS ISSUE BEFORE THE CIT(A) WHICH WAS ALSO CONFIRMED BY THE CIT(A). IN THE ASSESSMENT ORDER, T HE ASSESSING M.A.NO.163 /AHD/2010 3 OFFICER IN DISCUSSING THE ISSUE OF DEDUCTION U/S.80 HHC HAS NOT DISCUSSED EXCLUSION OF NET PATTERN DEVELOPMENT CHAR GES AT ALL. THIS FACT HAS NOT BEEN TAKEN NOTE OF BY THE HON'BLE ITAT. THE HON'BLE ITAT HAS, RELYING ON ITS FINDING ON THE SAM E HEAD OF INCOME AND W.R.T. SEC.80IA AS DISCUSSED IN THE SECO ND ISSUE IN THE ORDER, HAS DISMISSED THE APPEAL OF THE REVENUE. THI S, BEING A MISTAKE APPARENT ON RECORD, MAY KINDLY BE RECTIFIED . BOTH THE MISTAKES ARE APPARENT ON RECORD. THEREFORE , IT IS PRAYED THAT THE HON'BLE TRIBUNAL MAY RECTIFY THE MISTAKES AND PASS NECESSARY ORDERS ACCORDINGLY. 2. IN THE COURSE OF HEARING BEFORE US, LD. D.R. REI TERATED THE SAME CONTENTIONS WHICH ARE RAISED BY THE REVENUE IN THE MISCELLANEOUS APPLICATION. 3. IN REPLY, IT WAS SUBMITTED BY THE LD. COUNSEL FO R THE ASSESSEE THAT THE 1 ST ISSUE IS CONCERNED WITH REGARD TO EXCLUSION OF RS. 21,24,012/- FROM BUSINESS PROFIT ON ACCOUNT OF SALE OF DEPB LICENSE, THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE SUBSEQUENT JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TOPMAN EXPORTS A S REPORTED IN 342 ITR 49 (S.C.). IT WAS SUBMITTED THAT AS PER THIS J UDGMENT OF HONBLE APEX COURT, ONLY THE PROFIT ON SALE OF DEPB IS TO B E CONSIDERED FOR 90% EXCLUSION FORM BUSINESS PROFITS AND NOT THE ENTIRE SALE PROCEEDS OF DEPB. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THIS ASPECT AND WE FIND THAT WHILE DECIDING GROUND NO3 OF THE REVENUE S APPEAL, IT IS NOTED BY THE TRIBUNAL THAT AS PER THE ASSESSEE, THERE IS A PROFIT OF RS.78,001/- ON SALE OF DEPB LICENSE AND, THEREFORE, FOR THE PURPOS E OF COMPUTATION OF DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IA, ONLY THIS PROFIT ON SALE OF DEPB OF RS.78,001/- SHOULD BE EXCLUDED FROM THE ENT IRE BUSINESS PROFIT AND NOT THE SALE OF DEPB OF RS.21,24,012/-. WHILE DECIDING THE GROUND NO.6 IN PARA 19, IT IS NOTED BY THE TRIBUNAL THAT T HE A.O. HAS TREATED THE ENTIRE SALE PROCEEDS ON DEPB AS INCOME FROM OTHER S OURCES WHEREAS, IT IS HELD BY THE LD. CIT(A) THAT SUCH SALE PROCEED OF DE PB SHOULD BE M.A.NO.163 /AHD/2010 4 ASSESSED AS INCOME FROM BUSINESS. THE TRIBUNAL HAD CONFIRMED THE ORDER OF LD. CIT(A) ON THIS ISSUE BUT THERE IS NO DIRECTI ON ON THIS ASPECT AS TO WHETHER PROFIT ON SALE OF DEPB OF RS.78,001/- SHOUL D BE CONSIDERED FOR EXCLUSION TO THE EXTENT OF 90% FROM BUSINESS PROFIT OR NOT. AS PER THE RECENT JUDGMENT OF HONBLE APEX COURT RENDERED IN T HE CASE OF TOPMAN EXPORTS (SUPRA) IT WAS HELD THAT PROFIT ON SALE OF DEPB HAS TO BE CONSIDERED FOR 90% EXCLUSION FORM BUSINESS PROFIT. WE, THEREFORE, FEEL THAT TO THIS EXTENT, THERE IS MISTAKE IN THE TRIBUN AL ORDER WHICH WE RECTIFY AND DIRECT THE A.O. TO DECIDE THIS ISSUE IN LINE WI TH THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TOPMAN E XPORTS (SUPRA). WE ARE HOLDING SO BECAUSE AS PER THE JUDGMENT OF HO NBLE APEX COURT RENDERED IN THE CASE OF SAURASHTRA KUTCH STOCK EXCH ANGE LTD. AS REPORTED IN 305 ITR 227, IF THE TRIBUNAL DECISION IS NOT IN LINE WITH THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OR HONBLE APE X COURT, EVEN IF RENDERED SUBSEQUENTLY, THIS IS APPARENT MISTAKE IN THE TRIBUNAL ORDER AND ACCORDINGLY, WE ARE DECIDING THIS ISSUE ON THE BASI S OF SUBSEQUENT DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF TOPMAN EXPORTS (SUPRA). THIS PART OF THE MISCELLANEOUS APPLICATIO N IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. THE 2 ND PART OF THE MISCELLANEOUS APPLICATION OF THE REVEN UE IS REGARDING INCLUSION OF NET PATTERN DEVELOPMENT CHAR GES OF RS.1,05,946/- IN THE TOTAL PROFIT FOR CALCULATION OF DEDUCTION U/ S 80HHC. IT WAS SUBMITTED BY THE LD. D.R. WITH REGARD TO THIS ASPEC T THAT THE ASSESSEE ITSELF HAS REDUCED 90% OF DEVELOPMENT CHARGES FROM THE PROFITS OF THE BUSINESS AND, THEREFORE, IT IS NOT CLEAR, AS TO WHY , THE ASSESSEE PREFERRED AN APPEAL ON THIS ISSUE BEFORE THE LD. CIT(A). HE SUB MITTED THAT UNDER THESE FACTS, THIS ISSUE SHOULD NOT HAVE BEEN DECIDED IN F AVOUR OF THE ASSESSEE AND, THEREFORE, IT IS AN APPARENT MISTAKE IN THE TR IBUNAL ORDER ON THIS ISSUE. M.A.NO.163 /AHD/2010 5 HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ACG ASSOCIATED CAPSULES (P) LTD VS C IT AS REPORTED IN 247 CTR 372. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. WE FIND THAT THIS ASPECT WAS DECIDED BY THE TRIBUNAL IN PARA 26 OF THE IMPUGNED TRIBUNAL ORDER. WHILE DECIDING GRO UND NO.8 OF THE REVENUES APPEAL, IT IS HELD BY THE TRIBUNAL IN THE IMPUGNED ORDER THAT THIS GROUND OF APPEAL IS EXACTLY THE SAME AS WAS IN GROU ND NO.2 OF THE APPEAL WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. GROUND NO.2 OF THE APPEAL WAS REGARDING THE DIRECTION OF LD. CIT(A) TO ENHANCE THE ELIGIBLE PROFIT FOR THE PURPOSE OF DEDUCTION U/S 80I BY RS.1 0,51,946/- RECEIVED BY THE ASSESSEE BY TREATMENT GIVEN TO NET PATTERN DEVE LOPMENT CHARGES. GROUND NO.2 WAS REJECTED BY THE TRIBUNAL AND THERE IS NO CONTENTION IN THE MISCELLANEOUS APPLICATION THAT THIS IS A MISTAKE IN THE TRIBUNAL DECISION WITH REGARD TO THIS GROUND NO.2 OF THE REVENUES AP PEAL. WHILE DECIDING GROUND NO.8 OF THE REVENUES APPEAL, THE TRIBUNAL H AS SIMPLY FOLLOWED THE DECISION OF THE TRIBUNAL IN RESPECT OF GROUND N O.2 OF THE APPEAL. WHEN THERE IS NO ALLEGATION OF ANY MISTAKE IN THE T RIBUNAL ORDER IN RESPECT OF GROUND NO.2 WHICH IS FOR THE SAME INCOME, WE DO NOT FIND ANY APPARENT MISTAKE IN THE TRIBUNAL ORDER IN RESPECT O F GROUND NO.8 ALSO. HENCE, THIS ASPECT OF THE REVENUES MISCELLANEOUS A PPLICATION IS REJECTED. 7. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- D./- (D. K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP M.A.NO.163 /AHD/2010 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 16/4 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18/4.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 27/4 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.27/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27/4/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .