The ACIT, Circle-10, Ahmedabad V. M/s. Jay Chem, Ahmedabad

MA 177/AHD/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7924 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 22-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 80IB

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY - AM M A NO.177/AHD/2010 [ARISING OUT OF ITA NO.841/AHD/2006] (ASSESSMENT YEAR:-2002-03) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-10, AHMEDABAD V/S M/S JAY CHEM, SHIP BUILDING, C G ROAD, NAVRANGPURA, AHMEDABAD PAN: AACFJ 1923 F [APPLICANT] [ORIGINAL RESPONDENT] [RESPONDENT] [ORIGINAL APPELLANT] REVENUE BY :- SHRI SAMIR TEKRIWAL, SR. DR ASSESSEE BY:- SHRI S N SOPARKAR, AR DATE OF HEARING:- 03-02-2012 DATE OF PRONOUNCEMENT:- 16-04-2012 O R D E R PER D K TYAGI (JM) :- BY THIS MISCELLANEOUS APPLICATION, THE REVENUE HAS REQUESTED FOR RECALLING OF THE ORDER DA TED 28-08- 2009 PASSED BY THE ITAT AHMEDABAD BENCH-A IN ITA.NO.841/AHD/2006 FOR THE AY 2002-03. 2. IN THE MISCELLANEOUS APPLICATION, THE REVENUE HA S SUBMITTED AS UNDER: FACTS OF THE CASE: THE HON'BLE ITAT HAS PASSED THE ORDER DOLED 28/08/2 009 RECEIVED ON 11/09/2009. 2 ON PERUSAL OF THE SAID ORDER IT IS SEEN THAT HON'BL E ITAT HAS DELETED THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB OF THE ACT ON THE FOLLOWING INCOME RELYING UPON THE DECISION OF APEX COURT IN THE CASE OF STERLING FOODS (1999) 237 ITR 579. (I) SALE OF DEPB LICENCE RS.79,12,666/ - (II) EXPORT INCENTIVE - DUTY DRAWBACK RS.15,92,282 /- (III) FOREIGN EXCHANGE RATE FLUCTUATION RS.25,07,2 74/- THE HON'BLE ITAT FOLLOWED THE DECISION OF HON'BLE I TAT, MUMBAI BENCH IN THE CASE OF SHAH ORIGINALS V/S. ACIT/DCIT, RANGE-24(L), MUMBAI (2008) 19 SOT 566 (MUM.) WHO HAS FOLLOWED TH E DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S. INDIA GELATINE & CHEMICALS LTD. IN WHICH IT IS HELD THAT SUCH INCOME ARE DIRECTLY RELATED TO THE BUSINESS OF INDUSTRIAL UNDERTAKING AND ELIGI BLE FOR DEDUCTION U/S.80IB OF THE ACT. THE DECISION OF THE HON'BLE ITAT OF ALLOWING DEDUCT ION U/S. 80IB ON RECEIPTS ARISING OUT OF SALE OF DEPB LICENCE, DUTY DRAWBACK AND FOREIGN EXCHANGE FLUCTUATION IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: IT IS EVIDENCE THAT SECTION 80IB OF THE ACT PROVIDE S FOR ALLOWING DEDUCTION IN RESPECT OF PROFITS & GAINS DERIVED FRO M ELIGIBLE BUSINESS. THE HON'BLE SUPREME COURT IN THE CASE OF STERLING F OODS 237 ITR 579 HAS HELD THE SCOPE OF WORD 'DERIVED FROM' IS NARROW ER THAN THE SCOPE OF WORD 'ATTRIBUTABLE TO' AND ONLY INCOME OF WHICH THE IMMEDIATE SOURCE IS BUSINESS IS ELIGIBLE FOR DEDUCTION U/S.80IB ORU/ S.80HHC. THE VERY RECENT JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA V/S. CIT 317 ITR 218 IS SQUARELY APPL ICABLE TO THE PRESENT CASE. THE HON'BLE SUPREME COURT HAS OBSERVE D THAT, THE WORD 'DERIVED FROM' IS NARROWER IN CONNOTATION AS COMPAR ED TO THE WORD 'ATTRIBUTABLE TO'. BY USING THE EXPRESSION 'DERIVED FROM' PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGR EE. THE HON'BLE SUPREME COURT FURTHER HELD THAT THOUGH THE OBJECT B EHIND DEPB, ETC. IS TO NEUTRALIZE THE INCIDENCE OF CUSTOM DUTY PAYME NT ON THE IMPORT CONTENT OF EXPORT PRODUCT, DEPB CREDIT / DUTY DRAW BACK RECEIPT DO NOT COME WITHIN THE FIRST DEGREE SOURCE AS THE SAID INCENTIVE FLOW FROM INCENTIVE SCHEMES ENACTED BY THE GOVERNMENT OR FROM THE SECTION 75 3 OF THE CUSTOMS ACT AND SUCH INCENTIVE PROFITS ARE N OT PROFITS DERIVED FROM ELIGIBLE BUSINESS U/S.80IB OF THE ACT. SIMILARLY, THE INCOME ON ACCOUNT OF GAIN AS A RESUL T OF APPRECIATION OF FOREIGN EXCHANGE SO EARNED BY THE ASSESSEE SUBSEQUE NT TO SALE ACTIVITIES AND IN SUCH INCOME HAS NOT ACCRUED AT TH E TIME OF SALE. THIS INCOME MAY BE INCIDENTAL TO OR ATTRIBUTABLE TO THE BUSINESS NOT DERIVED FROM EXPORT ACTIVITIES OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE HON'BLE ITAT IS NOT CORRE CT ON THE INTERPRETATION OF THE PROVISIONS OF SEC. 80IB OF TH E ACT, WHICH IS TO BE CONSIDERED AS MISTAKE APPARENT FROM RECORD IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V/S. SUNIL KUMAR 212 ITR 238 (RAJ) WHEREIN IT IS HELD THAT NON-CONSIDERATION OF JUDGEMENT OF HIGHER COURT BEFORE OR SUBSEQUENT TO THE ORDER IS M ISTAKE APPARENT FROM RECORDS. PRAYER OF THE DEPARTMENT:- IT IS THEREFORE, HUMBLY PRAYED THAT:- (1) THE HONBLE ITAT MAY RECALL THE ORDER PASSED ON 28-08-2009 (2) THE HONBLE ITAT MAY CONSIDER THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF CIT VS. LIBERTY INDIA (DELIVERED SUBSEQUENT TO THE PRESENT ORDER PASSED BY THE HONB LE ITAT) IN VIEW OF THE DECISION OF CIT VS. SUNIL KUMAR 212 ITR 238 (RAJ), AND ACCORDINGLY, AMEND ITS ORDER, AS NON-CONSIDERAT ION OF JUDGMENT OF THE HIGHER COURT BEFORE OR SUBSEQUENT T O THE ORDER IS MISTAKE APPARENT FROM RECORD. 3 AT THE TIME OF HEARING, THE LEARNED DR SUBMITTED THAT THE TRIBUNAL HAS DELETED THE DISALLOWANCE OF CLAIM OF D EDUCTION U/S 80IB OF THE ACT ON THE FOLLOWING INCOME, RELYING UP ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C IT VS. STERLING FOODS LTD. (1999) 237 ITR 579 (SC): 4 (I) SALE OF DEPB LICENCE RS.79,12,666 /- (II) EXPORT INCENTIVE - DUTY DRAWBACK RS.15,92,282 /- (III) FOREIGN EXCHANGE RATE FLUCTUATION RS.25,07,2 74/- IN A RECENT JUDGMENT OF THE HON'BLE SUPREME COURT I N THE CASE OF LIBERTY INDIA VS. CIT 317 ITR 218, IT HAS BEEN HELD THAT THE INCOME OUT OF SALE OF DEPB LICENCE AND EXPORT INCEN TIVE DUTY DRAWBACK ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT, THEREFORE, A MISTAKE OF LAW HAS CREPT IN THE ORDER OF THE TRIBUNAL. HE, THEREFORE, RELYING ON THE DECISION IN THE CASE OF CIT VS. SUNIL KUMAR 212 ITR 238 (RAJ), WHEREIN IT HAS BEEN HELD T HAT NON- CONSIDERATION OF THE JUDGMENT OF THE HIGHER COURT B EFORE OR SUBSEQUENT TO THE ORDER, IS A MISTAKE APPARENT FROM RECORD, THEREFORE, THE ORDER PASSED BY THE TRIBUNAL MAY KIN DLY BE RECALLED. 4 THE LEARNED COUNSEL OF THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT IN THE CASE OF LIBERTY INDIA VS. CIT 317 ITR 218, THE ISSUE INVOLVED WAS IN RESPECT OF DEPB LICENSE A ND DUTY DRAWBACK. IF AT ALL, THE ORDER OF THE TRIBUNAL IS T O BE RECALLED, IT SHOULD BE LIMITED TO THAT EXTENT ONLY. 5 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. WE FIND THAT AS PER THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF LIBERTY INDIA (SUPRA) THE INCOME DERIVED FR OM SALE OF DEPB LICENSE AND EXPORT INCENTIVES, IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB AND SINCE THE TRIBUNAL HAS DELET ED THIS DISALLOWANCE, A MISTAKE APPARENT FROM RECORD HAS CR EPT IN THE ORDER AND THEREFORE, THE ORDER OF THE TRIBUNAL TO T HIS DELETION, IS 5 HEREBY MODIFIED BY HOLDING THAT THE ASSESSEE WAS NO T ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT ON SALE OF DEPB LICEN CE AND DUTY DRAWBACK. 6 IN THE RESULT, THE MISCELLANEOUS APPLICATION IS A LLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 16-04-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 16-04-2012 COPY OF THE ORDER FORWARDED TO: 1. M/S JAY CHEM, SHIP BUILDING, C G ROAD, NAVRANGPU RA, AHMEDABAD 2. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-10, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVI, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD