UNISYNTH CHEMICALS, V. DCIT CIR 24(2),

MA 328/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9513 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: R C JAIN
• Keywords: Business income
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER. M.A. NO.328/MUM/2012. (IN M.A. NO.300/MUM/2009) (IN ITA N O. 3701/MUM/2008) ASSESSM ENT YEAR : 2004-05. M/S UNISYATH CHEMICALS, DY. COMMISSIONER OF 11, SARAF UDYOG BHAWAN, VS. INCOME-TAX, NEAR CHINCHOLI PATHTAK, CIRCLE-24(2), MALAD (W), MUMBAI-400 064. MUMBAI. PAN AAAFU1724D APPLICANT. RESPONDENT. APPLICANT BY : SHRI R.C. JAIN. RESPONDENT BY : SHRI A.B. KOLI. DATE OF HEA RING : 19-10-2012. DATE OF PRONOUNCEM ENT : 09-11-2012. O R D E R PER P.M. JAGTAP, A.M. : BY THIS MISCELLANEOUS APPLICATION, THE ASSESSEE IS SEEKING RECTIFICATION OF THE MISTAKE ALLEGED TO HAVE CREPT IN THE ORDER OF T HE TRIBUNAL DATED 10-09-2009 PASSED IN ITA NO. 3701/MUM/2008 READ WITH THE ORDER DATED 09-09-2011 PASSED IN M.A.NO. 300/MUM/2011. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE MAIN IS SUE RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO. 3701/MUM/2008 WAS RELATING TO ASSESSEES CLAIM FOR 2 M.A.NO.328/MUM/2012 DEDUCTION U/S 80HHC ON THE AMOUNT OF RS.7,48,899/- RECEIVED IN RESPECT OF DEPB LICENSE. VIDE ITS ORDER DATED 10 TH SEPT., 2009 (SUPRA), THE TRIBUNAL HELD THAT THE SA ID ISSUE WAS COVERED BY THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF TOPMAN EXPORT REPORTED IN 318 ITR (AT) 87 (MUM)(SB) WHERE IN IT WAS HELD THAT ON SALE OF DEPB ENTITLEMENTS, BOOK VALUE OF DEPB COULD BE T AXABLE AS BUSINESS INCOME U/S 28(IIIB) AND DEDUCTION U/S 80HHC WILL BE AVAILA BLE ON THIS AMOUNT IN THE YEAR OF ACCRUAL. ACCORDINGLY, THE MAIN ISSUE INVOLVED IN THE ASSESSEES APPEAL WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DECISION OF SPECIAL BENC H OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORT (SUPRA). THE SAID DECISION OF THE SPE CIAL BENCH IN THE CASE OF TOPMAN EXPORT (SUPRA) HOWEVER, CAME TO BE REVERSED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS 328 ITR 451 HOLDING THAT THE AMOUNT EQUIVALENT TO THE FACE VALU E OF THE DEPB AS WELL AS THE AMOUNT RECEIVED IN EXCESS OF DEPB CREDIT CONSTITUTE PROFIT OF BUSINESS U/S 28(IIID) AND NOT U/S 28(IIIB) AND KEEPING IN VIEW THE SAID D ECISION OF HONBLE JURISDICTIONAL HIGH COURT, THE ORDER DATED 10 TH SEPT., 2009 (SUPRA) WAS MODIFIED BY THE TRIBUNAL ALLOWING THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M.A. NO.300/MUM/2011 BY ITS ORDER DATED 9 TH SEPT., 2011 WHEREBY A DIRECTION WAS GIVEN TO THE AO TO RECOMPUTE THE DEDUCTION U/S 80HHC KEEP ING IN VIEW THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS & CHEMICALS (SUPRA). 3. AS POINTED OUT BY THE ASSESSEE IN THE PRESENT MI SCELLANEOUS APPLICATION, THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F KALPATARU COLOURS & CHEMICALS (SUPRA) HAS SINCE BEEN OVERRULED BY THE H ONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORT 247 CTR 353 HOLDING THAT DEPB IS CASH ASSISTANCE RECEIVABLE AGAINST EXPORT UNDER THE SCHEME OF THE G OVERNMENT AND WHILE THE FACE 3 M.A.NO.328/MUM/2012 VALUE OF THE DEPB FALLS UNDER CLAUSE (IIIB) OF SECT ION 28, THE DIFFERENCE BETWEEN THE SALE VALUE AND THE FACE VALUE OF THE DEPB (I.E. PROFIT) WILL FALL UNDER CLAUSE (IIID) OF SECTION 28. IT AS ALSO HELD THAT DEPB REP RESENTS PART OF THE COST INCURRED BY A PERSON FOR MANUFACTURING OF THE EXPORT PRODUCT AN D HENCE EVEN WHEN THE DEPB IS NOT UTILIZED BY THE EXPORTER BUT IS TRANSFERRED TO ANOTHER PERSON, THE DEPB CONTINUES TO REMAIN AS A COST TO THE EXPORTER. IT W AS HELD THAT WHEN DEPB IS TRANSFERRED, THE ENTIRE SUM RECEIVED ON SUCH TRANSF ER DOES NOT BECOME THE PROFIT OF THE EXPORTER AND IT IS ONLY THE AMOUNT THAT HE RECE IVES IN EXCESS OF THE DEPB WHICH REPRESENTS HIS PROFITS ON TRANSFER OF THE DEPB. IT IS THUS CLEAR THAT THE DECISION RENDERED BY THE TRIBUNAL VIDE ITS ORDER DATED 10 TH SEPT., 2009 AS MODIFIED BY AN ORDER DATED 9 TH SEPT., 2011 (SUPRA) IS NOT IN CONFORMITY WITH THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORT (SUPRA) AND THERE IS A MISTAKE APPARENT FROM RECORD IN THE SAID ORDER. WE, THEREFORE, RECTIFY THE SAME BY REVISING OUR DIRECTION TO THE AO TO THE EFFECT THAT HE SHALL RECOMPUTE THE DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC KEEPING IN VIEW THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORT (SUPRA). 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED COURT ON THIS 9 TH DAY OF NOV., 2012. SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 9 TH NOV., 2012. WAKODE 4 M.A.NO.328/MUM/2012 COPY TO : 1. APPLICANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. D.R., F-BENCH. (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.