Abad Exim Private Ltd, Cochin V. DCIT, Ernakulam

MA 39/COCH/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1859 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 17-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: RADHESH L BHAT
• Keywords: Question of law
• Section: 80HHC; 260A; 205; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM MA NO. 39 /COCH/201 9 : ASST.YEAR 200 2 - 200 3 (ARISING OUT OF ITA NO. 249/COCH/2007 ) M/S.ABAD EXIM PVT. LTD. ABAD BUILDING, PB NO.313 COCHIN 682 002. PAN : AABCA9685R . VS. THE ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1 (1) ERNAKULAM . ( APPLICANT ) (RESPONDENT) APPLICANT BY : SRI. RADHESH L.BHAT RESPONDENT BY : SMT.A.S.BINDHU, SR.DR DATE OF HEARING : 0 7.0 6 .2019 DATE OF PRONOUNCEMENT : 17 .0 6 .2019. O R D E R PER GEORGE GEORGE K, JM THIS MISCELLANEOUS APPLICATION AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE TRIBUNAL DATED 06.03.2019. THE APPEAL WAS ORIGINALLY DISPOSED OFF BY THE TRIBUNAL VIDE ITS ORDER DATED 30.10.2009. AGGRIEVED BY THE ORDER OF THE TRIBUNAL, THE DEPARTMENT HA D FILED THE APPEAL U/S 260A OF THE I.T.ACT TO THE HONBLE HIGH COURT OF KERALA. THE HONBLE HIGH COURT OF KERALA VIDE ITS JUDGMENT DATED 07.08.2018 RESTORED THE FOLLOWING ISSUES TO THE TRIBUNAL FOR FRESH CONSIDERATION: - ( I ) DEDUCTION U/S 80HHC OF THE I.T.ACT, AND ( II ) CLAIM OF DEDUCTION U/S 10A OF THE I.T.ACT. M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 2 2. SUBSEQUENT TO THE HONBLE HIGH COURTS JUDGMENT, THE TRIBUNAL DISPOSED OFF THE APPEAL VIDE ITS ORDER DATED 06.03.2019. THE ASSESSEE BEING AGGRIEVED BY THE FINDINGS OF THE TRIBUNAL WITH REGARD TO DEDUCTION U/S 10A OF THE I.T.ACT, HAS FILED THE PRESEN T MISCELLANEOUS APPLICATION. THE CONTENT OF THE M.A. READS AS FOLLOW: - 1. THE H'BLE ITAT, COCHIN BENCH PASSED AN ORDER ON 06.03.2019, ON THE DIRECTION GIVEN BY THE H'BLE KERALA HIGH COURT VIDE ORDER DT . 07.08.2018 ON AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE H'BLE ITAT, ON THE GROUNDS RELATING TO DEDUCT ION U/S.80HHC AND CLAIM U/S.10A OF THE INCOME TAX ACT. 2. IN THE ORDER OF H'BLE HIGH COURT OF KERALA, IN RESPECT OF THE CLAIM U/S. 1 OA OF TH E ACT, THE H'BLE COURT VIDE PARA 4, DIRECTED THE H'BLE ITAT AS UNDER: '4. THE RESPONDENT - ASSESSEE SUBMITS THAT THEY ALSO HAVE A VALID CLAIM UNDER SECTION 1 OA OF THE ACT. THEY CAN CLAIM IT BEFORE THE TRIBUNAL AS HAS BEEN PROVIDED IN (1998) 229LTR 383 (SC) [NTPC V. CI T ]. HOWEVER, IF THE CLAIM IS WITH RESPECT TO INDIVIDUAL QUICK FREEZING (IQF), THE SAME CANNOT BE TERMED TO BE A MANUFACTURE OR PRODUCTION AS DECLARED IN 2012 (2) KLT SN 86 (C NO. 79) [CIT V. CHOICE TRADING CORPORATION LTD. ] . IT HAS TO BE NOTIC ED THAT FOR THE SUBJECT YEAR, AFTER THE AMENDMENT TO SECTION 1 OA, MERE PROCESSING DOES NOT ENTITLE A CLAIM UNDER SECTION 1 OA. BUT, BY THE PROVISO ADDED ON AMENDMENT BY SUBSTITUTION. THE UNDERTAKINGS WHICH WERE ENTITLED UNDER THE EARLIER PROVISION WOULD BE SO ENTITLED EVEN UNDER THE NEW PROVISION FOR THE UNEXPIRED PERIOD OF ENTITLEMENT AS PER THE EARLIER PROVISION. HENCE IN CONSIDERING SUCH CLAIM NECESSARILY IT WOULD HAVE TO BE EXAMINED WHETHER THE ASSESSEE HAD CLAIMED AND OBTAINED THE EXEMPTION IN THE YEA RS EARLIER TO THE AMENDMENT. ' M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 3 (EMPHASIS SUPPLIED) AS CAN BE SEEN, THE DIRECTION GIVEN BY THE H'BLE HIGH COURT WAS TO EXAMINE WHETHER THE ASSESSEE HAD CLAIMED AND OBTAINED THE EXEMPTION IN THE YEARS EARLIER TO THE AMENDMENT TO SEC. 1 OA IN THE FINANCE ACT 2000 W.E.F 0 1.04.2000. 3. THE EFFECT OF THE ORDER OF THE HIGH .COURT WAS THAT IF THE APPELLANT HAD CLAIMED U/S.10A AND THE AO ALLOWED THE SAME UNDER THE PROVISIONS OF SEC.10 A, WHICH STOOD PRIOR TO THE AMENDMENT, THE APPELLANT CONTINUES TO GET THE BENEFIT FOR THE UNEXPIRED PERIOD, EVEN THOUGH THE LAW WAS AMENDED SUBSEQUENTLY. 4. THE H'BLE ITAT HEARD THE MATTER AND ISSUED THE ORDER ON 06.03.2019. IN THE SAID ORDER, THE BENCH HELD THAT IN PRINCIPLE THE ASSESSEE IS ELIGIBLE TO BENEFIT OF CLAIM U/S. 1 OA OF THE ACT FOR THE AY 2002 - 03, EVEN AFTER THE AMENDMENT OF SEC.10A. HOWEVER, IN THE SAID ORDER, IN PARA 5, THE H'BLE BENCH STATED AS UNDER: '5.1 THEREFORE, GOIN G BY THE JUDGMENT OF THE HON 'BLE HIGH COURT, THE ASSESSEE WOULD BE ENTITLED TO THE CLAIM OF DEDUCTION U/S 1 OA OF THE I T.ACT FOR THE UNEXPIRED PERIOD, I.E., ASSESSMENT YEAR 2002 - 2003 IN RESPECT OF EXPORTS TO EXPORTS HOUSE OTHER THAN IQF. THE QUANTIFICATION OF THE AMOUNT THAT THE AS SESSEE IS ENTITLED FOR DEDUCTION U / S 1 OA OF THE I T.ACT FOR THE RELEVANT ASSESSMENT YEAR HAS TO BE COMPUTED BY THE ASSESSING OFFICER FOR THE REASON THAT THE HON 'BLE HIGH COURT HAD STATED THAT THE CLAIM OF IQF, DEDUCTION U /S 1 OA OF THE I T. ACT CANNOT BE G RANTED. SO ALSO, THERE SHALL NOT BE OVERLAPPING OF DEDUCTION U/ S 1 OA AND 80HHC OF THE I T. ACT WITH REGARD TO THE SAME EXPORT (I.E. EXPORT MADE TO EXPORT HOUSE, M/ S. ABAD EXPORTS PRIVATE LIMITED). THEREFORE, FOR THE LIMITED PURPOSE OF COMPUTATION OF DEDUC TION U /S 10 A OF THE I T.ACT, THE ISSUE IS RESTORED TO THE ASSESSING OFFICER. IT IS ORDERED ACCORDINGLY. ' (EMPHASIS SUPPLIED) M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 4 5. IT CAN BE SEEN THAT THE H'BLE BENCH STATED THAT AS HIGH COURT HELD THAT THE DEDUCTION U/S.10 A OF THE ACT CANNOT BE GRANTED IF IT RELATES TO IQF. THE RESULT OF THE ABOVE STATEMENT WILL BE THE DENIAL OF BENEFIT ULS.10 A OF THE ACT BY THE ASSESSING OFFICER, IF THE CLAIM RELATES TO IQF, EVEN THOUGH IT RELATES TO THE UNEXPIRED PERIOD OF ENTITLEMENT AS PER PROVISIONS PRIOR TO AMENDMENT. THIS IS NOT THE INTENSION THE ORDER OF THE HIGH COURT. 6. HENCE THE OBSERVATION OF THE H'BLE BENCH IS AN ERROR APPARENT FROM RECORD TO THE ABOVE EXTENT. THEREFORE, IT IS HUMBLY PRAYED THAT THE H'BLE BENCH MAY KINDLY REVISE ITS ORDER IN ACCORDANCE WITH THE DIRECTION OF THE H'BLE HIGH COURT AND ISSUE THE ORDER AFRESH. 3. THE LEARNED AR RELIED ON THE CONTENT OF THE M.A. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO MISTAKE APPARENT IN THE ORDER OF THE TRIBUNAL DATED 06.03.2019 REQUIRING RECTIFICATION. HENCE, IT WAS PRAYED THAT THE PRESENT M.A. FILED BY THE ASSESSEE BE DISMISSED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. TO UNDERSTAND THE ISSUE RAISED IN THIS MISCELLANEOUS PETITION, IT IS NECESSARY TO REPRODUCE THE RELEVANT DIRECTION OF THE HONBLE HIGH COURT IN JUDGMENT DATED 07.08.2018 (ITA NO.219/2010). THE SAME READ AS FOLLOWS: - '4. THE RESPONDENT - ASSESSEE SUBMITS THAT THEY ALSO HAVE A VALID CLAIM UNDER SECTION 10A OF THE ACT. THEY CAN CLAIM IT BEFORE THE TRIBUNAL AS HAS BEEN PROVIDED IN (1998) 229 ITR 383 (SC) [NTPC V. CIT]. HOWEVER IF THE CLAIM IS WITH RESPECT TO INDIVIDUAL QUICK FREEZING (IQF), THE SAME CANNOT BE TER MED TO BE A MANUFACTURE OR PRODUCTION AS DECLARED IN 2012 (2) KLT SN 86 (C.NO.79) [CIT V. CHOICE TRADING M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 5 CORPORATION LTD.]. IT HAS TO BE NOTICED THAT FOR THE SUBJECT YEAR, AFTER THE AMENDMENT TO SECTION 10A, MERE PROCESSING DOES NOT ENTITLE A CLAIM UNDER S ECTION 1OA. BUT BY THE PROVISO ADDED ON AMENDMENT BY SUBSTITUTION, THE UNDERTAKINGS WHICH WERE ENTITLED UNDER THE EARLIER PROVISION WOULD BE SO ENTITLED EVEN UNDER THE NEW PROVISION FOR THE UNEXPIRED PERIOD OF ENTITLEMENT AS PER THE EARLIER PROVISION. HENC E IN CONSIDERING SUCH CLAIM NECESSARILY IT WOULD HAVE TO BE EXAMINED WHETHER THE ASSESSEE HAD CLAIMED AND OBTAINED THE EXEMPTION IN THE YEARS EARLIER TO THE AMENDMENT. 5. THE HONBLE HIGH COURT HAD DIRECTED THE TRIBUNAL TO EXAMINE WHETHER THE ASSESSEE HAD CLAIMED AND OBTAINED EXEMPTION IN THE YEARS EARLIER TO THE AMENDMENT OF SECTION 10A OF THE I.T. ACT BY FINANCE ACT, 2000 WITH EFFECT FROM 01 . 04 . 2000. THE EFFECT OF THE JUDGMENT OF THE HONBLE HIGH COURT IS THAT IF THE ASSESSEE HAD CLAIMED DEDUCTION U/ S. 10A OF THE I.T. ACT AND THE ASSESSING OFFICER HAD ALLOWED THE SAME UNDER THE PROVISIONS OF SECTION 10A WHICH STOOD PRIOR TO THE AMENDMENT, THE ASSESSEE CONTINUES TO GET THE BENEFIT OF DEDUCTION FOR THE UNEXPIRED PERIOD EVEN THOUGH THE LAW WAS AMENDED SU BSEQUENTLY. THE TRIBUNAL, IN PURSUANCE TO THE DIRECTION OF THE HONBLE HIGH COURT PASSED ORDER ON 06 . 03 . 2019. IN THE SAID ORDER OF THE TRIBUNAL, IT WAS HELD IN PRINCIPLE THAT THE ASSESSEE WAS ELIGIBLE TO THE BENEFIT OF CLAIM U/S. 10A OF THE ACT FOR THE A SSESSMENT YEAR 2002 - 20 03, EVEN AFTER AMENDMENT TO SECTION 10A OF THE I.T. ACT. FURTHER, THE ITAT STATED THAT DEDUCTION U/S. 10A OF THE I.T. ACT CANNOT BE GRANTED IF IT RELATES TO INDIVIDUAL QUICK FREEZING (IQF), EVEN THOUGH IT RELATES TO UNEXPIRED PERIOD OF ENTITLEMENT AS PER THE PROVISIONS PRIOR TO THE AMENDMENT. THE OBSERVATION OF THE TRIBUNAL IN ITS ORDER DATED 06 . 03 . 2019 IS ERROR APPARENT . WE M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 6 MAKE IT CLEAR THAT FOR THE UNEXPIRED PERIOD OF ENTITLEMENT OF DEDUCTION U/S. 10A OF THE I.T. ACT, THE ASSESSE E WOULD BE ENTITLED TO THE SAID CLAIM, EVEN IF IT RELATES TO IQF , PROVIDED THE ASSESSEE HAD MADE CLAIM U/S 10A OF THE I.T.ACT AND THE A.O. HAD GRANTED DEDUCTION FOR THE ASSESSMENT YEARS PRIOR TO AM E N D MENT . THE ABOVE VIEW WAS ALSO TAKEN BY THE HONBLE HIGH COURT IN ASSESSEES OWN CASE IN ITA NO. 197, 205 & 230/2010 (JUDGMENT DATED 07/08/2018). THE JUDGMENT OF THE HONBLE HIGH COURT, REGARDING 10A DEDUCTION CLAIM THAT IT IS ENTITLED TO IQF WITH REGARD TO P ROCESSING OF PRAWNS UNDERTAKEN BY THE ASSESSEE FOR THE UNEXPIRED PERIOD OF 10 CONSECUTIVE YEARS AS AVAILABLE IN THE UNAMENDED PROVISION, READS AS FOLLOWS: 3. THE DECISION CITED BY THE REVENUE IN CHOICE TRADING CORPORATION LTD. (SUPRA) MAKES IT VERY CLEA R THAT PROCESSING OF PRAWNS BY IQF IS NOT A MANUFACTURE OR PRODUCTION; WHICH WAS A DECLARATION MADE IN THE CONTEXT OF A CLAIM UNDER SECTION 801 OF THE ACT. THE DISTINCTION ATTEMPTED BY THE LEARNED COUNSEL FOR THE ASSESSEE HEREIN IS THAT THE PROVISO WHICH A CCOMPANIED THE SUBSTITUTED PROVISION UNDER SUB - SECTION (1) OF SECTION 10A MAKES IT CLEAR THAT THE ASSESSEE WHO WAS ENTITLED TO THE BENEFIT AS PER THE SUB - SECTION PRIOR TO SUBSTITUTION WOULD BE SO ENTITLED EVEN AFTER THE SUBSTITUTION FOR THE UNEXPIRED PERIO D OF TEN CONSECUTIVE ASSESSMENT YEARS. 4. WE DEEM IT FIT THAT THE PROVISO BE EXTRACTED HEREIN: 'PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UNDERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATIO N OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITLED TO DEDUCTION REFERRED TO IN THIS SUB - SECTION ONLY FOR THE UNEXPIRED PERIOD OF THE AFORESAID TEN CONSECUTIVE ASSE SSMENT YEARS.' M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 7 ADMITTEDLY, THE ASSESSEE HAD BEEN ENJOYING THE BENEFIT PRIOR TO FINANCE ACT, 2000 ON THE BASIS OF THE PROVISION AS IT EXISTED BEFORE SUBSTITUTION. THE PROVISO MAKES IT CLEAR THAT SUCH PERSONS WHO HAD THE BENEFIT PRIOR TO SUBSTITUTION WOULD BE ENTITLED TO DEDUCTION REFERRED TO IN THE SUB - SECTION FOR THE UNEXPIRED PERIOD OF THE TEN CONSECUTIVE ASSESSMENT YEARS; AS AVAILABLE IN THE UN - AMENDED PROVISION. 5. THE REVENUE HAD ATTEMPTED TO ARGUE BEFORE THE TRIBUNAL THAT THE CONTINUATION OF THE DEDU CTION WOULD BE WITH REFERENCE TO SUB - SECTION (1), WHICH WAS SUBSTITUTED. WE ARE UNABLE TO AGREE WITH SUCH A CONTENTION. ANY ASSESSEE, WHO WAS ENTITLED TO THE BENEFIT PRIOR TO THE SUBSTITUTION WOULD BE ENTITLED TO THE BENEFIT UNDER THE SUBSTITUTED PROVISION FOR THE UNEXPIRED PERIOD AS PER THE UN - AMENDED PROVISION, WE, HENCE, ANSWER THE FIRST QUESTION OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN VIEW OF THE ANSWER WE HAVE GIVEN TO QUESTION NO. 1, WE ARE OF THE OPINION THAT QUESTION NO. 2 NEED NOT BE ANSWERED; WHICH ISSUE IS ANSWERED BY ANOTHER DIVISION BENCH, WHICH WE FOLLOW. 7. IN VIEW OF THE ABOVE REASONING AND FINDINGS OF THE HONBLE HIGH COURT IN ASSESSEES OWN CASE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE DEDUCTION U/S. 10A OF THE I. T. ACT IN RESPECT OF THE UNEXPIRED PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS AS AVAILABLE IN THE UNAMENDED PROVISION. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 17 TH DAY OF JUNE , 2019 . SD/ - SD/ - (CHANDRA POOJARI) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER C OCHIN ; DATED : 17 TH JUNE , 2019 . DEVDAS* M A NO. 39 / COCH /201 9 M/S. ABAD EXIM (P) LTD . 8 COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT. REGISTRAR) ITAT, COCHIN 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, KOCHI 4. THE CIT(A) - IV , KOCHI 5. THE DR, ITAT, COCHIN 6. GUARD FILE.