The ITO, Ward-1(2), Ahmedabad V. Angi Plast Pvt. Ltd., Ahmedabad

MA 420/AHD/2009

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9910 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-03-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-12-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 17-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion
• Section: 37; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI A. MOHAN ALAN KAMONY, AM) MA NO.420 AND 421/AHD/2009 (IN ITA NO.3354/AHD/2004 AND 4121/AHD/2008 FOR AY: 2001-02 AND 2003-04) THE INCOME TAX OFFICER, WARD 1(2),AHMEDABAD VS AGNI PLAST PVT. LTD., 4803, PHASE IV, GIDC, VATVA, AHMEDABAD P. A. NO. AAABCA 8320 P (APPLICANT) (RESPONDENT) APPLICANT BY SHRI Y. P. VERMA, SR. DR RESPONDENT BY SHRI VIJAY RANJAN, AR DATE OF HEARING: 01-03-2013 DATE OF PRONOUNCEMENT: 07-03-2013 O R D E R PER A. MOHAN ALANKAMONY: THESE TWO MISC. APPLICATIONS ARE PREFERRED BY THE REVENUE AGGRIEVED BY THE COMMO N ORDER OF THE TRIBUNAL DATED 28-08-2009 PASSED IN ITA NO.3354/AHD /2004 AND 4121/AHD/2008, FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04 RESPECTIVELY. THE ISSUE / REQUEST FOR RECALLING TH E AFORESAID ORDER OF THE TRIBUNAL BEING COMMON, BOTH THE MISC. APPLICATI ONS WERE HEARD TOGETHER AND THEY ARE BEING DISPOSED OF BY THIS CON SOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE CONTENTS OF BOTH THE MISC. APPLICATION OF TH E REVENUE ARE REPRODUCED HEREIN UNDER IN CONCISE MANNER: 1. THIS MISCELLANEOUS APPLICATION IS ARISING OUT OF THE ORDER PASSED BY THE ITAT. AHMEDABAD BENCH B, AHMEDABAD IN APPEAL IN T HE CASE OF AGNI 2 PLAST PVT. LTD., AHMEDABAD IN ITA NO/3354/AHD/2004 / ITA NO.4121/AHD/2008 DATED 28.8.2009. 2. ON PERUSAL OF THE ORDER DATED 28 TH AUGUST, 2009, IT IS NOTICED THAT THE ISSUE OF EXCLUSION OF DEPB ENTITLED FOR COMPUTATION OF DEDUCTION U/S. 80 IB OF THE ACT IS NO MORE RES-INTEGRA IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S. LIBERTY I NDIA VS. CIT (REPORTED IN 183 TAXMAN 349) DATED 31.8.2009 ARISIN G OUT OF SLP (VC) NO.5827 WHEREIN THE HONBLE COURT HELD THAT DUTY DR AWBACK RECEIPT/DEPB BENEFITS DO NOT FORM PART OF NET PROF ITS OF ELIGIBLE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF SECTION 80I/80IA/80IB OF THE ACT. 3. THEREFORE, THE ABOVE ISSUE MAY KINDLY BE RECONSI DERED IN VIEW OF THE DECISION OF THE HONBLE APEX COURT AND PASS NECESSA RY ORDER ACCORDINGLY. 4. THE APPROVAL LETTER FROM THE CIT, AHMEDABAD- I, AHMEDABAD IS ENCLOSED HEREWITH. 3. BEFORE US, THE LEARNED DR SUBMITTED AS UNDER: 2. HOWEVER, THE ISSUE OF DEPB BENEFIT AND THE CONC EPT OF DERIVED FROM HAVE BEEN NOW SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS CIT REPORTED IN 317 ITR 218 (SC) D ELIVERED ON 31 ST AUGUST 2009. HONBLE SUPREME COURT HELD DEPB IS AN INCENTIVE. IT IS GIVEN UNDER DUTY EXEMP TION REMISSION SCHEME. ESSENTIALLY, IT IS AN EXPORT INCENTIVE. NO DOUBT, THE OBJECT BEHIND DEPB IS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT CONTENT OF EXPORT PRODUCT. THIS NEUTRALIZATI ON IS PROVIDED FOR BY CREDIT TO CUSTOMS DUTY AGAINST EXPORT PRODUCT. UNDE R DEPB, AN EXPORTER MAY APPLY FOR CREDIT AS PERCENTAGE OF FOB VALUE OF EXPORTS MADE IN FREELY CONVERTIBLE CURRENCY. CREDIT IS AVAILABLE ONLY AGAI NST THE EXPORT PRODUCT AND AT RATES SPECIFIED BY DGFT FOR IMPORT OF RAW MA TERIALS, COMPONENTS ETC. DEPB CREDIT UNDER THE SCHEME HAS TO BE CALCULA TED BY TAKING INTO ACCOUNT THE VALUE OF EXPORTS MADE IN FREELY CONVERT IBLE CURRENCY. CREDIT IS AVAILABLE ONLY AGAINST THE EXPORT PRODUCT AND AT RA TES SPECIFIED BY DGFT FOR IMPORT OF RAW MATERIALS, COMPONENTS ETC. DEPB C REDIT UNDER THE SCHEME HAS TO BE CALCULATED BY TAKING INTO ACCOUNT DEEMED IMPORT CONTENT OF THE EXPORT PRODUCT AS PER BASIC CUSTOMS DUTY AND SPECIAL ADDITIONAL DUTY PAYABLE ON SUCH DEEMED IMPORTS. THE REFORE, DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY CENTRAL GOVERNMENT OR FROM S. 75 OF THE CUSTOMS ACT, 1962, HENCE, INCENTIVES PROFITS ARE NOT PROFITS DERIVED FROM THE ELIGIBLE B USINESS UNDER S. 80 IB. 3 THEY BELONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKINGS. SEC. 75 OF THE CUSTOMS ACT 1962 AND S. 37 OF THE CENTRAL EXCISE ACT, 1944 EMPOWER GOVERNMENT OF INDIA TO PROVIDE FOR REPAYMEN T OF CUSTOMS AND EXCISE DUTY PAID BY AN ASSESSEE. THE REFUND IS OF T HE AVERAGE AMOUNT OF DUTY PAID ON MATERIALS OF ANY PARTICULAR CLASS OR D ESCRIPTION OF GOODS USED IN THE MANUFACTURE OF EXPORT GOODS OF SPECIFIED CLA SS. THE RULES DO NOT ENVISAGE A REFUND OF AN AMOUNT ARITHMETICALLY EQUAL TO CUSTOMS DUTY OR CENTRAL EXCISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER-CUM- MANUFACTURER. SUB-S. (2) OF S. 75 OF THE CUSTOMS AC T REQUIRES THE AMOUNT OF DRAWBACK TO BE DETERMINED ON A CONSIDERATION OF ALL THE CIRCUMSTANCES PREVALENT IN A PARTICULAR TRADE AND ALSO BASED ON T HE FACTS SITUATION RELEVANT IN RESPECT OF EACH OF VARIOUS CLASSES OF G OODS IMPORTED. BASICALLY, IN THE SOURCE OF DUTY DRAWBACK RECEIPT L IES IN S. 75 OF THE CUSTOMS ACT AND S. 37 OF THE CENTRAL EXCISE ACT. ANALYSING THE CONCEPT OF REMISSION OF DUTY DRAWBACK AND DEPB, IT BECOMES CLEAR THAT THE REMISSION OF DUTY IS ON ACCO UNT OF THE STATUTORY/POLICY PROVISIONS IN THE CUSTOMS ACT/SCHE ME(S) FRAMED BY THE GOVERNMENT OF INDIA. IN THE CIRCUMSTANCES, PROFITS DERIVED BY WAY OF SUCH INCENTIVES DO NOT FALL WITHIN THE EXPRESSION PROFI TS DERIVED FROM INDUSTRIAL UNDERTAKING IN S.80- IB. 3. IN VIEW OF THE ABOVE, THERE ARISES A MISTAKE APP ARENT FROM THE RECORD AFTER THE SUPREME COURT ORDER, EVEN IF THE O RDER OF THE SUPREME COURT OR THE ORDER OF THE JURISDICTIONAL HIGH COURT IS LATER DATED. RELIANCE IS PLACED ON SAURASHTRA KUTCH EXCHANGE LTD. REPORTED AT 305 ITR 227 (SC) THE APEX COURT IN THE ABOVE CASE OF HELD NON-CONSIDERATION OF DECISION OF JURISDICTIONAL HIG H COURT (OR SUPREME COURT) IS A MISTAKE APPARENT FROM RECOR D RECTIFIABLE UNDER S. 254(2) DECISION OF HIGH COUR T ON THE POINT RENDERED A FEW MONTHS PRIOR HAVING NOT BEEN BROUGHT TO THE NOTICE OF TRIBUNAL, THE TRIBUNAL DID NOT COMMIT ANY ERROR OF LAW OR OF JURISDICTION IN EXERC ISING POWER UNDER SUB-S. (2) OF S. 254 AND IN RECTIFYING MISTAKE APPARENT FROM THE RECORD A JUDICIAL DECISION ACTS RETROSPECTIVELY. ACCORDING TO BLACKSTONIAN THEORY, IT IS NOT THE FUNCTION OF THE COURT TO PRONOUNCE A NEW RULE BUT TO MAINTAIN AND EXPOUND THE OLD ONE. IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY 4 ONLY DISCOVER OR FIND THE CORRECT LAW. THE LAW HAS ALWAYS BEEN THE SAME. IF A SUBSEQUENT DECISION ALTERS THE EARLIER ONE, IT (THE LATER DECISION) DOES NOT MAKE NEW LAW. IT ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. TO PUT IT DIFFERENTLY, EVE N WHERE AN EARLIER DECISION OF THE COURT OPERATED FOR QUITE SOME TIME, THE DECISION RENDERED LATER ON WOULD HAVE RETROSPECTIVE CLARIFYING THE LEGAL POSITION WHICH W AS EARLIER NOT CORRECTLY UNDERSTOOD. THE LEARNED DR RELYING ON THE AFORESAID DECISIONS P RAYED THAT THE ABOVE ORDER OF THE TRIBUNAL MAY BE RECALLED FOR REC TIFICATION AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SAURASHTA KUCH STOCK EXCHANGE CITED SUPRA. 4. THE LEARNED AR ON THE OTHER HAND RELIED ON THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MEPCO INDUSTRI ES LTD. VS CIT REPORTED IN 319 ITR 208 AND OBJECTED TO THE PRAYER OF THE LEARNED DR FOR RECALLING THE ORDER OF THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE ORDER OF THE TRIBUNAL AND CAREFULLY CONSIDERED THE CASE LAWS CIT ED BEFORE US. WE FIND FORCE IN THE SUBMISSIONS ADVANCED BY THE LEARN ED DR WHILE AS THE CASE LAW REFERRED TO BY THE LEARNED AR IS NOT A PPLICABLE IN THE PRESENT CASE BECAUSE THE ISSUE INVOLVED IN THE SAID CASE LAW IS DISTINGUISHABLE ON FACTS. IN THE CASE CITED BY THE LEARNED AR VIZ. MEPCO INDUSTRIES LTD. VS CIT, CITED SUPRA, THE HON BLE SUPREME COURT HAD HELD REVERSING THE DECISION OF THE HONBLE HIGH COURT THAT THE RIGHT TO RECTIFY MISTAKES UNDER SECTION 154 COULD N OT BE INVOKED IN A CASE OF MERE CHANGE OF OPINION. A RECTIFIABLE MISTAKE WAS A MISTAKE WHICH WAS OBVIOUS AND NOT SOMETHING WHICH H AD TO BE 5 ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS WERE POSSIBLE. A DECISION ON A DEBATABLE P OINT OF LAW COULD NOT BE TREATED AS A MISTAKE APPARENT FROM TH E RECORD. HOWEVER, THE HONBLE SUPREME COURT IN THE CASE M/S. LIBERTY INDIA HAD LAID DOWN A RATIO WITH RESPECT TO DEPB INCENTIV ES THAT PROFITS DERIVED OUT OF SUCH INCENTIVES DO NOT FALL WITHIN T HE EXPRESSION PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING IN SECTION 80- IB OF THE ACT. FURTHER, THE HONBLE SUPREME COURT IN ITS DECISION RENDERED IN THE CASE OF SAURASHTRA KUTCH EXCHANGE LTD., CITED SUPRA , HA SPECIFICALLY LAID DOWN THAT FAILURE TO APPLY THE JUDGMENT OF JUR ISDICTIONAL HIGH COURT IS A MISTAKE APPARENT ON RECORD AND THE TRIBU NAL HAS JURISDICTION TO RECTIFY THE SAME U/S 254 OF THE ACT . APPARENTLY, WE FIND THE ARGUMENTS OF THE LEARNED DR TO BE REASONABLE AN D CORRECT AND, THEREFORE, WE HEREBY RECALL THE ORDER OF THE TRIBUN AL AND DIRECT THE REGISTRY TO POST BOTH THE CASES FOR HEARING IN THE NORMAL COURSE INTIMATING BOTH THE PARTIES WELL IN ADVANCE. 6. IN THE RESULT, THE MISC. APPLICATIONS OF THE REV ENUE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-03-2013. SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANTA DEKA/ LAKSHMIKANTA DEKA/ LAKSHMIKANTA DEKA/ LAKSHMIKANTA DEKA/- -- - 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHME DABAD 1. DATE OF DICTATION: -DIRECT ON COMPUTER 04-03-2 013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 04-03-2013 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: