ITO 6(3)(4), V. KOBIAN ELECTRONICS INDIA P. LTD,

MA 47/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0361 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 31-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIVEDY DR N O N E
• Assessee Lawyers: CULLA E MUMBAI PAN AABCKC
• Section: 80HHC; 115JB

Judgement Text

MA NO.47 OF 2012 KOBIAN ELECTRONICS INDIA PVT LTD M UMBAI PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A. NO.47/MUM/2012 (ARISING OUT OF ITA NO.967/MUM/2009) (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER-6(2)(4) ROOM NO.562, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 VS. M/S KOBIAN ELECTRONICS INDIA (P) LTD, 3 CHUNILAL MEHTA COMPOUND, HARISH ARJUN PALAV MARG, VICTORIA GARDEN, BYCULLA (E) MUMBAI 400027 PAN: AABCK 5701 C (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAJARSHI DWIVEDY, DR ASSESSEE BY: N O N E DATE OF HEARING: 10/05/2013 DATE OF PRONOUNCEMENT: 10/05/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS A MISCELLANEOUS APPLICATION RAISED BY THE REVENUE AGINST THE ORDERS OF THE ITAT B BENCH DATED 28.09 .2011 FOR THE AY 2005-06. THE REVENUE HAS RAISED GROUND NO.2 IN THE IMPUGNED APPEAL AS UNDER: 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN HOLDING THAT FOR THE P URPOSE OF COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB O F THE IT ACT, IN VIEW OF CLAUSE (IV) OF THE EXPLANATION B ELOW SECTION 115JB BOOK PROFIT IS TO BE REDUCED BY THE A MOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80H HC AS CALCULATED TREATING THE BOOK PROFIT AS THE INCOME O F ASSESSEE AND NOT ON THE BASIS OF INCOME AS CALCULAT ED UNDER NORMAL PROVISIONS OF THE I.T. ACT. B) THE LEARNED CIT (A) FAILED TO APPRECIATE THAT AS PER THE SAID CLAUSE (IV) OF EXPLANATION BELOW SECTION 115JB THE MA NO.47 OF 2012 KOBIAN ELECTRONICS INDIA PVT LTD M UMBAI PAGE 2 OF 4 AMOUNT OF PROPFITS ELIGIBLE FOR DEDUCTION UNDER SEC TION 80HHC IS TO BE COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF SUB SECTION (3) OR SUB SECTION 3(A ), AS THE CASE MAY BE, OF THAT SECTION AND SUBJECT TO THE CONDITIONS SPECIFIED IN THAT SECTION. SINCE AS PER SECTION 80HHC (1B) OF THE I.T. ACT, NO DEDUCTION UNDER SECT ION 80HHC IS AVAILABLE FROM AY 2005-06. THEREFORE, EVEN AS PER SAID CLAUSE (IV) OF EXPLANATION BELOW SECTION 1 15JB OF THE I.T. ACT, THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC COMES TO ` .NIL. 2. HOWEVER, THE ITAT HAS DECIDED THE ISSUE VIDE PARA 8 AS UNDER: 8 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE I SSUE STANDS DECIDED AGAINST THE REVENUE AND IN FAVOUR OF ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF AJANTA PHARMA LTD VS. CIT REPORTED I N 327 ITR 305 WHEREIN IT HAS BEEN HELD THAT 100% OF THE E XPORT TURNOVER EARNED BY ASSESSEE AS COMPUTED UNDER SECTI ON 80HHC(3) WAS ELIGIBLE FOR DEDUCTION UNDER EXPLANATI ON 4 TO SECTION 115JB OF THE ACT. IN VIEW OF THE BINDI NG DECISION OF THE HON'BLE SUPREME COURT, GROUNDS OF APPEAL NO.2(A) & (B) RAISED BY THE REVENUE ARE DISMISSED. 3. IT WAS THE CONTENTION OF THE REVENUE THAT DEDUCTION UNDER SECTION 80HHC WAS NOT ALLOWABLE FOR THE AY 2005-06 AND THEREFORE, NO DEDUCTION IS ALLOWABLE EVEN UNDER SECTION 115JB. ACCORDINGLY THE ORDER IS NOT CORRECT ON THE PRINCIPLES OF LAW, EVEN THOUGH THE DECISION OF THE HON'BLE SUPREME COURT RELIED UPON B Y THE ITAT IS APPLICABLE FOR EARLIER YEARS, BUT NOT FOR THE IMP UGNED YEAR. 4. THIS MA WAS POSTED NUMBER OF TIMES AND AS ASSESSEE WAS NOT PRESENT, NOTICES WERE ISSUED TO BE SERVED THROUGH T HE DEPARTMENT AS WELL AS BY RPAD. REVENUE FILED ACKNOWLEDGEMENT O F HAVING SERVED THE NOTICE ON ASSESSEE AND THERE IS ACKNOWLE DGEMENT BY THE COMPANY ON 18.04.2013. SINCE ASSESSEE WAS NOT PRESE NT, NOR FILED ANY ADJOURNMENT PETITION, WE HAVE HEARD THE LEARNED DR. AS SUBMITTED BY THE REVENUE, THERE IS A MISTAKE IN APP LYING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT I N THE IMPUGNED MA NO.47 OF 2012 KOBIAN ELECTRONICS INDIA PVT LTD M UMBAI PAGE 3 OF 4 AY AS NO SUCH DEDUCTION WAS ELIGIBLE FOR THE AY 200 5-06 UNDER SECTION 80HHC. THIS FACT WAS ALSO RECORDED BY THE C OORDINATE BENCH IN THEIR ORDER IN ASSESSEES OWN CASE FOR AY 206-07 VIDE ITA NO.4877/MUM/2009 VIDE PARA NO.3.2 AS UNDER: 3.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING RED UCTION OF BOOK PROFIT BY THE AMOUNT OF PROFIT ELIGIBLE FOR DE DUCTION UNDER SECTION 80HHC UNDER THE PROVISIONS OF CLAUSE (IV) OF EXPLANATION-1 OF SECTION 115JB. THE AMOUNT OF PROFI T ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC COMPUTED UNDER CL AUSE (A)(B) OR (C) OF SUB SECTION (3) OR SUB SECTION (3A ) OF SECTION 80 HHC(3) IS REQUIRED TO BE REDUCED FROM BOOK PROFIT U NDER THE PROVISIONS OF CLAUSE(IV) OF EXPLANATION-I OF SECTIO N 115JB(2). EARLIER THERE WAS A DEBATE AS TO WHETHER PROFIT ELI GIBLE FOR DEDUCTION UNDER SECTION 80HHC(3)/80HHC(3A) HAS TO B E REDUCED OR ONLY THE DEDUCTION ACTUALLY ALLOWABLE UN DER SECTION 80HHC(1B) IS REQUIRED TO BE REDUCED FROM TH E BOOK PROFIT. THE SAID CONTROVERSY IS SETTLED BY THE JUDG MENT OF HON'BLE SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD. (SUPRA), IN WHICH IT HAS BEEN HELD THAT IT IS THE P ROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC AND NOT ACTUAL DE DUCTION ALLOWABLE UNDER SECTION 80HHC WHICH IS REQUIRED TO BE REDUCED. HOWEVER, THE DEDUCTION ALLOWABLE UNDER SEC TION 80HHC HAS BEEN DONE AWAY WITH IN A PHASED MANNER AN D SINCE ASSESSMENT YEAR 2005-06, NO DEDUCTION IS ALLO WABLE. THE CLAUSE (IV) OF EXPLANATION 1 TO SECTION 115JB(2 ) HAS ALSO BEEN OMITTED BY THE FINANCE ACT 2011 W.E.F. 1.4.200 5 AND, THEREFORE, FROM ASSESSMENT YEAR 2005-06, BOOK PROFI T IS NOT REQUIRED TO BE REDUCED BY THE AMOUNT OF PROFIT ELIG IBLE FOR DEDUCTION UNDER SECTION 80HHC AS DEDUCTION UNDER SE CTION 80HHC IS NO LONGER AVAILABLE FROM ASSESSMENT YEAR 2 005- 06. THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR ANY DEDUCTION UNDER SECTION 115JB(2). THE SAID AMENDMENT HAD NOT BEEN BROUGHT TO THE NOTICE OF THE TRIBUNAL IN ASSESSMENT YEAR 2005-06. IN VIEW OF THE AMENDED PROVISIONS, THE ASSESSEE IS NOT ENTITLED FOR ANY REDUCTION OF BOOK PROFIT ON ACCOUNT OF SECTION 80HH C. WE, THEREFORE, HOLD THAT THE ASSESSEE WILL NOT BE E NTITLED FOR ANY REDUCTION OF BOOK PROFIT ON ACCOUNT OF SECTION 80HHC DEDUCTION OR PROFIT ELIGIBLE FOR DEDUCTION UNDER SE CTION 80HHC. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND ORDER OF AO DISALLOWING THE CLAIM IS UPHELD. MA NO.47 OF 2012 KOBIAN ELECTRONICS INDIA PVT LTD M UMBAI PAGE 4 OF 4 5. IN VIEW OF THE ABOVE SINCE THERE IS A MISTAKE ON TH E PART OF THE ITAT IN DECIDING THE ISSUE, IN THE INTEREST OF JUST ICE, THE ORDER TO THE EXTENT OF GROUND NO.2 IS RECALLED FOR FRESH HEARING . ACCORDINGLY THE APPEAL TO THE EXTENT OF DECIDING GROUND NO.2 PREFER RED BY THE REVENUE IS RECALLED AND POSTED ON 29 TH JULY, 2013 BEFORE A BENCH. REGISTRY IS DIRECTED TO ISSUE NOTICE THROUGH RPAD A ND ALSO THROUGH THE REVENUE TO THE PARTY IN THIS REGARD, 6. IN THE RESULT MISCELLANEOUS APPLICATION FILED BY AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MAY, 2013 SD/- SD/- (B.R. MITTAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED10TH MAY, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI