Vikram Knittex Pvt.Ltd.,, Surat v. The Addl.CIT., Range-4,, Surat

ITA 1107/AHD/2008 | 2004-2005
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 110720514 RSA 2008
Assessee PAN AABCV5025A
Bench Ahmedabad
Appeal Number ITA 1107/AHD/2008
Duration Of Justice 2 year(s) 1 month(s) 23 day(s)
Appellant Vikram Knittex Pvt.Ltd.,, Surat
Respondent The Addl.CIT., Range-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 21-05-2010
Date Of Final Hearing 17-05-2010
Next Hearing Date 17-05-2010
Assessment Year 2004-2005
Appeal Filed On 28-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 1107/AHD./2008 ASSESSMENT YEAR : 2004-2005 VIKRAM KNITTEX PVT. LTD. SURAT -VS.- ADDL. COMM ISSIONER OF INCOME TAX (PAN : AABCV 5025 A) RANGE-4 SURAT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DENNIS CHOKSH I RESPONDENT BY : SMT. JYOTI LAXMI SR . D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 11.01.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I SURAT FOR TH E ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS.22 81 523/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 20.12.1996 WHEREIN HE DISALLOWED THE DEDUCTION UNDER SECTION 80HHC AMOUNTING TO RS.21 43 915/-. ON APPEAL IN THE IMPUGNED ORDER THE LD. COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF LD. COMMISSIONER OF INCOM E TAX (APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF THE ENTIRE DEDUCTION U/S. 80HHC OF THE ACT AS MADE BY THE A.O. WITHOUT APPREC IATING 2 ITA NO. 1107/AHD/200 8 (A) THAT THE AMOUNT OF DEPB LICENSE RECEIVED BY THE APP ELLANT IS NOTHING BUT REIMBURSEMENT OF COST OF DUTIES SUFFERED BY THE INPUTS AND THUS THE SAME SHOULD BE REDUCED FROM THE COST OF GOODS SOLD AND THE PROFIT SO ARRIVED SHOULD BE TREATED AS DERIVED FROM EXPORTS BEING FULLY ELIGIBLE FOR DEDUCTION U/S. 80HHC OF THE ACT. (B) THAT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80 HHC THE ENTIRE AMOUNT OF DEPB CANNOT BE EXCLUDED FROM THE PROFIT O F THE BUSINESS AND ONLY PROFIT IF ANY ON SALE OF DEPB CAN BE RED UCED FROM THE PROFIT OF THE BUSINESS AS PER THE PROVISIONS OF SECTION 28 (IIID) OF THE ACT. (C) THAT THE TAXATION LAWS (AMENDMENT) ACT 2005 MAKES UNDUE DISTINCTION BETWEEN EXPORTERS ON THE BASIS OF TURNO VER AND AMEND THE LAWS BY LAYING DOWN VARIOUS CONDITIONS ON A RETRO SPECTIVE BASIS WHICH IS UNCONSTITUTIONAL AND ULTRA VIRES REQUIRIN G OUTRIGHT ANNULMENT. HENCE IT IS MOST HUMBLY SUBMITTED THAT THE DEDUCTI ON UNDER SECTION 80HHC AS COMPUTED BY THE APPELLANT MAY KINDLY BE AL LOWED. ALL THE AFORESAID GROUNDS REGARDING DISALLOWANCE OF DEDUCTION U/S. 80HHC OF THE ACT ARE INDEPENDENT TO EACH. (2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN NOT DIRECTING THE A.O. TO DELETE T HE INTEREST CHARGED U/S. 234B OF THE ACT AS PER THE CLEAR DIRECTIONS ISSUED BY THE HONBLE CBDT VIDE CIRCULAR NO. 2 DATED 17.01.2006 WHICH PROVIDE S THAT NO INTEREST SHALL BE CHARGED IN RESPECT OF ANY FRESH DEMAND RAISED CO NSEQUENT TO THE ENACTMENT OF TAXATION LAWS (AMENDMENT) ACT 2005 O N ACCOUNT OF VARIATION IN RETURNED INCOME ATTRIBUTABLE TO PROFI TS ON SALE OF DEPB CREDITS. 3. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI DENNIS CHOKSHI APPEARED AND CONTENDED THAT IN THE PRESENT APPEAL FOLLOWING ISS UES ARE INVOLVED :- (I) SECTION 28(IIID) REFERS ONLY TO THE WORD PROFI T AND THEREFORE FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80HHC IN CASE OF ASSESS ES HAVING EXPORT TURNOVER EXCEEDING RS.10 CRORES ONLY THE PROFIT ON SALE OF DEPB CANNOT BE TREATED AS EXPORT INCENTIVES AND ADDED TO THE PROFIT OF THE BU SINESS WHEREAS THE FACE VALUE OF DEPB WOULD FALL WITHIN THE AMBIT OF SECTION 28(I IIB) AND WOULD THUS BE TREATED AS EXPORT INCENTIVES. 3 ITA NO. 1107/AHD/200 8 (II) IN CASE OF ANY DISALLOWANCE OF DEDUCTION U/S. 80HHC OF THE ACT ON THE GROUND OF EXCLUSION OF PROFIT ON SALE OF DEPB INTEREST U/ S. 234B CANNOT BE CHARGED ON THE TAX PAYABLE IN VIEW OF CLEAR DIRECTIONS OF NOT CHARGING THE SAME AS GIVEN IN CIRCULAR NO. 2 DATED 17.01.2006 ISSUED BY THE CBDT . 3.1. THE LD. COUNSEL OF THE ASSESSEE FURTHER POINTE D OUT THAT THE ISSUES INVOLVED IN THIS APPEAL REGARDING COMPUTATION OF DEDUCTION UNDER SECTION 80 HHC NOW DIRECTLY STAND COVERED BY THE DECISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF M/S. TOPMAN EXPORTS VS.- ITO REPORTED IN [2009] 125 TTJ (MUMBAI)(SB) 289 WHEREI N IT HAS BEEN HELD AS UNDER :- SECTION 28(IIID) REFERS ONLY TO THE WORD PROFIT AND HENCE FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80HHC IN CASE OF ASSESSES HAVING EXPORT TURNOVER EXCEEDED RS.10 CRORES ONLY THE PROFIT ON SALE OF D EPB CANNOT BE TREATED AS EXPORT INCENTIVES AND ADDED TO THE PROFIT OF THE BU SINESS. WHEREAS THE FACE VALUE OF DEPB WOULD FALL WITHIN T HE AMBIT OF SECTION 28(IIIB) AND WOULD THUS BE TREATED AS EXPORT INCENTIVES FO R THE PURPOSE OF COMPUTING DEDUCTION U/S. 80HHC. THE LD. COUNSEL OF THE ASSESSEE ACCORDINGLY SUBMITT ED THAT AS PER THE DECISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF TOPMAN EXPORTS (SUPRA) THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC AMOUNTING TO RS.21 43 915/-. 4. ON THE OTHER HAND SMT. JYOTI LAXMI SR. D.R. AP PEARING ON BEHALF OF THE REVENUE POINTED OUT THAT THE AFORESAID COMPUTATION FILED BY THE ASSESSEE AS PER THE DECISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF TOPMAN EXPORTS NEEDS VERIFICATION AT THE END OF ASSESSING OFFICER. SHE ACCORDINGLY SUGGESTED THAT THE MATTER BE RESTORED TO THE FILE OF ASSESSING OFFICER WHO WILL ALLOW THE DEDUCTION UNDER SECTION 80HHC AS PER THE DECISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF TOPMAN EXPORTS (SUPRA) . 5. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. IT IS PERTINENT TO NOTE THAT WHEN THE LD. CIT(A) 4 ITA NO. 1107/AHD/200 8 PASSED THE IMPUGNED ORDER THE DECISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF TOPMAN EXPORTS (SUPRA) WHICH IS DELIVERED ON 11.08 .2009 WAS NOT AVAILABLE. WE THEREFORE SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE ISSUE OF DEDUCTION UNDER SECTION 80HHC TO THE FILE OF ASSESSING OFFICER WHO WILL VERIFY THE COMPUTATI ON SUBMITTED BY THE ASSESSEE AND ALLOW THE DEDUCTION CLAIMED UNDER SECTION 80HHC TO THE ASSESS EE ACCORDINGLY. 6. IN THE RESULT FOR STATISTICAL PURPOSES THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 21.05.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 / 05 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.