The ACIT, Circle-5, Ahmedabad v. Ratnamani Metals & Tubes Ltd.,, Ahmedabad

ITA 3251/AHD/2004 | 2001-2002
Pronouncement Date: 26-02-2010 | Result: Dismissed

Appeal Details

RSA Number 325120514 RSA 2004
Bench Ahmedabad
Appeal Number ITA 3251/AHD/2004
Duration Of Justice 5 year(s) 3 month(s) 17 day(s)
Appellant The ACIT, Circle-5, Ahmedabad
Respondent Ratnamani Metals & Tubes Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 17-10-2008
Date Of Final Hearing 18-02-2010
Next Hearing Date 18-02-2010
Assessment Year 2001-2002
Appeal Filed On 08-11-2004
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' (BEFORE S/SHRI BHAVNESH SANI AND N S SAINI) ITA NO.3251/AHD/2004 (ASSESSMENT YEAR: 2001-02) THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-5 AHMEDABAD V/S RATNAMANI METALS & TUBES LTD. 17 RAJMUGAT SOCIETY NARANPURA CHAR RASTA ANKUR ROAD AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI GOVIND SINGHAL SR. DR RESPONDENT BY:- SHRI P D SHAH CA O R D E R PER N S SAINI (ACCOUNTANT MEMBER) : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSION ER OF INCOME-TAX (APPEALS)-XI AHMEDABAD [THE CIT(A)] DATED 13-08 -3004 FOR ASSESSMENT YEAR 2001-02. 2 THE ONLY GROUND TAKEN BY THE REVENUE IN THIS APPE AL READS AS UNDER: THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO COMPUTE DEDUCTION U/S 80HHC OF THE ACT EXCLUDING SALES-TAX AND EXCISE DUTY FROM TO TAL TURNOVER AND ALSO ALLOW DEDUCTION U/S 80HHC ON RECEIPT OF DEPB LICENSE. 2.1 THE DEPARTMENTAL APPEAL WAS DECIDED BY THE TRIB UNAL EARLIER VIDE ORDER DATED 17-10-2008. HOWEVER THE DEPARTMENT PRE FERRED M A NO.296 OF 2009 WHICH WAS DECIDED VIDE ORDER DATED 12-02-2010 AND FOR LIMITED PURPOSE THE EARLIER ORDER OF THE TRIBUNAL WAS RECALLED BECA USE THE ISSUE ON RECEIPT OF DEPB WAS NOT DECIDED. 3 THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIM ED DEDUCTION U/S 80HHC OF THE INCOME-TAX ACT 1961 [THE ACT]. ACCO RDING TO THE AO WHILE CALCULATING THE DEDUCTION U/S 80HHC THE ASSESSEE H AS NOT EXCLUDED THE OTHER INCOME AND NOT INCLUDED SALES-TAX AND EXCIS E DUTY IN TOTAL TURNOVER. 2 2 ON BEING ASKED BY THE AO AS TO WHY THE RE-COMPUTATI ON OF DEDUCTION 80HHC SHOULD NOT BE MADE THE ASSESSEE FILED RE PLY WHICH WAS REPRODUCED BY THE ASSESSING OFFICER AT PARA-6 OF THE ASSESSMENT O RDER. THE REPLY FILED BY THE ASSESSEE WAS NOT CONSIDERED BY THE ASSESSING OFFICE R TO BE SATISFACTORY. THEREFORE AFTER DISCUSSING THE ISSUE AT LENGTH IN THE ASSESSMENT ORDER AND ALSO RELYING UPON THE VARIOUS DECISIONS AS MENTION ED IN THE ASSESSMENT ORDER THE ASSESSING OFFICER EXCLUDED THE ASSESSEE' S CLAIM OF DEDUCTION ON RECEIPT OF DEPB AND INCLUDED THE SALES-TAX AND EXCI SE DUTY WHILE COMPUTING THE DEDUCTION U/S. 80HHC OF THE ACT. 4 DURING THE COURSE OF APPELLATE PROCEEDINGS THE A . R. OF THE ASSESSEE FILED WRITTEN SUBMISSIONS WHEREIN IT WAS SUBMITTED AS UNDER - '(I) THAT THE LEARNED AO HAS ERRED IN LAW AND FACTS BY REDUCING THE DEDUCTION U/S.80HHC OF THE ACT BY RS.10 57 441/-. T HE AO SHOULD NOT (A) INCLUDE EXCISE DUTY AND SALES-TAX FOR THE PURPO SE OF COMPUTING THE TOTAL TURNOVER (B) REDUCE THE AMOUNT OF DEPB FROM T HE BUSINESS PROFIT OF THE APPELLANT (C) TREAT THE DEPB U/S .80HHC OF T HE ACT. (II) THE ACTION OF THE AO IS BAD IN LAW AND THE AO SHOULD BE DIRECTED TO CALCULATE IT CORRECTLY AS PER OUR WORKI NG BASED ON BUSINESS INCOME. WITH REGARD TO INCLUSION OF EXCISE DUTY AND SALES-TAX IN THE TURNOVER THE APPELLANT MOST RESPECTFULLY RELY ON T HE JUDGEMENT OF THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF CIT VS. SU DARSHAN CHEMICALS INDUSTRIES LTD. 112 TAXMAN 511 (MUMBAI) HONBLE ITAT CALCUTTA IN THE CASE OF IFB AGRO INDUSTRIES LTD. VS . DCIT (SPL. BENCH- CALCUTTA) AND CIT(A) ORDER IN THE CASE OF THE APPEL LANT FOR THE A.Y. 1998-98. (III) THE AO HAS FURTHER ERRED IN LAW AND FACTS BY REDUCING THE AMOUNT OF DEPB LICENSE FROM THE PROFIT OF THE BUSIN ESS. SINCE IT IS NATURE OF EXPORT INCENTIVE IT SHOULD BE TREATED AS INCOME DEFINED IN CLAUSE (IIIA) OF SECTION 28 AND FURTHER ITS BENEFIT OF PROVISO TO SUB- SECTION 3 OF 80HHC SHOULD BE GIVEN. ACCORDINGLY PR OPER TREATMENT OF DUTY DRAW BACK BENEFIT AND SATE OF DEPB AS PER LAW SHOULD BE GIVEN FOR THE COMPUTATION OF DEDUCTION U/S.80HHC. IN THIS REGARD RELIANCE IS PLACED ON THE JUDGMENT OF JURISDICTIONAL ITAT IN TH E CASE OF PRATIBHA SYNTAX LIMITED VS. JCIT 81 ITD 118 AND ORDER NO. CI T(A)- VIII/IT/323/02-03 DATED 27-01-2004 OF THE CIT(A)VII I MUMBAI IN THE CASE OF COMPUTREE INFO TECH LTD. FOR A.Y. 2001-02. IN VIEW OF THE FACTS OF THE CASE AND ALSO RELYING U PON THE ABOVE DECISIONS IT WAS SUBMITTED BY THE A. R. OF THE ASSESSEE THAT THE AO SHOULD BE DIRECTED NOT TO INCLUDE EXCISE DUTY AND SALES TAX FOR THE PURPOS E OF COMPUTING THE TOTAL 3 3 TURNOVER AS WELL AS REDUCE THE AMOUNT OF DEPB FROM THE BUSINESS PROFIT OF THE ASSESSEE AND TREAT THE DEPB AS NON EXPORT INCEN TIVE WHILE RE-CALCULATING THE DEDUCTION U/S.80HHC OF THE ACT. 5 AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASS ESSEE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HELD AS UNDER: - 6.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE AR OF THE APPELLANT COMPANY. I HAVE ALSO GONE THROU GH THE DECISIONS REFERRED TO ABOVE RELIED UPON BY THE A. R. AND THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE APPE LLANT HAS RELIED UPON BOMBAY HIGH COURT DECISION IN THE CASE OF SUDA RSHAN CHEMICALS INDUSTRIES LTD. 245 ITR 769 WHICH IS APPLICABLE ON THE FACTS OF THE APPELLANTS CASE. FURTHER IN THE CASE OF IFB AGRO INDUSTRIES VS. DC1T (83 STD 96) THE SPECIAL BENCH IN THE ITAT CALC UTTA BENCHI THE ASSESSING OFFICER WAS DIRECTED TO COMPUTE THE DEDUC TION U/S 80 HHC ON EXPORT PROFITS ARRIVED AT ON THE BASIS OF EXPORT TURNOVER AND TOTAL TURNOVER EXCLUSIVE OF RECEIPTS EXCISE DUTY AND SALE S TAX. IN PARA 25 & 26 OF THE ORDER THE SPECIAL BENCH HAS HELD AS UNDE R :- 'IN VIEW OF THE AFORESAID DISCUSSION WE ARE OF THE OPINION THAT THOUGH 'TOTAL TURNOVER' MAY INCLUDE THE RECEIPTS OF EXCISE DUTY AND SALES-TAX ETC. IN ITS GENERAL PARLANCE AND UNDE R SPECIFIC STATUTE BECAUSE OF ITS WIDER COVERAGE IN THE DEFIN ITIONS GIVEN THEREUNDER IT HAS TO BE GIVEN A RESTRICTIVE MEANIN G WHILE COMPUTING THE 'EXPORT PROFIT' FOR THE PURPOSE O F SECTION 80 HHC NAMELY ONLY THAT PART OF THE RECEIPT FOR SALE C ONSIDERATION IS TO BE TAKEN AS PART OF THE TOTAL TURNOVER WHICH HAS AN ELEMENT OF PROFIT THEREIN AND ACCORDINGLY THE RECEIPTS OF EXCISE DUTY AND SALES-TAX WHICH DO NOT INCLUDE AN. ELEMENT OF PROFI T SHOULD BE EXCLUDED FROM 'TOTAL TURNOVER. 'IN THE RESULT THE ASSESSING OFFICER IS DIRECTED T O COMPUTE THE DEDUCTION UNDER SECTION 80 HHC ON EXPORT PROFITS AR RIVED AT ON THE BASIS OF THE EXPORT TURNOVER AND TOTAL TURNOVER EXCLUSIVE OF THE RECEIPT OF EXCISE DUTY AND SALES-TAX.' THE ABOVE MENTIONED DECISION OF SPECIAL BENCH ITAT CALCUTTA HAS BEEN FOLLOWED BY THE ITAT AHMEDABAD BENCH B IN TH E CASE OF SUNDEK INDIA LTD. VS. ACIT CIRCLE 2(4) AHMEDABAD ( ITA NO.447/AHD/95 DATED 19-08-2002). THE HONOURABLE ITA T AHMEDABAD IN THIS CASE HELD AS UNDER:- 'WHETHER FOR THE PURPOSE OF COMPUTATION OF AMOUNT O F DEDUCTION U/S. 80 HHC 'TOTAL TURNOVER' INCLUDE DUTIES LIKE E XCISE DUTY SALES TAX ETC. WAS AN ISSUE ON WHICH DIVERSION VIEW OF THE TRIBUNAL. RECENTLY ITAT SPECIAL BENCH CALCUTTA IN I.T.A 4 4 NO.211/CAL/2000 IN THE CASE OF IFB AGRO INDUSTRIES LTD. VS. DCIT FOR THE A.Y 1996-97 HELD THAT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80 HHC TAXES AND DUTIES LI KE EXCISE DUTY SALES TAX OCTROI ETC. ARE NOT TO BE INCLUDED IN THE TOTAL TURNOVER. THE PERUSAL OF DECISION OF SPECIAL BENCH REVEALS THAT DECISION OF APEX COURT IN THE CASE OF MCDOWELL AND CO. LTD. IS DULY CONSIDERED BY SPECIAL BENCH. WE THEREFORE RE SPECTFULLY FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF IFB AGRO INDUSTRIES LTD (SUPRA) HELD THAT EXCISE DUTY IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S. 80 HHC OF THE I.T. ACT 1961. WE DIRECT THE ASSESSING OFFICER ACCORDIN GLY.' THE ABOVE CASES ARE DIRECTLY APPLICABLE ON THE FACT S OF THE APPELLANT'S CASE AS THESE DECISIONS PERTAIN TO CALCULATION-OF T OTAL TURNOVER FOR THE PURPOSE OF DEDUCTION U/S. 80 HHC. IN THE VIEW OF TH E ABOVE DECISIONS THE ASSESSING OFFICER IS DIRECTED TO COMPUTE DEDUCT ION U/S 80 HHC ON EXPORT PROFITS ARRIVED AT ON BASIS OF THE EXPORT TU RNOVER AND TOTAL TURNOVER EXCLUSIVE OF THE RECEIPTS OF EXCISE DUTY A ND SALES-TAX. 6.2.3 WITH REGARD TO AO'S ACTION OF EXCLUDING THE APPELLANTS CLAIM OF DEDUCTION OF RECEIPT OF DEPB I AGREE WITH THE CONTENTION PUT FORTH BY THE AR OF THE APPELLANT. THE HONBLE ITAT AHMEDABAD HAS IN THE CASE OF PRATIBHA SYNTEX LTD. SPECIFICALLY HELD THAT THE INCENTIVE UNDER DEPB ARE COVERED UNDER SECTION 28(IIIB). THE CIT(A)-XIII MUMBAI HAS IN THE ORDER DATED 26-3-2003 ALSO DECIDE D THE ISSUE IN THE SAME WAY. SIMILAR ISSUE OF SALE OF DEPB LICENCE WAS BEFORE C1T(A)- V AHMEDABAD IN THE CASE OF ADANI EXPORTS LTD. WHER EIN VIDE HIS ORDER NO. C1T(A)-V/1TO OSD-1/48 DATED 05-06-2003 HE HELD THAT THE PROFIT ARISING FROM THE SALE OF DEPB LICENCES IS CO VERED BY THE PROVISO U/S. SGHHC (3). IN ANOTHER CASE OF M/S. BHA NDARI EXPORTS CIT(A)-XIII AHMEDABAD HAS RELYING ON CBDT CIRCULA R NO. 621 AND CBDT INSTRUCTION F. NO. 133/131/97 DATED 23.2.98 A ND ALSO RELYING ON THE ITAT (AHD) DECISION IN THE CASE OF PRATIBHA SYN TEX LTD. HELD (VIDE HIS ORDER IN APPEAL MO. CIT(A)XIII/ACLT.CIR.7/3 6/04-05 DATED 23- 06-2004) THAT THE DEPB LICENCES ARE COVERED UNDER T HE PROVISIONS OF SECTION 28(IIIA) OF THE I. T. ACT 1961 AND ALLOWED DEDUCTION U/S.80HHC(3) OF THE ACT ACCORDINGLY. IN VIEW OF THE ABOVE DISCUSSION THE ASSESSING OFFIC ER IS ALSO ACCORDINGLY DIRECTED TO GRANT DEDUCTION WITH REFERE NCE TO THE DEPB INCENTIVES AS CLAIMED BY THE APPELLANT COMPANY. 6 THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREAS THE LEARNED AUTHO RISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 5 5 7 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND THAT THE ISSUE OF EXCLUSION OF SALES-TAX AND EXCISE DUTY FRO M TOTAL TURNOVER WHILE COMPUTING DEDUCTION U/S 80HHC WAS COVERED BY THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LAKSHMI MACHIN E WORKS (2007) 290 ITR 667 (SC) IN FAVOUR OF THE ASSESSEE. THE SAME VI EW IS ALREADY TAKEN BY THE TRIBUNAL WHILE PASSING THE ORDER DATED 17 TH OCTOBER 2008. THE ISSUE OF DEDUCTION U/S 80HHC IN RESPECT OF DEPB LICENSE WAS ONLY RE-CALLED OUT OF THE ABOVE ORDER OF THE TRIBUNAL WHILE DECIDING MISC ELLANEOUS APPLICATION NO.296 OF 2009 FILED BY THE DEPARTMENT VIDE ORDER D ATED 12-02-2010. THE ISSUE RECALLED IN THE MISCELLANEOUS APPLICATION IS DECIDED IN THE NEXT PARA. 8 AS REGARDS DEDUCTION U/S 80HHC IN RESPECT OF DEPB LICENSE IT IS OBSERVED THAT THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) HAS DIRECTED THE LEARNED ASSESSING OFFICER TO GRANT DED UCTION AFTER FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF PRATIBHA SY NTEX LTD. (SUPRA). THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY ERROR IN THIS PART OF THE ORDER OF THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) ALSO. THUS WE DO NOT FIND ANY GOOD REASON TO INTERFERE W ITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FOR TH IS PART ALSO. THEREFORE THE PART OF THE GROUND RECALLED IN THE MISCELLANEOU S APPLICATION OF THE REVENUE IS ALSO DISMISSED. 9 IN THE RESULT THE PART OF THE RECALLED GROUND IN THE ABOVE APPEAL IS ALSO DISMISSED. AS A RESULT THE APPEAL OF THE REVENUE S TANDS DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 26-02-2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 26-02-2010 COPY OF THE ORDER FORWARDED TO : 6 6 1. RATNAMANI METALS & TUBES LTD. 17 RAJMUGAT SOCI ETY NARANPURA CHAR RASTA ANKUR ROAD AHMEDABAD 2. THE ACIT CIRCLE-5 AHMEDABAD 3. THE CIT CONCERNED 4. THE CIT(A)-XI AHMEDABAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DY.R/ AR ITAT AHMEDABAD