M/s. UNI DERITEND LTD., MUMBAI v. DCIT 1(3), MUMBAI

ITA 6063/MUM/2005 | 2002-2003
Pronouncement Date: 31-05-2010

Appeal Details

RSA Number 606319914 RSA 2005
Assessee PAN AAACU0028K
Bench Mumbai
Appeal Number ITA 6063/MUM/2005
Duration Of Justice 4 year(s) 7 month(s) 20 day(s)
Appellant M/s. UNI DERITEND LTD., MUMBAI
Respondent DCIT 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Bench Allotted D
Tribunal Order Date 31-05-2010
Date Of Final Hearing 07-04-2010
Next Hearing Date 07-04-2010
Assessment Year 2002-2003
Appeal Filed On 11-10-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D BEFORE SHRI N.V. VASUDEVAN (JM) & R.K. PANDA (AM) I.T.A.NO. 6063/MUM/05 (ASSESSMENT YEAR : 2002-03) UNI DERITEND LIMITED LIBERTY BUILDING SIR VITHALDAS THACKERSEY MARG MUMBAI-400 020. VS. DCIT 1(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. APPELLANT RESPONDENT PAN/GIR NO. : AAACU0028K ASSESSEE BY : SHRI AJAY THAKORE DEPARTMENT BY : SHRI S.K. SINGH ORDER PER N.V. VASUDEVAN JM :- THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 20.7.2005 OF LEARNED CIT(A)-XXI MUMBAI RELATING TO A.Y. 2002-03. 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING FERROUS AND NON-FERROUS INVESTMENT CA STINGS. THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S. 80HHC OF TH E ACT IN RESPECT OF PROFITS DERIVED FROM EXPORT. THE ASSESSEE MADE A CL AIM FOR DEDUCTION U/S. 80HHC OF THE ACT OF RS. 18 67 886/-. THE SAME WAS HOWEVER NOT ALLOWED BY THE ASSESSING OFFICER. LEARNED CIT(A) CO NFIRMED THE ORDER OF THE ASSESSING OFFICER. HENCE THIS APPEAL BY THE AS SESSEE BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING BEFORE THE TRIBUNAL THE LEARNED COUNSEL FOR THE ASSESSEE FILED A CHART OF VARIOUS GROUNDS RAISE D BY THE ASSESSEE IN THIS APPEAL AND HAS FURTHER GIVEN DETAILS AS TO HOW VARIOUS GROUNDS ARE ALREADY DECIDED BY THE ITAT IN ASSESSEES OWN CASE IN THE APPEAL FOR A.Y. 2001-02. UNI DERITEND LIMITED 2 4. GROUND NO. 1 2 AND 4 RAISED BY THE ASSESSEE READ AS FOLLOWS :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN EXCLUDING 90% OF MISCELLANE OUS INCOME FROM THE PROFITS OF THE BUSINESS FOR THE PUR POSES OF COMPUTING DEDUCTION U/S. 80HHC THE DETAILS OF WHIC H ARE AS UNDER :- RS. INSURANCE CLAIMS RECEIVED 2 53 553/- MISCELLANEOUS INCOME 14 709/- PACKING & FORWARDING RECOVERIES -15 968/- WRITE OFF AND WRITE BACK -1 31 120/- SALES TAX ASSESSMENT REFUND PRIOR YEAR 9 11 624/- RECOVERIES OF EXPENSES 6 59 811/- TOTAL MISCELLANEOUS INCOME 16 92 609/- 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN EXCLUDING 90% OF INSPECTION FEES OF RS. 13 37 285/- FROM THE PROFITS OF THE BUSINESS FO R THE PURPOSE OF DEDUCTION U/S. 80HHC OF THE ACT. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN CONSIDERING SALES TAX SET O FF AMOUNTING TO RS. 29 42 312/- AS PART OF TURNOVER WH ILE COMPUTING DEDUCTION U/S. 80HHC. 5. IN A.Y. 2001-02 IN ITA NO. 9054/MUM/04 (ASSESSEE S APPEAL) AND ITA NO. 9064/MUM/04 (REVENUES APPEAL) THE VERY SA ME ISSUE WAS CONSIDERED AND DECIDED AGAINST THE ASSESSEE VIDE PA RA 4 TO 9 10 AND 11 TO 13 OF THE COMMON ORDER DATED 23.5.2007. FOR THE REASONS STATED THEREIN THESE GROUNDS ARE TO BE DISMISSED AS CONCED ED AND ACCEPTED BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THE CHART F ILED BEFORE US. 6. GROUND NO. 3 5 & 7 WERE NOT PRESSED AND HENCE T HEY ARE DISMISSED AS NOT PRESSED. 7. GROUND NO. 6(A) TO (D) RAISED BY THE ASSESSEE RE ADS AS FOLLOWS :- 6(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN DISALLOWING 90% OF EXPORT I NCENTIVES AMOUNTING TO RS. 98 62 025/- FROM TOTAL PROFITS OF THE UNI DERITEND LIMITED 3 BUSINESS AND THEREBY REDUCING THE CLAIM UNDER SECTI ON 80HHC. (B) THE LEARNED CIT(A) THEREFORE ERRED IN BRINGING TO TAX DEPB ENTITLEMENT UNDER SECTION 28(IV)/28(I) OF THE ACT A ND IN NOT GIVING DEPB ENTITLEMENTS FOR THE PURPOSE OF PROVISO TO SECTION 80HHC(3) OF THE ACT. (C) THE LEARNED CIT(A) FURTHER ERRED IN NOT REDUCIN G DEPB ENTITLEMENTS FROM COST OF PURCHASE/PRODUCTION WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC. (D) WITHOUT PREJUDICE TO THE SAME LEARNED CIT(A) E RRED IN NOT ALLOWING THE AFOREMENTIONED UNDER SECTION 28 WHILE COMPUTING THE TAXABLE PROFIT FOR THE RELEVANT PREVI OUS YEAR. 8. THE ISSUE RAISED BY THE ASSESSEE IN THE AFORESAID GROUNDS ARE WITH REGARD TO ALLOWING DEDUCTION ON TRANSFER OF DEPB LICENSE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE DECIDED BY THE SPECIAL BE NCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS IN ITA NO. 5769/M/06. THE SPECIAL BENCH VIDE ITS ORDER DATED 11.08.2009 HAS RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERING THE FACE V ALUE OF DEPB AS COVERED UNDER SECTION 28 (IIIB) AND THE PROFIT ON TRANSFER OF DEPB I.E. EXCESS OF SALE PRICE OVER THE FACE VALUE OF DEPB AS FALLING U NDER SECTION 28 (IIID). IT HAS FURTHER BEEN HELD THAT THERE IS NO SCOPE FOR AL LOWING SEPARATE DEDUCTION FOR INDIVIDUAL EXPENSES CONNECTED WITH TH E SALE OF DEPB DUE TO THE SCHEME OF SECTION 80HHC. WE THEREFORE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND DIRECT THE ASSESSING OFFICE R TO RECOMPUTE THE DEDUCTION UNDER SECTION 80HHC IN ACCORDANCE WITH TH E VIEW TAKEN BY THE SPECIAL BENCH IN THE AFORE NOTED CASE. NEEDLE SS TO SAY THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING H EARD BY THE AO IN THE FRESH PROCEEDINGS. 10. GROUND NO. 8 IS GENERAL GROUND TO ALLOW DEDUCTI ON U/S. 80HHC. IN TERMS OF THE DIRECTIONS GIVEN IN THIS ORDER IF THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80HHC THE ASSESSING OFFICER WILL AL LOW DEDUCTION U/S. 80HHC. UNI DERITEND LIMITED 4 11. GROUND NO. 9 RAISED BY THE ASSESSEE READS AS FO LLOWS :- 9(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN DISALLOWING BAD AND DOUBTFU L DEBTS AMOUNTING TO RS. 9 03 462/- DEBITED IN THE ACCOUNTS OF THE ASSESSEE THE DETAILS OF WHICH ARE AS UNDER :- BIRLA KENT TAYLOR LTD. RS. 16 975/- CENTRAL RAILWAY RS. 14 617/- CHICAGO PNEUMATIC CO. LTD. RS. 25 361/- DIESEL LOCOMOTIVE WORKS RS. 1 26 583/- KINETIC ENGINEERING PVT. LTD. RS. 83 973/- MAHINDRA & MAHINDRA LTD. RS. 38 737/- MAHNIDRA & MAHINDRA LTD. RS. 55 069/- MAHINDRA & MAHINDRA LTD. RS. 2 00 000/- MARUTI UDYOG LTD. RS. 2 00 000/- NUCLEAR FUEL COMPLEX RS. 10 232/- SPIRAX MARSHALL LTD. RS. 43 312/- SOLSONS EXPORTS PVT. LTD. RS. 88 603/- TOTAL RS. 9 03 462/- 9(B) WITHOUT PREJUDICE TO THE AFOREMENTIONED AMOUNT BE ALLOWED U/S. 28 WHILE COMPUTING PROFITS FOR THE RELEVANT PR EVIOUS YEAR. 12. THE ASSESSEE HAS DEBITED IN ITS PROFIT AND LOSS ACCOUNT AN AMOUNT OF RS. 9 03 462/- ON ACCOUNT OF PROVISION FOR DOUBT FUL DEBTS. VIDE ORDER SHEET ENTRY DATED 7.3.2005 THE ASSESSING OFFICER C ALLED UPON THE ASSESSEE TO SHOW CAUSE WHY THE SAME SHOULD NOT BE D ISALLOWED. THE ASSESSEE VIDE A LETTER DATED 10.3.2005 SUBMITTED TH AT A SUBMISSION HAS BEEN MADE VIDE LETTER DATED 4.12.2003 AS TO WHY THE PROVISION WERE REQUIRED TO BE MADE. IN THE LETTER DATED 4.12.2003 THE ASSESSEE HAD STATED THAT AS OF NOW THE DEBTS ARE STILL NOT SETT LED BY THE BUYERS. THE ASSESSEES CONTENTION WAS EXAMINED BY THE ASSESSING OFFICER AND HE WAS OF THE VIEW THAT THE AMOUNTS OF THE DEBTS HAVE NOT BECOME BAD AND ONLY A PROVISION HAS BEEN MADE. SUCH PROVISIONS BEING CO NTINGENT AND NOT CRYSTALISED LIABILITY WAS NOT ALLOWABLE EXPENDITURE AS PER THE PROVISIONS OF THE I.T. ACT 1961. IN VIEW OF THE ABOVE THE AMO UNT OF RS. 9 03 462/- WAS DISALLOWED AND WAS ADDED BACK TO THE TOTAL INCO ME. UNI DERITEND LIMITED 5 13. ON APPEAL BY THE ASSESSEE LEARNED CIT(A) FOLL OWED THE ORDER OF CIT(A) FOR AY 01-02 WHEREIN IN PARA 21 IT WAS HELD THAT EXPLANATION TO SECTION 36(1)(VII) WAS INSERTED BY THE FINANCE ACT 2001 W.R.E.F. 1.4.1989 AND THAT THE EXPLANATION STATES THAT ANY BAD DEBT O R PART THEREOF WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSE E SHALL NOT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE AC COUNT OF THE ASSESSEE. IT WAS THEREFORE HELD THAT THE PROVISION FOR DOUBTFUL DEBT IS CANNOT BE ALLOWED AS A DEDUCTED AND THAT THE DISALL OWANCE BY THE ASSESSING OFFICER WAS RIGHT. THUS IN A.Y. 2001-02 THE TRIBUNAL DISMISSED ASSESSEES GROUND ON IDENTICAL ISSUE HELD THAT DEDUCTION CANNOT BE ALLOWED U/S. 36(1)(VII) OF THE ACT ON TH E BASIS OF MERE PROVISION MADE WITHOUT AN ACTUAL WRITE OFF. FOR SIM ILAR REASONS THE DISALLOWANCE FOR THE PROVISIONS FOR DOUBTFUL DEBTS OF RS. 9 03 462/- IN A.Y. 2002-03 WAS CONFIRMED BY THE CIT(A). AGGRIEVE D BY THE ORDER OF CIT(A) THE ASSESSEE HAS RAISED GROUND NO.9 BEFORE THE TRIBUNAL. 14. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT RECENTLY HON'BLE SUPREME COURT IN THE CASE OF VIJAY A BANK VS. CIT 323 ITR 166 (SUPREME COURT) HAS EXPLAINED AS TO HOW EVE N MAKING A PROVISION FOR DOUBTFUL DEBT CAN BE CONSTRUED AS AN ACTUAL WRITE OFF AND THE ASSESSEES CASE SHOULD BE EXAMINED BY THE ASSE SSING OFFICER IN THE LIGHT OF THE SUBSEQUENT DEVELOPMENT OF THE LAW. HE THEREFORE PRAYED THAT THE ISSUE BE REMANDED TO THE ASSESSING OFFICER TO B E DECIDED AFRESH IN THE LIGHT OF THE GUIDELINES LAID DOWN BY HON'BLE SU PREME COURT. THE LEARNED DR RELIED ON THE ORDER OF LEARNED CIT(A). 15. WE ARE OF THE VIEW THAT THE REQUEST MADE BY T HE ASSESSEE IS REASONABLE AND ACCEPTABLE. WE THEREFORE REMAND THE ISSUE TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION IN THE LI GHT OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE. THE ASSESS ING OFFICER WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE B EFORE DECIDING THE ISSUE. UNI DERITEND LIMITED 6 16. IN THE RESULT APPEAL BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOUNCED ON 31 ST DAY OF MAY 2010. SD/- (R.K. PANDA) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 31 ST MAY 2010 COPY TO : 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS