BRILLIANT INTERNATIONAL, MUMBAI v. ACIT CIR 24(3), MUMBAI

ITA 1450/MUM/2010 | 2004-2005
Pronouncement Date: 31-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 145019914 RSA 2010
Assessee PAN AADFB4035F
Bench Mumbai
Appeal Number ITA 1450/MUM/2010
Duration Of Justice 11 month(s) 6 day(s)
Appellant BRILLIANT INTERNATIONAL, MUMBAI
Respondent ACIT CIR 24(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 31-01-2011
Date Of Final Hearing 25-01-2011
Next Hearing Date 25-01-2011
Assessment Year 2004-2005
Appeal Filed On 22-02-2010
Judgment Text
1 ITA NO.1450/MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH MUMBAI J BENCH MUMBAI J BENCH MUMBAI J BENCH MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI BEFORE SHRI R V EASWAR BEFORE SHRI R V EASWAR BEFORE SHRI R V EASWAR BEFORE SHRI R V EASWAR PRESIDENT & PRESIDENT & PRESIDENT & PRESIDENT & SHRI R K PANDA AM SHRI R K PANDA AM SHRI R K PANDA AM SHRI R K PANDA AM ITA NO. 1450/MUM/2010 ITA NO. 1450/MUM/2010 ITA NO. 1450/MUM/2010 ITA NO. 1450/MUM/2010 (ASST YEAR 2004 (ASST YEAR 2004 (ASST YEAR 2004 (ASST YEAR 2004- -- -05) 05) 05) 05) BRILLIANT INTERNATIONAL BRILLIANT COMPLEX CTS NO. 1689 WESTERN EXPRESS HIGHWAY MIRAGAON MIRA ROAD (E) THANE DIST MUMBAI 104 VS THE ASST COMMR OF INCOME TAX CIR. 24(3) MUMBAI (APPELANT) (APPELANT) (APPELANT) (APPELANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO.AADFB4035F PAN NO.AADFB4035F PAN NO.AADFB4035F PAN NO.AADFB4035F ASSESSEE BY SHRI ISHWAR PRAKESH RATHI REVENUE BY SHRI SUMEET KUMAR PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 29.5.2008 OF THE CIT(A) XXIV MUMBAI RELATING TO AS SESSMENT YEAR 2004-05. 2 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS ENGAGED IN MANUFACTURING AND EXPORTING ELECTRICAL ACCESSORIES AND APPLIANCES LIKE DOOR BELLS WIRE CLIPS JUNCTION BOXES EXTENSION CORDS EARTHLING RODS ETC. TO COUNTRIES LIKE UAE KUWAIT SAUDI ARABIA EGYPT GHANA & IRAQ. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOT ED THAT THE EXPORT INCENTIVES CLAIMED BY THE ASSESSEE INCLUDE SALE OF DEPB/DFRC L ICENSES OF ` . 67 15 620/- WHICH ACCORDING TO HIM ARE NOT COVERED BY THE PR OVISIONS OF SECTION 28(IIIA) AND (IIIC) OF THE I T ACT HE HELD THAT SALE OF DEPB A RE NOT COVERED IN THE STATUTE THEREFORE CANNOT BE CONSIDERED FOR THE DEDUCTION U/S 80HHC OF THE ACT. 2 ITA NO.1450/MUM/2010 ACCORDING TO HIM THE SALE OF DEPB DO NOT FIND SPEC IFIC MENTION IN PROVISO TO SEC. 80HHC(3)(C) OF THE I T ACT; THEREFORE THE DEPB WIL L NOT BE CONSIDERED FOR DEDUCTION U/S 80HHC OF THE I T ACT 1961. THE ASSES SING OFFICER ALSO REFERRED TO THE CLARIFICATION ISSUED BY THE CBDT IN CONSULTAT ION WITH THE MINISTRY OF LAW ACCORDING TO WHICH SUCH PROFITS ARE NOT ELIGIBLE FOR DEDUCTION U/S 80HHC. 3 IN APPEAL THE CIT(A) UPHELD THE ORDER OF THE ASS ESSING OFFICER FOR WHICH THE ASSESSEE IS IN APPEAL HERE BEFORE US WITH THE F OLLOWING GROUNDS: I) THE LD CIT(A) ERRED IN CONFIRMING THE CHARGEABILITY OF INCOME TAX ON SUM SPECIFIED U/S 28(IIID) AND 28(IIIE) I.E. PROFIT ON TRANSFER OF DEPB AND DFRC RESPECTIVELY WHEREAS THE SAME ARE NOT COV ERED WITHIN THE DEFINITION OF INCOME U/S 2(24). II) FURTHER WITHOUT PREJUDICE TO THE ABOVE THE LD CIT (A) HAS ERRED IN CONFIRMING THE ENTIRE SALES PROCEEDS OF DEPB AND DF RC AS INCOME U/S 28(IIID) AND 28(IIIE) RESPECTIVELY WHEREAS THE PROFIT ON TRANSFER OF DEPB AND DFRC SHOULD HAVE BEEN DETERMINED BY RED UCING THE FACE VALUE OF DEPB AND DFRC FORM THE SALE PROCEEDS WHILE CALCULATING THE DEDUCTION U/S 80HHC. III) FURTHER WITHOUT PREJUDICE TO THE ABOVE THE FACE VA LUE OF DEPB AND DFRC ACCRUED ON EXPORT PERFORMANCE SHOULD HAVE BEEN CONSIDERED AS EXPORT INCENTIVES U/S 28(IIIB) WHILE CALCULATIN G THE DEDUCTION U/S 80 HHC. 4 THERE IS A DELAY OF 557 DAYS IN FILING OF THIS AP PEAL BEFORE THE TRIBUNAL. THE LD COUNSEL FOR THE ASSESSEE REFERRING TO THE A PPLICATION FOR CONDONATION OF DELAY DULY SUPPORTED BY AN AFFIDAVIT SUBMITTED TH AT AFTER THE RECEIPT OF THE ORDER PASSED BY THE CIT(A) CONFIRMING THE DISALLOW ANCE OF DEDUCTION U/S 80HHC THE PARTNER OF THE FIRM DISCUSSED THE ISSUE WITH THEIR CONSULTANT WHO WAS HANDLING THE TAX MATTERS. THE TAX CONSULTANT ADVIS ED THAT THERE IS NO POINT IN FILING AN APPEAL SINCE THE ENTIRE SALES PROCEEDS OF DEPB WILL BE TREATED AS PROFIT ON TRANSFER OF DEPB U/S 28(IIIB) AND SINCE THE ASS ESSEE IS UNABLE TO FULFIL THE 3 ITA NO.1450/MUM/2010 CONDITIONS PRESCRIBED UNDER THIRD PROVISO TO SEC. 8 0HHC NO DEDUCTION U/S 80HHC WILL BE AVAILABLE TO THE ASSESSEE. THE APPEAL WAS D UE FOR FILING ON OR BEFORE 13.8.2008; BUT THE SAME WAS NOT FILED DUE TO THE AD VICE OF THE CONSULTANT. 4.1 HE SUBMITTED THAT IN THE MEANWHILE THE ASSESS EE CAME TO KNOW THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS REPORTED IN 318 ITR 87 HAD DECIDED THE ISSUE IN FAVOUR OF THE EXPORTERS . SINCE THE ASSESSEE CAME TO KNOW THE RIGHT INTERPRETATION ON QUANTIFICATION OF PROFIT ON TRANSFER OF DEPB AND DFRC AND THEIR EFFECTS WHILE CALCULATING THE DEDUCT ION U/S 80HHC ONLY AFTER THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IT W AS ADVISED TO FILE THE SECOND APPEAL FOR WHICH THERE IS A DELAY OF 557 DAYS. HE SUBMITTED THAT THE DELAY IN FILING OF THIS APPEAL IS FULLY ON ACCOUNT OF THE IN CORRECT OPINION ON THE LEGAL ISSUE OF PROFIT ON TRANSFER OF DEPB AND DFRC AND THEIR EF FECTS WHILE CALCULATING THE DEDUCTION U/S 80HHC. HE SUBMITTED THAT THE ASSESSE E ACTED BONAFIDELY ON THE BASIS OF THE ADVICE OF THE CONSULTANT AND THERE WAS NO MALAFIDE INTENTION OR DELIBERATE INACTION ON THE PART OF THE ASSESSEE; TH EREFORE THE DELAY IN FILING OF THIS APPEAL SHOULD BE CONDONED. REFERRING TO THE D ECISION OF THE TRIBUNAL IN THE CASE OF U H INTERNATIONAL VIDE ITA NOS. 6162 616 4 AND 6165/MUM/2009 ORDER DATED 7.1.2011 FOR THE AYS 1999-00 2001-02 AND 20 04-05 RESPECTIVELY HE SUBMITTED THAT THE TRIBUNAL UNDER IDENTICAL FACTS H AD CONDONED THE DELAY OF 769 DAYS. 4.2 THE LD DR ON THE OTHER HAND STRONGLY OPPOSED TH E CONDONATION OF DELAY. HE SUBMITTED THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS (SUPRA) WHICH WAS IN FAVOUR OF THE ASSESSEE HAS SINCE BEEN 4 ITA NO.1450/MUM/2010 REVERSED BY THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF KALPATARU COLOURS & CHEMICALS REPORTED IN 233 CTR 313 AND THEREFORE THE ISSUE HAS TO BE DECIDED AGAINST THE ASSESSEE. 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THERE IS A DELAY OF 557 DAYS IN FILING OF THIS APPEAL BY THE ASSESSEE BEFORE THE TR IBUNAL. WE FIND UNDER IDENTICAL FACTS THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF U H INTERNATIONAL (SUPRA) HAS CONDONED THE DELAY OF 796 DAYS IN FILIN G THE APPEAL BY THE ASSESSEE BY HOLDING AS UNDER: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN OU R VIEW THE REASONS GIVEN IN THE AFFIDAVIT FOR CONDONATION OF DELAY ARE SUFFICIENT TO CONDONE THE DELAY IN FILING THE APPEAL ON BEHALF OF THE ASSESSE E. THE FACT THAT THE ASSESSEE WAS GUIDED BY THE ADVICE OF CHARTERED ACCO UNTANT FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL AND THE FACT THAT SU BSEQUENT PROFESSIONAL ADVICE WAS RECEIVED BY THE ASSESSEE FOR FILING AN A PPEAL BEFORE THE TRIBUNAL WOULD BE SUFFICIENT CAUSE FOR NOT FILING T HE APPEAL WITHIN TIME. IT IS ALSO SEEN THAT THERE HAS BEEN NO NEGLIGENCE OR I N ACTION ON THE PART OF THE ASSESSEE. THE TAX LIABILITY HAS TO BE IN ACCOR DANCE WITH LAW AND CANNOT BE FASTENED BECAUSE OF TECHNICAL LAPSES. A LIBERAL APPROACH HAS TO BE ADOPTED IN THE MATTER OF CONDONATION OF DELAY. WE THEREFORE CONDONE THE DELAY IN FILING THE APPEALS BY THE ASSESSEE. 6 SINCE THE FACTS OF THE IMPUGNED APPEAL ARE SIMIL AR TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN THE ABOVE MENTIONED CASE WE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L CONDONE THE DELAY IN FILING OF THIS APPEAL BY THE ASSESSEE. 5 ITA NO.1450/MUM/2010 7 SO FAR AS THE MERIT OF THE CASE IS CONCERNED WE FIND THE TRIBUNAL AT PARA 10 OF THE AFORESAID ORDER HAS ALSO DECIDED THE ISSU E WITH THE FOLLOWING DIRECTIONS: 10. ON MERITS WE FIND THAT THE DECISION OF THE SPEC IAL BENCH IN THE CASE OF TOPMAN EXPORTS (SUPRA) HAS SINCE BEEN REVERSED B Y THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS ITA 2887 OF 2009. WE ARE THEREFORE OF THE VIEW T HAT IT WOULD BE APPROPRIATE TO DIRECT THE ASSESSING OFFICER TO DISP OSE OF THE ISSUE IN ACCORDANCE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT. THE LD. COUNSEL FOR THE ASSESSEE HOWEVER SUBMITTED THAT AP PEALS HAVE BEEN PREFERRED AGAINST THE DECISION OF THE HONBLE BOMBA Y HIGH COURT BEFORE THE HONBLE SUPREME COURT. WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD CONSIDER THE ISSUE IN THE LIGHT OF BINDING P RECEDENT AT THE POINT OF TIME WHEN HE GIVES EFFECT TO THE ORDER OF THE TRIBU NAL. WE DIRECT ACCORDINGLY. FOR STATISTICAL PURPOSES THESE APPEAL S ARE TREATED AS ALLOWED. 8 RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUN AL CITED SUPRA UNDER IDENTICAL FACTS AND CIRCUMSTANCES WE DIRECT THE AS SESSING OFFICER TO DECIDE THE ISSUE IN ACCORDANCE WITH THE DIRECTIONS OF THE JURI SDICTIONAL HIGH COURT AND IN ACCORDANCE WITH LAW AFTER ALLOWING REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROU ND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 9 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 31 ST DAY OF JAN 2011. SD/- SD/- ( (( ( R V EASWAR R V EASWAR R V EASWAR R V EASWAR ) )) ) PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 31 ST JAN 2011 RAJ* 6 ITA NO.1450/MUM/2010 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI