M/S K MOHAN & CO. (EXPORTS) (REGD) (SINCE CONVERTED INTO K MOHAN & CO, ( EXPORTS) PVT. LTD, MUMBAI v. THE DY CIT 17(3), MUMBAI

ITA 2546/MUM/2008 | 2004-2005
Pronouncement Date: 20-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 254619914 RSA 2008
Bench Mumbai
Appeal Number ITA 2546/MUM/2008
Duration Of Justice 2 year(s) 8 day(s)
Appellant M/S K MOHAN & CO. (EXPORTS) (REGD) (SINCE CONVERTED INTO K MOHAN & CO, ( EXPORTS) PVT. LTD, MUMBAI
Respondent THE DY CIT 17(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 20-04-2010
Date Of Final Hearing 15-04-2010
Next Hearing Date 15-04-2010
Assessment Year 2004-2005
Appeal Filed On 11-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI BEFORE SHRI R.S. PADVEKAR (JM) AND SHRI RAJENDRA S INGH(AM) ITA NO.2546/M/2008 ASSESSMENT YEAR 2004-05 K MOHAN & CO.(EXPORTS) (REGD) THE DY.CIT 17(3) M UMBAI (SINCE CONVERTED INTO K MOHAN & CO. PIRAMAL CHAMBE RS (EXPORTS) PVT. LTD. 6 ISHWAR BHAVAN PAREL MUMBAI 400 012. A ROAD CHURCHGATE MUMBAI 400 020. APPELLANT RESPONDENT ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SHRI KESHAVE SAXENA O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 18.2.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2004-05 . THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING ALLOWABILITY OF DEDUCTI ON UNDER SECTION 80HHC IN RESPECT OF DEPB INCOME. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FOR THE RELEVANT YEAR HAD CREDITED A SUM OF RS.6 32 19 443/- ON ACCO UNT OF DEPB INCOME. WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC THE ASSESSE E HAD EXCLUDED 90% OF DEPB INCOME FROM THE PROFIT OF INCOME AS PER EXPLAN ATION (BAA) AND HAD ALSO INCREASED THE PROFIT OF BUSINESS BY THE DEPB INCOME IN THE RATIO OF EXPORT TURNOVER TO THE TOTAL TURNOVER. THE AO HOWEVER HELD THAT ENTIRE DEPB INCOME WAS PROFIT UNDER SECTION 28(III)(D) AND SINCE THE T URNOVER OF THE ASSESSEE 2 EXEEDED RS.10 CRORES THE ASSESSEE COULD BE ALLOWED THE BENEFIT OF INCREASE AS PER THIRD PROVISO TO SECTION 80HHC ONLY WHEN TWO CO NDITIONS MENTIONED IN THE CLAUSES A & B OF THE SAID PROVISO WERE SATISFIED. T HE ASSESSEE COULD NOT PRODUCE ANY MATERIAL TO SHOW THAT THE SAID CONDITIONS ARE S ATISFIED AND THEREFORE THE AO DID NOT ALLOW DEDUCTION UNDER SECTION 80HHC IN RESP ECT OF DEPB INCOME. IN APPEAL CIT(A) CONFIRMED THE VIEW OF THE AO THAT ENT IRE CREDIT OF DEPB WAS PROFIT AS PER SECTION 28(III)(D) AND ACCORDINGLY CO NFIRMED THE ORDER OF AO AGGRIVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF TOPMAN EXPORTS LTD. (318 ITR (AT) 87). IN THE SAID CASE THE SPECIAL BENCH HAS HELD THAT THE FACE VALUE OF DEPB IS THE BUSINES S INCOME UNDER SECTION 28(IIIB) AND EXCESS OF SALE CONSIDERATION ABOVE THE FACE VALUE IS PROFIT UNDER SECTION 28(III)(D). THEREFORE IN SO FAR AS THE FACE VALUE OF DEPB IS CONCERNED THE PROFIT HAS TO BE INCREASED AS PER THE FIRST PR OVISO TO SECTION 80HHC(3) WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC. AS R EGARDS THE EXCESS OF SALE PROCEEDS ABOVE THE FACE VALUE OF DEPB IS CONCERNED THE SAME IS PROFIT UNDER SECTION 28(IIID) WHICH WOULD BE COVERED BY THE THIR D PROVISO TO SECTION 80HHC(III) AND SINCE THE CONDITIONS MENTIONED IN CL AUSES A & B OF THE SAID PROVISO ARE NOT SATISFIED THE ASSESSEE WILL NOT BE ENTITLED TO THE BENEFIT OF INCREASE AS PER THIRD PROVISO TO SECTION 80HHC(3). THE AO WILL RECOMPUTE THE DEDUCTION UNDER SECTION 80HHC IN RESPECT OF THE DEP B INCOME IN THE LIGHT OF DECISION OF SPECIAL BENCH MENTIONED ABOVE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED IN TERMS OF THE ORDER ABOVE. 3 5. THE ORDER WAS PRONOUNCED IN OPEN COURT ON 20.0 4 .2010. SD/- SD/- ( R.S. PADVEKAR) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2010 AT :MUMBAI