DCIT, New Delhi v. M/s Carlton Overseas Pvt. Ltd., New Delhi

ITA 2646/DEL/2011 | 2003-2004
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 264620114 RSA 2011
Assessee PAN AAACC0482B
Bench Delhi
Appeal Number ITA 2646/DEL/2011
Duration Of Justice 2 month(s) 4 day(s)
Appellant DCIT, New Delhi
Respondent M/s Carlton Overseas Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 27-07-2011
Date Of Final Hearing 26-07-2011
Next Hearing Date 26-07-2011
Assessment Year 2003-2004
Appeal Filed On 23-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B: NEW DELHI BEFORE SHRI C.L.SETHI JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER I.T. A. NO.2646/DEL/2011 ASSESSMENT YEAR : 2003-04 DY. COMMISSIONER OF INCOME-TAX M/S. CARLTON OVERS EAS PVT. LTD. CIRCLE 33(1) NEW DELHI. VS. J-5 3 RD FLOOR SAKET NEW DELHI. PAN: AAACC0482B (APPELLANT) (RESPONDENT ) APPELLANT BY: MS. SURJANI MOHANTY SR. DR. RESPONDENT BY: SHRI S.C. GOYAL CA. O R D E R PER C.L. SETHI JUDICIAL MEMBER: THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 2 3.03.2011 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF A PENALTY ORDER PASSED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT 1961 BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2003-04. 2. THE GROUND RAISED BY THE REVENUE IS AS UNDER:- THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DE LETING PENALTY AMOUNTING TO RS.510000/- IMPOSED U/S 271(1) (C) OF THE I.T. ACT IGNORING THAT AS PER SUB-SECTION 9 OF SECT ION 80IA ONCE THE BUSINESS PROFITS ARE CONSIDERED UNDER THIS SECT ION THE PROFITS TO THE EXTENT WHICH ALREADY CLAIMED ARE NOT ELIGIBL E FOR DEDUCTION UNDER ANY OTHER PROVISIONS OF CHAPTER VI- A UNDER THE HEADING DEDUCTION IN RESPECT OF SPECIAL INCOMES . 2 3. IN THIS CASE THE ASSESSEE FILED ITS RETURN OF I NCOME DECLARING TOTAL INCOME AT RS.49 94 951/- ON 2.12.2003 FOR THE ASSE SSMENT YEAR UNDER CONSIDERATION. 4. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF LEATHER FOOTWEAR AND COMPONENTS. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED DEDUCTION UNDER SEC. 80HHC AT RS.7 8 88 535/-. THE ASSESSEE ALSO CLAIMED DEDUCTION U/S 80IB TO THE EXT ENT OF RS.29 31 874/- IN RESPECT OF THE PROFIT OF INDUSTRIAL UNDERTAKING LOC ATED AT VILLAGE KHANDSA GURGAON HARYANA. THE ASSESSEE COMPUTED THE DEDUCT ION U/S 80HHC WITH REFERENCE TO THE TOTAL BUSINESS PROFIT OF THE ASSES SEE COMPANY WITHOUT REDUCING THEREFROM THE AMOUNT OF DEDUCTION ALREADY CLAIMED UNDER SEC. 80IB OF THE ACT. THE AO HAD TAKEN A VIEW THAT THE DEDUC TION ALREADY CLAIMED UNDER SEC. 80IB SHOULD BE REDUCED FROM THE PROFIT O F BUSINESS FOR THE PURPOSE OF COMPUTING THE AMOUNT OF DEDUCTION AVAILA BLE U/S 80HHC OF THE ACT. THE AO THEREFORE COMPUTED DEDUCTION U/S 80HH C WITH REFERENCE TO THE PROFIT OF BUSINESS AS REDUCED BY THE PROFIT ALR EADY CONSIDERED FOR DEDUCTION U/S 80IB OF THE ACT. IN THIS MANNER THE AO REDUCED THE AMOUNT OF DEDUCTION AVAILABLE U/S 80HHC OF THE ACT AND ALS O INITIATED PENALTY PROCEEDINGS ON THAT ACCOUNT. THE AMOUNT OF DEDUCTI ON U/S 80HHC DISALLOWED BY THE AO TO THE EXTENT OF RS.13 88 361/ - WAS CONFIRMED BY THE 3 LEARNED CIT(A) VIDE ORDER DATED 27.12.2007. THE AO THEREFORE FIX THE PENALTY PROCEEDINGS FOR HEARING. IN REPLY THERETO THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED WHOLE PARTICULARS OF INC OME TRULY AND FULLY AND HAS NOT CONCEALED THE PARTICULARS OF ITS INCOME. T HE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80HHC I N THE SAME MANNER AS IT WAS CLAIMED AND ALLOWED IN THE ASSESSMENT YEARS 200 1-02 AND 2002-03. THE ASSESSEE THEREFORE REQUESTED TO DROP THE PENAL TY PROCEEDINGS INITIATED BY THE AO U/S 271(1)(C) OF THE ACT. 5. AFTER CONSIDERING THE ASSESSEES SUBMISSION AND IN THE LIGHT OF THE PROVISIONS OF SEC. 80IA(9) WHICH IS ANALOGOUS TO S EC. 80IB(13) THE AO HAD TAKEN A VIEW THAT THE ASSESSEE COULD CLAIM DEDUCTIO N U/S 80HHC ONLY ON THE BALANCE PROFIT OF THE BUSINESS AFTER REDUCING THE D EDUCTION ALLOWED U/S 80IB OF THE ACT. THE AO FURTHER STATED THAT MERELY BECA USE SIMILAR CLAIM WAS ALLOWED IN THE ASSESSMENT YEARS 2001-02 AND 2002-03 THAT IS NOT SUFFICIENT TO SAY THAT THE ASSESSEE HAS NOT FURNISHED INACCURA TE PARTICULARS OF INCOME AS THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO THE INCOME-TAX PROCEEDINGS. THE AO FURTHER STATED THAT IT WAS NOT THE BURDEN OF THE DEPARTMENT TO PROVE AND ESTABLISH THAT THE ASSESSEE HAD CONSCIOUSLY CON CEALED HIS INCOME. THE AO THEREFORE LEVIED A PENALTY OF RS.5 10 222/- U/ S 271(1)(C) OF THE ACT. 4 6. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 7. AFTER CONSIDERING THE AOS ORDER AND ASSESSEES SUBMISSION AND THE POSITION OF LAW THE LEARNED CIT(A) HAS TAKEN A VIE W THAT THE ISSUE AS TO WHETHER THE DEDUCTION ALREADY ALLOWED U/S 80IA/80IB OF THE ACT SHOULD BE REDUCED FROM THE PROFIT AND GAINS OF THE ASSESSEES BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC WAS HIGHLY DEBATA BLE ISSUE AND THEREFORE THE AO WAS NOT JUSTIFIED IN LEVYING PENA LTY U/S 271(1)(C ) OF THE ACT. THE LEARNED CIT(A)S ORDER IN THIS RESPECT RU NS AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. AR AND HAVE GONE THROUGH THE PENALTY ORDER. THE PENALTY I S IMPOSED ON THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80HHC. THE ASSESSEE HAD CLAIMED THE DEDUCTION ON TOTAL PROFITS OF THE BUSINESS BEFORE REDUCING THE DEDUCTI ON U/S 80IB CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER FOU ND IT TO BE IN CONTRAVENTION TO THE PROVISIONS OF THE ACT AND RECO MPUTED THE DEDUCTION U/S 80HHC AT RS.65 00 174/- AS AGAINST TH E CLAIM OF THE ASSESSEE OF RS.78 88 535/-. I FIND THAT THE ISSUE `WHETHER RELIEF U/S 80-IA/80- IB SHOULD BE DEDUCTED FROM PROFITS AND GAINS OF THE AS SESSEES BUSINESS BEFORE COMPUTING RELIEF U/S 80HHC HAS BEE N A DEBATABLE ISSUE. THE ISSUE WAS ALSO REFERRED TO HO NBLE SPECIAL BENCH OF ITAT IN THE CASE OF ACIT VS. ROGINI GARMEN TS 108 ITD 49 AND AGAIN IN THE CASE OF ACIT VS. HINDUSTAN MINT & AGRO PRODUCTS PVT. LTD. 119 ITD 107. EVEN IN ASSES SEES OWN CASE DIFFERENT VIEW WAS TAKEN BY THE ASSESSING OFF ICER IN EARLIER YEARS. IN SUCH CIRCUMSTANCES WHEN ISSUE I S DEBATABLE IT CANNOT BE SAID THAT BY TAKING A POSSIBLE INTERPR ETATION THE APPELLANT HAS FILED INACCURATE PARTICULARS OF INCOM E. HENCE I FIND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N INVOKING THE 5 PROVISIONS OF SECTION 271(1)(C ) AND THE PENALTY IM POSED BY HIM IS THEREFORE DELETED. 8. HENCE THE DEPARTMENT IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE AUTHORITIES BELOW. 10. IN THIS CASE THE ASSESSEE CLAIMED DEDUCTION U/ S 80HHC AFTER COMPUTING THE AMOUNT OF DEDUCTION ON THE TOTAL PROF IT OF BUSINESS WITHOUT REDUCING THEREFROM THE AMOUNT OF PROFIT ALREADY ALL OWED AS DEDUCTION U/S 80- IB OF THE ACT. THIS RETURN WAS FILED BY THE ASSESS EE ON 2.12.203. IN THE IMMEDIATE PRECEDING ASSESSMENT YEARS 2001-02 AND 20 02-03 THE ASSESSEE ALSO CLAIMED DEDUCTION UNDER SEC.80HHC BY COMPUTIN G THE SAME WITH REFERENCE TO THE TOTAL PROFIT OF THE BUSINESS WITHO UT REDUCING THEREFROM THE AMOUNT OF PROFIT ALREADY ALLOWED AS DEDUCTION U/S 8 0IB OF THE ACT AND THE SAID CLAIM OF THE ASSESSEE WAS ALLOWED BY THE DEPAR TMENT. IT IS NO DOUBT TRUE THAT THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABL E TO THE INCOME-TAX PROCEEDINGS BUT THE CLAIM MADE BY THE ASSESSEE ON T HE BASIS OF EARLIER ASSESSMENT YEARS CANNOT BE SAID TO BE MALA FIDE OR DISHONEST SO AS TO ATTRACT PENALTY LEVIABLE U/S 271(1)(C) OF THE ACT. IN THIS SITUATION THE ASSESSEES CLAIM IN SUBSEQUENT YEAR SHALL BE CONSIDERED TO BE BONA FIDE BASED ON THE ASSESSMENTS OF EARLIER YEARS. THEREFORE THE AOS CONTENTION THAT MERE BECAUSE THE IDENTICAL CLAIM WAS ALLOWED IN EARLIER ASSESSMENT YEARS 2001- 6 02 AND 2002-03 THE ASSESSEES CONTENTION THAT HE H AS NOT FURNISHED INACCURATE PARTICULARS OF ITS INCOME IS NOT ACCEPT ABLE IS NOT JUSTIFIED. 11. THE QUESTION AS TO WHETHER THE AMOUNT OF DEDUCT ION ALREADY ALLOWED U/S 80-IA/80-IB SHOULD BE REDUCED FROM THE PROFIT O F THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC OR IT SHOU LD BE REDUCED ONLY FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80HHC WAS HIG HLY DEBATABLE AT THE TIME WHEN THE ASSESSEE FILED THE RETURN OF INCOME O N 2.12.2003 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. TO DECIDE THI S ISSUE A SPECIAL BENCH OF ITAT WAS CONSTITUTED IN THE CASE OF ACIT VS. ROG INI GARMENTS 108 ITD 49 (SB). IN THAT CASE THE HONBLE PRESIDENT OF ITA T REFERRED THE QUESTION FOR THE CONSIDERATION OF THE SPECIAL BENCH THAT WHE THER RELIEF U/S 80-IA SHOULD BE DEDUCTED FROM PROFIT AND GAINS OF BUSINES S BEFORE COMPUTING RELIEF U/S 80HHC OF THE ACT. THE SPECIAL BENCH DECIDED TH IS ISSUE VIDE ORDER DATED APRIL 27 2007. IN THAT CASE THE ASSESSMENT YEARS INVOLVED WERE 1999-2000 AND 2002-03. THE SPECIAL BENCH HAS TAKEN A VIEW THAT RELIEF U/S 80-IA SHOULD BE REDUCED FROM THE PROFIT AND GAINS O F BUSINESS BEFORE COMPUTING RELIEF U/S 80HHC OF THE ACT. THEREFORE PRIOR TO THIS DECISION DATED APRIL 27 2007 THE MATTER WAS DEBATABLE AND NOT SETTLED AND THERE WERE DIFFERENT VIEWS TAKEN BY THE DIVISION BENCHES OF THE ITAT. THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF MITT AL CLOTHING CO. VS. DCIT 7 (2005) 4 SOT 626 HELD THAT PROVISIONS OF SEC. 80-I A(9) ONLY REGULATE THE DEDUCTIONS ALLOWABLE UNDER CHAPTER VI-A AND OBJECT OF SAID SECTION IS NOT TO PREVENT CLAIM TO DEDUCTION UNDER MORE THAN ONE SECT ION UNDER CHAPTER VI-A WHERE THE ASSESSEE SATISFIES CONDITIONS OF THESE SE CTIONS. JAIPUR BENCH OF THE TRIBUNAL RENDERED DECISION IN THE CASE OF TOSCHICA CREATION VS. ITO (2006) 150 TAXMAN 48 HELD THAT DEDUCTION U/S 80HHC SHOULD BE ALLOWED ON INCOME INCLUDED IN GROSS TOTAL INCOME BEFORE MAKING ANY DEDUCTION UNDER CHAPTER VI-A. HOWEVER TOTAL DEDUCTION U/S 80-IB A ND 80HHC SHOULD BE RESTRICTED UPTO GROSS TOTAL INCOME. THEREAFTER ON THIS ISSUE A LARGER BENCH OF TRIBUNAL WAS CONSTITUTED IN THE CASE OF HINDUSTAN M INT AND AGRO PRODUCTS P. LTD. (2009) 315 ITR (AT) 401 (DEL)(SB) AND IN THAT CASE THE VIEW TAKEN BY THE EARLIER SPECIAL BENCH IN THE CASE OF ROGINI GAR MENTS (SUPRA) WAS UPHELD. THE VIEW OF THE LARGER BENCH OF THE TRIBUNAL IN THE CASE OF HINDUSTAN MINT AND AGRO PRODUCTS P. LTD. (SUPRA) HAS BEEN UPHELD B Y THE HONBLE DELHI HIGH COURT IN THE CASE OF GREAT EASTERN EXPORTS VS. CIT (2011) 332 ITR 14 (DEL). THE SAME VIEW HAS ALSO BEEN TAKEN BY THE HO NBLE KERALA HIGH COURT IN THE CASE OF OLAM EXPORTS (INDIA) LTD. VS. CIT (2 011) 332 ITR 40. HOWEVER THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES P. LTD. VS. DCIT (2011) 332 ITR 42 (BOM.) HAS TAKEN A CONTRARY VIEW AND DISSENTED FROM THE DECISION OF HONBLE DEL HI HIGH COURT AND 8 HONBLE KERALA HIGH COURT IN THE CASES OF GREAT EAS TERN EXPORTS (SUPRA) AND OLAM EXPORTS (INDIA) LTD. (SUPRA) RESPECTIVELY. TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES P. LTD. (S UPRA) HAS HELD THAT THE RESTRICTION IMPOSED BY SEC. 80-IA(9) IS NOT APPLICA BLE AT THE STAGE OF COMPUTATION OF DEDUCTION U/S 80HHC(3) BUT IS APPLIC ABLE AT THE STAGE OF ALLOWING DEDUCTION U/S 80HHC(1) OF THE ACT. IT WAS FURTHER HELD THAT SEC. 80-IA(9) SEEKS TO RESTRICT ALLOWANCE OF DEDUCTION A ND NOT THE COMPUTATION OF DEDUCTION UNDER ANY OTHER SECTION UNDER HEADING `C TO CHAPTER VI-A OF THE ACT. IT IS THUS CLEAR THAT CONTRARY VIEWS HAVE B EEN TAKEN BY THE DIFFERENT HIGH COURTS ON THE ISSUE AS TO WHETHER THE AMOUNT O F DEDUCTION ALREADY ALLOWED U/S 80-IA SHOULD BE REDUCED FROM THE PROFIT OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC OF THE ACT OR FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80HHC OF THE ACT. 12. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE WE ARE THEREFORE IN FULL AGREEMENT WITH THE VIEW TAKEN BY THE LEARNED CIT(A) THAT THE ISSUE WHETHER RELIEF U/S 80-IA/80-IB SHOULD BE DEDUCTED FROM PROF ITS AND GAINS OF BUSINESS FOR THE PURPOSE OF COMPUTING RELIEF U/S 80HHC IS A DEBATABLE ISSUE AND THEREFORE THE AO WAS NOT JUSTIFIED IN IMPOSING THE PENALTY U/S 271(1)(C ) OF THE ACT ON THAT ACCOUNT. IN THE PRESENT CASE THE A SSESSEE HAS FURNISHED ALL THE PARTICULARS AND DETAILS OF THE CLAIM OF DEDUCTION U /S 80-IB VIS--VIS U/S 9 80HHC OF THE ACT AND NO PARTICULAR HAS BEEN CONCEAL ED. THE ASSESSEES CLAIM OF DEDUCTION U/S 80HHC AFTER COMPUTING THE SA ME WITH REFERENCE TO THE TOTAL PROFIT OF THE BUSINESS CANNOT SAID TO BE TOTALLY UNTENABLE IN THE EYES OF LAW WHEN THE ASSESSEE FILED ITS RETURN OF INCOME ON 2.12.2003. THE ASSESSEES CLAIM OF DEDUCTION U/S 80HHC IS THUS FO UND TO BE BONA FIDE. IT IS ALSO FOUND THAT THE ASSESSEE HAS BEEN ABLE TO FURNI SH A BONA FIDE EXPLANATION IN SUPPORT OF ITS CLAIM AND THUS THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY UPON IT UNDER EXPLANATION 1 TO SEC. 271(1)(C) O F THE ACT. WE THEREFORE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND REJECT T HIS APPEAL FILED BY THE REVENUE. 13. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 14. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 27 TH JULY 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH JULY 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.