Jaguar Overseas Ltd., v. ITO Ward 4 (1),

ITA 3402/DEL/2006 | 2003-2004
Pronouncement Date: 07-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 340220114 RSA 2006
Assessee PAN AAACJ0273F
Bench Delhi
Appeal Number ITA 3402/DEL/2006
Duration Of Justice 3 year(s) 6 month(s) 7 day(s)
Appellant Jaguar Overseas Ltd.,
Respondent ITO Ward 4 (1),
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 07-05-2010
Date Of Final Hearing 11-03-2010
Next Hearing Date 11-03-2010
Assessment Year 2003-2004
Appeal Filed On 30-10-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 3402/DEL/2006 ASSESSMENT YEAR: 2003-04 M/S JAGUAR OVERSEAS LTD. 1107 VIKRAM TOWER 16 RAJENDRA PLACE NEW DELHI. AAACJ0273F VS. ITO WARD 4(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VED JAIN CA MS. RANO JAIN CA& SH . VENKETESH CHOWRASIA CA RESPONDENT BY: SMT. BANITA DEVI NAREEN SR. DR O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST THE ORDER OF CIT(A) DATED 31 ST AUGUST 2006 FOR A.Y. 2003-04. 2. THE ASSESSEE IN THE PRESENT APPEAL HAS RAISED AS MANY AS EIGHT GROUNDS OF APPEAL AND ONE ADDITIONAL GROUND. DURIN G THE COURSE OF HEARING SH. VED JAIN LD. AR OF THE ASSESSEE HAD PR ESSED GROUNDS NO. 5 7 AND ADDITION GROUND HENCE THE OTHER GROUNDS A RE DISMISSED BEING NOT PRESSED. 3. GROUND NO. 5 READ AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTI ON OF THE AO THAT THE 2 ITA NO. 3402/DEL/2006 AMOUNT OF RS. 9 65 43 572/- ON ACCOUNT OF DEPB PROF ITS ARE ELIGIBLE FOR DEDUCTION U/S 80HHC. 4. IT WAS SUBMITTED THAT THIS ISSUE IS REQUIRED TO BE DECIDED IN THE LIGHT OF DECISION OF SPL. BENCH IN THE CASE OF TOP MAN EXPORTS VS. ITO 33 SOT 337. RATHER IT WAS THE COMMON CONTENTION OF BO TH THE PARTIES THAT ISSUE MAY BE RESTORED BACK TO THE FILE OF AO TO RE- DECIDE THE PRESENT ISSUE IN THE LIGHT OF AFOREMENTIONED DECISION OF SP L. BENCH. ACCORDINGLY AFTER HEARING BOTH THE PARTIES WE RESTORE THIS ISS UE TO THE FILE OF AO WITH A DIRECTION TO RE-DECIDE THE ISSUE IN THE LIGHT OF AFOREMENTIONED DECISION OF SPL. BENCH. WE DIRECT ACCORDINGLY. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO. 7 READ AS UNDER: - (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING TH E ACTION OF AO IN DETERMINING THE BOOK PROFITS U/S 115JB AT RS. 3 71 92 238/- AS AGAINST NIL BOOK PROFITS DECLARED BY THE ASSESSEE. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED BOTH ON FACETS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN DENYING THE DEDUCTION U/S 80HHC ON BOOK PROFI TS U/S 115JB. 6. WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF THE ACT THE DEDUCTION CLAIMED U/S 80H HC WAS RESTRICTED TO THE GROSS TOTAL INCOME OF RS. 2 87 23 068/- AND WHI LE COMPUTING BOOK PROFITS U/S 115JB DEDUCTION OF RS. 3 73 92 238/- W AS CLAIMED U/S 3 ITA NO. 3402/DEL/2006 80HHC. NO RELIEF AS SOUGHT FOR BY THE ASSESSEE BEF ORE AO WAS GIVEN. HENCE ASSESSEE RAISED GROUND NO. 7 BEFORE CIT(A) WH ICH READ AS UNDER: DETERMINING BOOK PROFITS OF THE APPELLANT U/S 11 5JB AT RS. 3 71 92 238/- BY DENYING DEDUCTION OF PROFITS ELIG IBLE FOR DEDUCTION U/S 80HHC OF THE ACT AGAINST NIL BOOK P ROFITS DECLARED BY THE APPELLANT. 7. LD. CIT(A) HAS CLUBBED THIS GROUND ALONG WITH OT HER GROUNDS RELATED TO DEDUCTION U/S 80HHC AND DID NOT ACCEPT T HE CLAIM OF THE ASSESSEE. THE ASSESSEE IS AGGRIEVED HENCE IN APPE AL. 8. IT WAS SUBMITTED BY LD. AR THAT THIS ISSUE IS NO W COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF SPL. BENCH IN THE CA SE OF DCIT VS. SYNCOME FORMULATIONS INDIA LTD. 106 ITD 193 (MUM.) (SB) WHEREIN SPL. BENCH HAS SPECIFICALLY REFERRED TO THE DIFFERENCE I N THE PHRASEOLOGY BETWEEN 115JA AND 115JB OF THE ACT TO TAKE A CONSCI OUS DECISION THAT DESPITE THE MINOR DIFFERENCE IN THE LANGUAGE IMPLIE D THEREIN DEDUCTION U/S 80HHC DESERVED TO BE COMPUTED BY TAKING INTO CO NSIDERATION BOOK PROFIT AND THEREFORE HE PLEADED THAT THIS ISSUE I S DECIDED IN FAVOUR OF THE ASSESSEE. HE CONTENDED THAT THOUGH THE AFOREMENTIO NED DECISION OF SPL. BENCH IN RESPECT OF ANOTHER ASPECT WAS OVERRUL ED BY HONBLE BOMBAY HIGH COURT EVEN AFTER THE DECISION OF HONB LE BOMBAY HIGH COURT IN THE CASE OF AJANTA PHARMA LTD. (223 CTR 44 1) COORDINATE BENCH OF BOMBAY VIDE ITS ORDER DATED 09.11.09 IN TH E CASE OF DCIT VS. GLANMARK LABORATORIES LTD. IN ITA NO. 4155/MUM./07 HAS HELD THAT THE POSITION REGARDING GRANT OF DEDUCTION WHILE COMPUTI NG BOOK PROFIT 4 ITA NO. 3402/DEL/2006 REMAINED UNCHANGED. HE HAS FURNISHED BEFORE US A C OPY OF SAID ORDER WHICH WAS ALSO GIVEN TO LD. DR. 9. IN THIS VIEW OF THE SITUATION AFTER HEARING BOT H THE PARTIES WE FOUND THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSES SEE BY THE AFOREMENTIONED DECISION OF MUMBAI BENCHES IN THE CA SE OF DCIT VS. GLANMARK LABORATORIES LTD. (SUPRA). FOR THE SAKE O F CONVENIENCE THE RELEVANT PORTION OF THE SAID ORDER IS REPRODUCED BE LOW: - FACTS CONCERNING GROUND NO. 1 ARE STATED IN BRIEF. UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT THERE W AS NO TAXABLE INCOME AND HENCE THE AO DETERMINED THE BOOK PROFIT U/S 115JB OF THE ACT. THE CASE OF THE ASSESSEE WAS THAT DEDUCTION U/S 80HHC OF THE ACT IS ALLOWABLE EVEN WH ILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. TH E AO HAVING REJECTED THE CONTENTION OF THE ASSESSEE AN APPEAL WAS PREFERRED BEFORE THE CIT(A) CONTENDING INTER A LIA THAT THE PROVISIONS OF SEC. 115JB USED THE EXPRESSION TH E AMOUNT OF PROFIT AND ON A SIMILAR EXPRESSION USED IN SEC. 115J AND 115JA OF THE ACT THE ITAT AS WELL AS THE HONBLE KERALA HIGH COURT HAD TAKEN A VIEW THAT DEDUCTION U /S 80HHC HAS TO BE COMPUTED AFTER TAKING BOOK PROFIT AS TOTAL INCOME ACCEPTED THE CLAIM OF THE ASSESSEE. I. DCIT VS. GOVIND RUBBER P. LTD. 89 ITD 457 (MUM.) II. CIT VS. GTN TEXTILES LTD. 248 ITR 372 (KER.) III. STARCHIK SPECIALITIES LTD. VS. DCIT 90 ITD 34 (HYD.) AGGRIEVED REVENUE IS IN APPEAL BEFORE US. LD. DR SUBMITTED THAT THE DECISIONS RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS IN AS MUCH AS THEY WERE DEALING WITH THE PROVISIONS OF SEC. 115J/115JA OF THE ACT WHEREAS PROVISIONS OF SEC. 115JB ARE DIFFERENTLY WORDED AND HENCE THE 5 ITA NO. 3402/DEL/2006 AFOREMENTIONED CASE LAW HAVE NO APPLICATION TO THIS CASE. IN PARTICULAR HE HAS REFERRED TO SUB-CLAUSE IV TO EXPLANATION THEREIN IN CONTRAST TO THE SUB-CLAUSE VIII TO EXPLANATION BELOW SEC. 115JA OF THE ACT TO SUBMI T THAT THE COMPUTATION OF DEDUCTION U/S 80HHC HAS TO BE RESTRICTED TO THE PROFITS OF THE BUSINESS AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE I.T. AC T AND NOT ON THE BOOK PROFIT. ON THE OTHER HAND THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE RELIED UPON THE DECISION OF THE ITAT MUMBAI SPL. BENCH IN THE CASE OF DCIT VS. SYNCOME FORMULATIONS P. LTD. (2007) 106 ITD 193 (MUM.) (SB) = (2007-TIOL-96-ITAT-MUM-SB) WHEREIN THIS VERY ISSUE WAS DECIDED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE BY FOLLOWING THE DECISION OF THE HONBLE KERALA HIGH COURT (SUPRA). IT WAS ALSO SUBMITTED THAT PHRASEOLOGY BETWEEN 115JA AND 115JB OF THE ACT TO TAKE A CONSCIOUS DECISION THAT DESPITE THE MONOR DIFFERENCE IN THE LANGUAGE EMPLOYED THEREIN DEDUCTION U/S 80HHC DESERVES TO BE COMPUTED BY TAKING INTO CONSIDERATION BOOK PROF IT. LD. COUNSEL WAS FAIR ENOUGH TO SUBMIT THAT IN THE CASE OF AJANTA PHARMA LTD. THE ITAT E BENCH MUMBAI FOLLOWED THE DECISION OF SYNCOME FORMULATIONS LTD. (SUPRA). ON AN APPEAL FILED BY T HE REVENUE THE HONBLE BOMBAY HIGH COURT CATEGORICALLY HELD THAT THE VIEW TAKEN BY THE ITAT SPL. BENCH MUMBAI (SUPRA) IS OVERRULED (SEE PARA 28 IN 223 CTR 441). HE THEN CLARIFIED THAT THE ITAT SPL . BENCH WAS CALLED UPON TO ANSWER TWO QUESTIONS I.E. (A) METHOD OF COMPUTATION OF DEDUCTION U/S 80HHC AND (B) PERCENTAGE OF DEDUCTION ALLOWABLE IN EACH YEAR. AS REGARDS THE PERCENTAGE OF DEDUCTION ALLOWABLE THE ITAT TOOK A VIEW THAT ASSESSEE WOULD 6 ITA NO. 3402/DEL/2006 BE ENTITLED TO 100% DEDUCTION AND THE VIEW TAKEN BY THE ITAT SPL. BENCH WAS FOLLOWED IN THE CASE OF AJANTA PHARMA LTD. ON AN APPEAL FIELD BY THE REVENUE WHILE ANSWERING A SPECIFIC QUESTION RAISED BEFORE THE HIGH COURT THE COURT OBSERVED THAT AN ASSESSEE WOULD NOT BE ENTITLED TO 100% DEDUCTION SINCE SUB SEC. 1 TO SEC. 80HHC INTRODUCED BY THE FINANCE ACT W.E.F. 1.4.01 WAS SPECIFICALLY MEANT TO PHASE OUT THE DEDUCTION COMPLETELY BY A.Y. 05-06 IN WHICH EVENT ON AN APPLICATION OF THE SAID SUB SEC. ONLY A PORTION OF THE AMOUNT COMPUTED U/S 80HHC IS ALLOWABLE IN A PARTICULAR YEAR. WHILE ANSWERING TH E SAID QUESTION THE HONBLE BOMBAY HIGH COURT OPINED THAT A CONTRARY VIEW TAKEN BY THE ITAT SPL. BENCH IN THE CASE OF SYNCOME FORMULATIONS LTD. (SUPRA) STAND OVERRULED. HE HAS ALSO ADVERTED OUR ATTENTION TO P ARA 19 OF THE ORDER OF THE JURISDICTIONAL HIGH COURT TO SUBMIT THAT ON THE FIRST ISSUE THE HONBLE BOMBAY HIGH COURT HAS NOT RENDERED ITS OPINION SICNE THAT ISSUE WAS NOT PLACED BEFORE THEIR LORDSHIPS FOR THI E KIND CONSIDERATION. HE HAS ALSO RELIED UPON THE DECISION OF THE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS 198 ITR 297 = (2002-TIOL-242- SC-IT) TO SUBMIT THAT ANY OBSERVATION OF A COURT HA S TO BE UNDERSTOOD IN THE LIGHT OF QUESTION PLACED BE FORE THEM AND INTERPRETATION OF AN EXPRESSION SHOULD NOT BE DIVERSED FROM ITS CONTEXT. HE THUS SUBMITTED T HAT SO FAR AS THE PRESENT ISSUE IS CONCERNED I.E. THE METHOD OF COMPUTATION OF DEDUCTION U/S 80HHC THE ISSUE STANDS COVERED BY THE DECISION OF THE ITAT S PL. BENCH IN THE CASE OF SYNCOME FORMULATIONS (SUPRA). ON THE OTHER HAND LD. DR STRONGLY RELIED UPON THE ORDER OF THE AO. 7 ITA NO. 3402/DEL/2006 HAVING CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE LD. CIT(A) IS IN CONFORMITY WITH THE DECISION O F THE ITAT SPL. BENCH CITED (SUPRA) AND HENCE WE AFFIRM THE ORDER OF THE LD. CIT(A) AND REJECT GROUND NO. 1 OF THE REVENUE. 10. IN THIS VIEW OF THE SITUATION RESPECTFULLY FOL LOWING THE AFOREMENTIONED DECISION OF COORDINATE BENCH WE RES TORE THE MATTER BACK TO THE FILE OF AO FOR RECOMPUTING THE BOOK PRO FIT U/S 115JB BY ALLOWING DEDUCTION U/S 80HHC IN TERMS OF PROPOSITIO N LAID DOWN BY ITAT E BENCH MUMBAI IN CASE OF M/S GLANMARK LABORATOR IES LTD. (SUPRA). WE DIRECT ACCORDINGLY. 11. THE ADDITIONAL GROUND IS WITH REGARD TO LEVY OF INTEREST U/S 234D. FOR THIS PURPOSE LD. AR OF THE ASSESSEE STATED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF SP L. BENCH IN THE CASE OF ITO VS. EKTA PROMOTERS P. LTD. 113 ITD 719 (DEL. ) (SB) WHEREIN IT HAS BEEN HELD THAT SEC. 234B INSERTED IN THE INCOME TAX ACT BY THE TAXATION LAWS (AMENDMENT ACT 2003) W.E.F. 01.06.0 3 BEING SUBSTANTIVE IN NATURE HAS NO RETROSPECTIVE EFFECT HENCE APPLICABLE FROM A.Y. 2004-05 ONLY. THE INTEREST U/S 234D IS CHARGE ABLE FROM A.Y. 2004- 05 ONLY AND IT COULD NOT BE CHARGED FOR EARLIER ASS ESSMENT YEARS EVEN THOUGH REGULAR ASSESSMENTS FOR SUCH EARLIER ASSESSM ENT YEARS ARE FRAMED AFTER 01.06.03 OR REFUND IS GRANTED FOR THOS E YEARS AFTER THE SAID DATE. IT IS SEEN THAT THE ASSESSMENT YEAR INVOLVED IN THE PRESENT APPEAL IS A.Y. 2003-04. HENCE INTEREST U/S 234D COULD NO T BE CHARGED. 8 ITA NO. 3402/DEL/2006 12. IN THIS VIEW OF THE SITUATION AFTER HEARING BO TH THE PARTIES FIRST WE ADMIT THE ADDITIONAL GROUND WHICH IS PURELY LEGAL I N NATURE AND NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD AND THEN WE DECIDE THE ISSUE IN FAVOUR OF ASSESSEE AND DELETE THE INTEREST LEVIE D U/S 234D CHARGED BY THE AO IN THE IMPUGNED ASSESSMENT ORDER BY FOLLOWIN G AFOREMENTIONED DECISION OF SPL. BENCH. THIS ADDITIONAL GROUND OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT FOR STATISTICAL PURPOSES THE AP PEAL IS PARTLY ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 07.05.2010 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 07.05.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR