The DCIT, Kheda Circle,, Nadiad v. Nabros Pharma Pvt. Ltd.,, Dist.Nadiad

ITA 3628/AHD/2008 | 1998-1999
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 362820514 RSA 2008
Assessee PAN AAACN7886N
Bench Ahmedabad
Appeal Number ITA 3628/AHD/2008
Duration Of Justice 2 year(s) 2 month(s) 16 day(s)
Appellant The DCIT, Kheda Circle,, Nadiad
Respondent Nabros Pharma Pvt. Ltd.,, Dist.Nadiad
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 21-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 1998-1999
Appeal Filed On 04-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER DATE OF HEARING : 06/01/2011 DRAFTED ON: 07 /01/2011 ITA NO.3628/AHD/2008 ASSESSMENT YEAR : 1998-99 THE DY.CIT KHEDA CIRCLE NADIAD VS. NABROS PHARMA PVT.LTD. NH NO.8 AT KAJIPURA TA. & DIST. KHEDA PAN/GIR NO. : AAACN 7886 N ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI RAJDEEP SINGH SR. D.R. RESPONDENT BY: MS. URVASHI SHODHAN O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XI AHMEDABA D DATED 04/08/2008 PASSED FOR ASSESSMENT YEAR 1998-99. 2. GROUND NO.1 READS AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DIRECTI NG THE A.O. THAT NOTHING WAS TO BE REDUCED FROM THE BUSINE SS PROFITS AS DEPB LICENCE INCOME AS AGAINST RS.19 58 995/- REDUCED FROM THE PROFITS OF THE BUSINESS FOR COMPUT ATION OF DEDUCTION U/S.80HHC(3) OVERLOOKING THE PROVISO INS ERTED BY THE TAXATION LAWS AMENDMENT ACT 2005 TO SEC 80H HC (3) THOUGHT HE ASSESSEE FAILED TO FURNISH CONTEMPOR ARY EVIDENCE. ITA NO. 3628/AHD/2008 THE DY.CIT VS. NABROS PHARMA PVT.LTD. ASST.YEAR - 1998-99 - 2 - 2.1. WHILE DECIDING THIS GROUND THE LEARNED CIT(AP PEALS) VIDE PARAGRAPH NO.4.1 HAS OBSERVED AS FOLLOWS:- 4.1. IT IS SEEN THAT THE SIMILAR ISSUE WAS THERE I N THE APPELLANTS OWN CASE FOR A.Y. 2001-02. THE SAID ISSUE HAS ALREADY BEEN DECIDED BY THE UNDERSIGNED VIDE APPEAL NO.CIT(A)-XI/553/07-08 DATE D 14-07-2008 PARTLY IN FAVOUR OF THE APPELLANT. THEREFORE HAVI NG CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF FINDIN GS GIVEN BY ME IN THE SAID ORDER THE ASSESSING OFFICER WAS DIRECTED TO RECOMPUTED THE DEDUCTION U/S.80HHC OF I.T. ACT ONLY BY REDUCING TH E 90% OF THE PROFITS ON SALE OF DEPB. SINCE IN THIS CASE THERE IS NO P ROFIT ON SALE OF DEPB AS EXPLAINED ABOVE NOTHING IS REQUIRED TO BE REDUC ED FROM THE BUSINESS PROFITS FOR COMPUTATION OF DEDUCTION U/S.80HHC OF I NCOME-TAX ACT. 3. IN THE LIGHT OF THE ABOVE OBSERVATION OF THE LEA RNED CIT(APPEALS) THAT THE ISSUE OF DEPB LICENCE FOR THE YEAR UNDER C ONSIDERATION WAS IDENTICAL WITH THE ASSESSMENT YEAR 2001-02 LEARNED AUTHORISED REPRESENTATIVE HAS MENTIONED THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02 THE ITAT AHMEDABAD BENCH C IN ITA NO.3241/AHD/2008 (THE DY.CIT VS. NABROS PHARMA PVT. LTD.) ORDER DATED 30/11/2010 THE ISSUE HAS BEEN DECIDED IN FAV OUR OF THE REVENUE VIDE PARAGRAPH NOS.3 & 3.1 AS FOLLOWS:- 3. AFTER HEARING BOTH THE SIDES WE ARE OF THE VIE W THAT THE LEARNED CIT(APPEALS) HAS WRONGLY ALLOWED THE CLAIM WHICH WA S APPARENTLY AGAINST THE FINDINGS OF THE ASSESSING OFFICER. RA THER THIS ISSUE HAS RECENTLY BEEN DEALT WITH BY ITAT B BENCH AHMEDABA D IN THE CASE OF INTAS EXPORTS VS. ACIT BEARING ITA NOS.1819 & 1820/AHD/2008 FOR ASSESSMENT YEARS 2003-04 & 2004-05 RESPECTIVELY (ON E OF US I.E.JM IS A PARTY) VIDE ORDER DATED 30/07/2010 WHEREIN IT HAS BEEN HELD AS UNDER:- 4. AFTER HEARING BOTH THE SIDES WE ARE OF THE OPIN ION THAT ON ACCOUNT OF THE AMENDMENTS IN SECTION 28(IIIA) WITH RETROSPECTIVE EFFECT FROM 01/04/1962; SECTION 28(IIID) WITH RETRO SPECTIVE EFFECT FROM 01/04/1998 AND 28(IIIE) WITH RETROSPECTIVE EFF ECT FROM ITA NO. 3628/AHD/2008 THE DY.CIT VS. NABROS PHARMA PVT.LTD. ASST.YEAR - 1998-99 - 3 - 01/04/2001 VIDE TAXATION LAW (AMENDMENT) ACT 2005 AND CONSEQUENT AMENDMENT IN SUB-SECTION(3) OF SECTION 80HHC OF THE I.T. ACT 1961 AS WELL AS ON ACCOUNT OF THE INS ERTION OF 2 ND 3 RD AND 4 TH PROVISO TO THE SUB-SECTION THERE IS NO SCOPE LEFT FOR THIS ASSESSEE TO CLAIM THE DEDUCTION IN RESPECT OF INCOM E ON SALE OF DEPB LICENCE BEING THE TURNOVER CROSSED THE LIMIT O F RS.10 CRORES AND THE REQUISITE CONDITIONS HAVE NOT BEEN F ULFILLED BY THE ASSESSEE. WE FIND NO FALLACY IN THE ORDERS OF TH E AUTHORITIES BELOW AND BY PLACING RELIANCE ON EASTMAN INDUSTRIES LTD. VS. DY.CIT REPORTED AS 120 ITD 362 (DELHI) AFFIRM THE SAME. FOR BOTH THE YEARS THESE GROUNDS OF THE ASSESSEE ARE THEREFORE DISMISSED. 3.1. IN VIEW OF THE ABOVE DECISION AS WELL AS IN TH E LIGHT OF CERTAIN FINDINGS ON FACTS BY A.O. IN RESPECT OF THE TOTAL TURN OVER OF THE ASSESSEE WE HEREBY REVERSE THE VERDICT OF LD. C IT(A) AND ALLOW THIS GROUND OF THE REVENUE. 4. IN THE RESULT THIS GROUND OF THE REVENUE IS HER EBY ALLOWED. 5. GROUND NO.2 READS AS UNDER:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN ALLOWIN G THE APPEAL OF THE ASSESSEE WHEREBY HE HAD DIRECTED TO INCLUDE EXCHANGE RATE DIFFERENCE AS BUSINESS INCOME AMOUNTI NG TO RS.94 67 913/- FOR COMPUTATION OF DEDUCTION U/S.80H HC(3) OVERLOOKING THE FACT THAT THE ASSESSEE RECEIVED THE INCOME DUE TO CONVERSION IN RUPEES AS A RESULT OF EXCHANGE RATE FLUCTUATION AND IT WAS NOT INCOME FROM EXPORTS. MO REOVER THE ASSESSEE ALSO FAILED TO FURNISH ANY CONTEMPORAR Y EVIDENCE EITHER DURING THE ASSESSMENT PROCEEDINGS O R DURING THE APPELLATE PROCEEDINGS. 5.1. IN RESPECT OF THIS GROUND AS WELL THE FINDING OF THE LEARNED CIT(APPEALS) WAS THAT THE FACTS AND THE ISSUE WAS I DENTICAL WITH THE FACTS OF ASSESSMENT YEAR 2001-02; RELEVANT OBSERVATION IS REPRODUCED BELOW:- ITA NO. 3628/AHD/2008 THE DY.CIT VS. NABROS PHARMA PVT.LTD. ASST.YEAR - 1998-99 - 4 - 3.1.2. IT IS SEEN THAT THE SIMILAR ISSUE WAS THERE IN THE APPELLANTS OWN CASE FOR A.Y. 2001-02. THE SAID IS SUE HAS ALREADY BEEN DECIDED BY THE UNDERSIGNED VIDE APPEAL NO.CIT( A)- XI/553/07-08 DATED 14-07-2008 IN FAVOUR OF THE APPE LLANT. THEREFORE HAVING CONSIDERED THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN VIEW OF FINDINGS GIVEN BY ME IN THE SAI D ORDER THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTIO NS UNDER SECTION 80HHC ON FOREIGN EXCHANGE RATE AS CLAIMED BY THE AP PELLANT. THUS THIS GROUND OF APPEAL IS ALLOWED. 6. IN RESPECT OF THE ISSUE OF FOREIGN EXCHANGE RATE DIFFERENCE THE TRIBUNAL HAS TAKEN A VIEW IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02 ORDER DATED 30/11/2010(SUPRA) VIDE PARAGR APH NO.6 AS FOLLOWS:- 6. ON HEARING BOTH THE SIDES WE ARE OF THE VIEW THAT THE A.O. HAD NOT CORRECTLY APPRECIATED ALL THOSE FACTS WHICH WERE CLAIMED TO HAVE BEEN PLACED BEFORE HIM VIDE A DETAILED LETT ER DATED 10.12.2007. IT WAS EXPLAINED THAT AT THE END OF THE YEAR THERE WAS OUTSTANDING SALE CONSIDERATION. THE SAME WAS CONVER TED INTO INDIAN CURRENCY FROM FOREIGN CURRENCY AT THE PREVAI LING EXCHANGE RATE AND DULY RECORDED IN THE BOOKS AS IT WAS CONSI STENTLY DONE IN THE PAST. THEREAFTER THE DIFFERENCE BETWEEN THE EX CHANGE RATE AND THE ACTUAL REALIZATION WAS EITHER DEBITED OR CREDIT ED TO CURRENCY RATE DIFFERENCE A/C. IT WAS ALSO INFORMED THAT THE SAID METHOD OF ACCOUNTING WAS AS PER THE ACCOUNTING STANDARD 11 PR ESCRIBED. HENCE THE CURRENCY RATE DIFFERENCE WAS CLAIMED AS B USINESS INCOME FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S SEC. 80HHC. CASE LAWS RELIED UPON WERE CIT VS.AMBA IMPEX 282 ITR 144 (GUJ.) GAMI EXPORTS 94 TTJ 557 (AHD.). ALONG WITH THE COPY OF THIS LETTER THE ASSESSEE HAS ALSO PLACED BE FORE US A CHART TO EXPLAIN THAT THE REALIZATION WAS DONE WITH IN THE S TATUTORY PERIOD. ASSESSEE HAS ANNEXED BANK CERTIFICATE OF EXPORT AN D REALIZATION. ONCE ALL SUCH DETAILS WERE VERY MUCH AVAILABLE BEFORE THE LOWER AUTHORITIES THEN IT NOT FAIR ON TH E PART OF THE REVENUE TO AGAIN CHALLENGE THOSE FACTUAL FINDINGS. APPLYING THE ITA NO. 3628/AHD/2008 THE DY.CIT VS. NABROS PHARMA PVT.LTD. ASST.YEAR - 1998-99 - 5 - PRINCIPAL LAID DOWN BY THE HONBLE COURTS LD. CIT (A ) HAS RIGHTLY ALLOWED THE CLAIM . RESULTANTLY THIS GROUND IS HERE BY DISMISSED. 7. THOUGH IN THE PAST A VIEW WAS TAKEN BY THE TRIB UNAL BUT FOR THE YEAR UNDER CONSIDERATION WHILE REFERRING TO THE AF ORESAID DECISION DATED 30-11-2010 IN THE ASSESSEES OWN CASE FOR ASSESSMEN T YEAR 2001-02 INVITED OUR ATTENTION TO DETAILS OF FOREIGN EXCHANG E RATE VARIATION AND CONTENDED THAT SINCE AN AMOUNT OF RS.80 44 861/- AL ONE PERTAINS TO EXPORTS MADE DURING THE YEAR AND HAS BEEN RECEIVED WITHIN THE STIPULATED TIME ACCORDINGLY DEDUCTION U/S.80HHC HAS TO BE RE STRICTED IN RELATION TO THE SAID AMOUNT WHILE THE REMAINING AMOUNT OF RS.14 23 052/- IS NOT ENTITLED TO DEDUCTION U/S.80HHC. THE LEARNED DR D ID NOT OPPOSE THESE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID SUBMISSION S OF THE LD. AR THE AMOUNT OF RS.80 44 861/- ALONE PERTAINS TO FOREIGN EXCHANGE RATE VARIATION IN RELATION TO EXPORTS MADE DURING THE YE AR WHICH HAS BEEN REALIZED WITHIN THE STIPULATED PERIOD. IN THESE CI RCUMSTANCES AND IN THE LIGHT OF VIEW TAKEN BY THE HON'BLE JURISDICTIONAL H IGH COURT IN CIT VS. AMBA IMPEX 282 ITR 144(GUJ) THE MATTER IS RESTORE D TO THE FILE OF THE AO WITH THE DIRECTIONS TO VERIFY THE AFORESAID CLA IM MADE BY THE LD. AR ON BEHALF OF THE ASSESSEE AND THEREAFTER RECOMPUTE DEDUCTION U/S 80HHC OF THE ACT CONSIDERING THE AMOUNT OF FOREIGN EXCHA NGE RATE VARIATION RELATING TO EXPORTS MADE DURING THE YEAR AND REALIZ ED WITHIN THE TIME STIPULATED IN SEC. 80HHC(2)(A) OF THE ACT. WITH TH ESE DIRECTIONS GROUND NO.2 OF THE APPEAL IS DISPOSED OF. ITA NO. 3628/AHD/2008 THE DY.CIT VS. NABROS PHARMA PVT.LTD. ASST.YEAR - 1998-99 - 6 - 9. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED BUT PARTLY AS PER THE DIRECTIONS. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 21 / 01 /2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 21/ 1 /2011 T.C. NAIR T.C. NAIR T.C. NAIR T.C. NAIR SR. PS SR. PS SR. PS SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS)-XI AHMEDABAD 5. THE DR AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD 1. DATE OF DICTATION..06/01/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07/01/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S21.1.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.1.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER