The Ad CIT, Range-4, Visakhapatnam v. M/s Prathyusha Associates, Visakhapatnam

ITA 366/VIZ/2009 | 2006-2007
Pronouncement Date: 25-01-2010 | Result: Dismissed

Appeal Details

RSA Number 36625314 RSA 2009
Assessee PAN AAEFP4036D
Bench Visakhapatnam
Appeal Number ITA 366/VIZ/2009
Duration Of Justice 7 month(s) 2 day(s)
Appellant The Ad CIT, Range-4, Visakhapatnam
Respondent M/s Prathyusha Associates, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 25-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-01-2010
Assessment Year 2006-2007
Appeal Filed On 22-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NOS.47 & 205/VIZAG/2007 ASSESSMENT YEAR : 2003-04 & 2004-05 RESPECTIVELY ACIT CIRCLE-1(1) VISAKHAPATNAM PRATYUSHA ASSOCIATES VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAEFP4036D ITA NO.366/VIZAG/2009 ASSESSMENT YEAR : 2006-07 ACIT RANGE-4 VISAKHAPATNAM PRATYUSHA ASSOCIATES VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI I. KAMA SASTRY CA ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF THE CIT(A) ON COMMON GROUNDS. SINCE THES E APPEALS WERE HEARD TOGETHER THESE ARE BEING DISPOSED OFF THROUGH THIS CONSOLIDATED ORDER. 2. IN APPEAL NO.47 OF 2007 REVENUE IS ASSAILED THE ORDER OF CIT(A) ON TWO GROUNDS AND FIRST GROUND RELATE TO THE COMPUTATION OF DEDUCTIONS U/S 80HHC OF THE I.T. ACT. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ORDER OF THE CIT(A) THAT THE CIT(A) HAS COMPUTED THE DEDUCTION U/S 80HHC FOLLOWING THE FORMULA PRESCRIBED FOR CLAUSE (A) OF SUB-SECTION 3 WHICH RELATE TO THE EXP ORT OF GOODS OR MERCHANDISE MANUFACTURED BY THE ASSESSEE WHEREAS TH E ASSESSEE IS ENGAGED ONLY IN TRADING OF GOODS. THE DEDUCTION U/S 80HHC IS TO BE COMPUTED FOLLOWING THE FORMULA PRESCRIBED IN CLAUSE (B) OF S UB-SECTION 3 WHICH RELATE TO THE EXPORT OF TRADING GOODS OUT OF INDIA. SINCE TH E CIT(A) HAS APPLIED THE 2 MODE OF CALCULATION ON A WRONG PREMISE THE ORDER O F THE CIT(A) DESERVE TO BE SET ASIDE AND MATTER MAY BE RESTORED TO THE FILE OF THE A.O. FOR COMPUTATION OF DEDUCTION U/S 80HHC OF THE I.T. ACT AS PER THE FORMULA PRESCRIBED FOR THOSE ASSESSEES WHERE THE EXPORT OUT OF INDIA IS OF TRADING GOODS. 3. THE LD. D.R. DID NOT DISPUTE THE FACTUAL ASPECT. 4. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDER OF THE LOWER AUTHORITIES WE FIND THAT CIT(A) HAS DETERMINED THE PROFITS DERIVED FROM THE EXPORT FOLLOWING THE FORMULA PRESC RIBED IN CLAUSE(A) OF SECTION 3 WHICH RELATE TO THE EXPORT OF GOODS OR ME RCHANDISE MANUFACTURED BY THE ASSESSEE. WHEREAS THE ASSESSEE IS A TRADE R AND HAS EXPORTED TRADING GOODS OUT OF INDIA. THE PROFITS DERIVED FR OM EXPORT SHALL BE WORKED OUT AS PER CLAUSE(B) OF SUB-SECTION 3 AFTER REDUCIN G THE DIRECT AND INDIRECT COST OF THE TRADING GOODS ATTRIBUTABLE TO SUCH EXPO RT FROM THE TURNOVER. THE CIT(A) HAS FOLLOWED THE FORMULA PRESCRIBED FOR THOS E EXPORTS IN WHICH THE GOODS AND MERCHANDISE WERE MANUFACTURED BY THE ASSE SSEES. SINCE THE CIT(A) HAS INCORRECTLY COMPUTED DEDUCTION U/S 80HHC WE SET ASIDE HIS ORDER AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH THE DIRECTION TO RE-COMPUTE DEDUCTIONS U/S 80HHC FOLLOWING THE PROPER PROCEDURE LAID DOWN FOR THOSE EXPORTS WHERE THE TRADING GOODS ARE EXPORTED I.E. A S PER CLAUSE(B) OF SUB- SECTION 3 OF SECTION 80HHC OF THE ACT. 5. NEXT ISSUE IN ITA 47 OF 2007 AND SOLE ISSUE RAIS ED IN ITA 205 OF 2007 AND 366 OF 2007 RELATE TO THE DEPRECIATION ON TIPPE RS OWNED BY THE ASSESSEES. THE FACTS IN THIS REGARD BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE CLAIMED DEPRECIATION ON TIPPERS AT 40% BUT WAS ALLOWED BY THE A.O. AT 25% AFTER HAVING OBSERVED THAT TIPPERS WERE USED FOR THE ASSESSEES OWN BUSINESS ONLY. DURING THE PENDENCY OF THE FIRST AP PEAL BEFORE THE CIT(A) IT WAS BROUGHT TO HIS NOTICE THAT IN THE BLOCK ASSESSM ENT IN THE CASE OF ASSESSEE THE SAME ISSUE WAS RACKED UP AND THE TRIB UNAL OF THE HYDERABAD BENCH VIDE ITS ORDER DATED 24.6.1999 ALLOWED THE AP PEAL OF THE ASSESSEES WITH A DIRECTION TO ALLOW THE DEPRECIATION AT 40%. FOLLOWING THE ORDER OF THE TRIBUNAL THE CIT(A) HAS DIRECTED THE A.O. TO ALLOW DEPRECIATION AT 40% AS CLAIMED BY THE ASSESSEE. WHILE DOING SO HE HAS AL SO RELIED UPON THE OTHER 3 ORDER OF THE CIT(A) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1994- 95 2000-01 AND 2001-02. NOW THE REVENUE HAS CHALL ENGED THE ORDER OF THE CIT(A) BUT NO EVIDENCE IS FILED ON RECORD THAT THE VIEW TAKEN BY THE TRIBUNAL IN BLOCK ASSESSMENT OR THE CIT(A) IN EARLIER YEAR H AS EVER BEEN REVERSED. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE IM PUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSE ES OWN CASE IN THE BLOCK ASSESSMENT WHERE THE TRIBUNAL HAS CONCLUSIVELY HELD THAT TIPPER WAS ALSO GIVEN ON HIRE PURPOSE AFTER PERUSING THE HIRE AGREE MENT. WE THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL AND RULE OF CON SISTENCY DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEES. ACCORDINGLY WE CONFIRM T HE ORDER OF THE CIT(A). 6. IN THE RESULT THE APPEALS OF THE REVENUE IN ITA NOS.205 OF 2007 & 366 OF 2009 ARE DISMISSED AND ITA NO.47 OF 2007 IS PART LY ALLOWED FOR STATISTICAL PURPOSE. PRO NOUNCED IN THE OPEN COURT ON 25.01.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 25 TH JANUARY 2010 COPY TO 1 THE ACIT CIRCLE-1(1) O/O THE ACIT RANGE-1 VIS AKHAPATNAM 2 THE ADDITIONAL CIT RANGE-4 VISAKHAPATNAM 2 M/S. PRATYUSHA ASSOCIATES 25-40-12 GANGULAVARI STREET VISAKHAPATNAM 3 THE CIT-1 VISAKHAPATNAM 4 THE CIT-2 VISAKHAPATNAM 4 THE CIT(A)-I VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM