Mittal International, v. ACIT Circle,

ITA 4372/DEL/2007 | 1999-2000
Pronouncement Date: 12-02-2010 | Result: Allowed

Appeal Details

RSA Number 437220114 RSA 2007
Assessee PAN AABFM7416P
Bench Delhi
Appeal Number ITA 4372/DEL/2007
Duration Of Justice 2 year(s) 3 month(s) 11 day(s)
Appellant Mittal International,
Respondent ACIT Circle,
Appeal Type Income Tax Appeal
Pronouncement Date 12-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 12-02-2010
Date Of Final Hearing 10-02-2010
Next Hearing Date 10-02-2010
Assessment Year 1999-2000
Appeal Filed On 01-11-2007
Judgment Text
ITA NOS. 4372 4373 4374 4375 & 4376/DEL/2007 A.YRS. 99-00 00-01 01-02 03-04 & 04-05 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NOS. 4372 4373 4374 4375 & 4376/DEL/2007 A.YRS. : 1999-2000 2000-01 2001-02 2003-04 & 200 4-05 M/S MITTAL INTERNATIONAL VS. ASSTT. COMMISSIO NER OF INCOME TAX GT ROAD VILLAGE SEWAH PANIPAT PANIPAT [PAN: AABFM7416P] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARUN KUMAR CA & SHRI ASHWANI T ANEJA ADV. DEPARTMENT BY : SHRI J.A. KHAN SR. DR O R D E R PER BENCH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A) FOR THE ASSESSMENT YEARS 1999-200 0 2000-01 2001-02 2003-04 AND 2004-05 RESPECTIVELY. SINCE THE ISSUE S INVOLVED ARE COMMON AND CONNECTED AND THE APPEALS WERE HEARD TOGETHER. THE SE ARE BEING CONSOLIDATED AND DISPOSED OFF TOGETHER FOR THE SAKE OF CONVENIE NCE. 2. THE COMMON ISSUE IN THE APPEALS IS THAT THE LD . CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDE R SECTION 80HHC IN RESPECT OF THE AMOUNT RECEIVED ON ACCOUNT OF DEPB. 3. THE AO IN THIS CASE DISALLOWED DEDUCTION UNDER SECTION 80HHC ON THE AMOUNT RECEIVED ON TRANSFER OF DEPB IN VIEW OF THE AMENDED PROVISIONS OF CLAUSE (IIID) OF SECTION 28 AND PROVISO 2 AND 3 O F SUB-SECTION 3 OF SECTION 80HHC OF THE IT ACT. ITA NOS. 4372 4373 4374 4375 & 4376/DEL/2007 A.YRS. 99-00 00-01 01-02 03-04 & 04-05 2 4. UPON ASSESSEES APPEAL LD. CIT(A) OBSERVED THAT PROVISO 2 AND 3 OF SECTION 80HHC PROVIDES INCASE THE EXPORT TURNOVER OF LESS THAN RS. 10 CRORES DEDUCTION UNDER SECTION 80HHC WILL BE ALLOWED ON DE PB ALSO BUT IN THE CASE OF EXPORT TURNOVER EXCEEDING RS. 10 CRORES DEDUCTIO N UNDER SECTION 80HHC WILL BE ALLOWED ON DEPB SUBJECT TO THE CONDITION THAT AS SESSEE HAD OPTION TO CHOOSE BETWEEN DUTY DRAW BACK AND DEPB SCHEMES AND THE RATE OF DEPB WAS LOWER THEN THE RATE OF DUTY DRAW BACK. LD. CI T(A) ACCORDINGLY AFFIRMED THE ACTION OF THE AO CONCLUDING THAT IN THE CASE OF THE ASSESSEE THE EXPORT TURNOVER IS ABOVE RS. 10 CRORES AND THE ASSESSEE H AS FAILED TO ESTABLISH THAT THE RATE OF DEPB WAS LOWER THAN THE RATE OF DUTY DR AW BACK AND THEREFORE THE CLAIM OF THE ASSESSEE IS REJECTED FOR DEDUCTION UND ER SECTION 80HHC ON TRANSFER OF DEPB. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL B EFORE. 6. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ABOVE ISSUE HAS NOW BEEN ADJUDICATED BY THE SPECIAL BENCH OF THE TRIBUN AL IN ITA NO. 5769/MUM/2006 IN THE CASE OF M/S TOPMAN EXPORTS VS. ITO. THE RELEVANT OBSERVATION OF THE SPECIAL BENCH IN THIS CASE IS AS UNDER:- 89. THE QUESTION RAISED BEFORE THE SPECIAL BENCH HAS TWO PARTS. IN SO FAR AS THE FIRST PART : WHETHER THE ENTIRE AMOUNT RECEIVED ON SALE OF DEPB ENTITLEMENTS REPRESENTS PR OFIT CHARGEABLE U/S 28(IIID) OF THE IT ACT IS CONCERNE D WE ANSWER IT IN NEGATIVE AND THE SECOND PART OF THE QU ESTION OR THE PROFIT REFERRED TO THEREIN REQUIRES ANY AR TIFICIAL COST BE INTERPOLATED? IS REPLIED IN AFFIRMATIVE TO THE EXTENT THAT THE FACE VALUE OF DEPB SHALL BE DEDUCTED FROM THE S ALE PROCEEDS. AS REGARDS THE GROUNDS RAISED IN THESE A PPEALS AGAINST THE DENIAL OF DEDUCTION U/S 80HHC IN FULL OR PART WE FIND THAT THE COMPUTATION OF PROFITS DERIVED FRO M EXPORTS AND THE RESULTANT AMOUNT OF DEDUCTION UNDER THIS SE CTION CAN BE MADE ONLY WHEN THE DECISION IS TAKEN ON THE AMOUNT AND THE TIMING OF TAXABILITY OF THE FACE VALUE OF D EPB AND THE PROFIT ON ITS SALE. ON THIS ISSUE WE HOLD THAT TH E FACE VALUE ON DEPB IS CHARGEABLE TO TAX U/S 28(IIID) AT THE TI ME OF ACCRUAL OF INCOME THAT IS WHEN THE APPLICATION FO R DEPB IS FILED WITH COMPETENT AUTHORITY PURSUANT TO EXPORTS AND PROFIT ITA NOS. 4372 4373 4374 4375 & 4376/DEL/2007 A.YRS. 99-00 00-01 01-02 03-04 & 04-05 3 ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PR OCEEDS OF DEPB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S 28(IIID) AT THE TIME OF ITS SALE. WHATEVER IS SAID ABOUT DEPB SHALL ALSO HOLD GOOD FOR DFRC ON BOTH ITS COMPONEN TS VIZ. THE FACE VALUE OF DFRC AND PROFIT ON ITS TRANSFER EXCEPT FOR THE FACT THAT THE PROFIT ON SALE OF DFRC SHALL BE C HARGED TO TAX U/S 28(IIIC). THERE IS NO DISPUTE ABOUT THE DUTY DRAW BACK WHICH SHALL BE CHARGEABLE TO TAX AT THE TIME O F ACCRUAL OF INCOME U/S 28(IIIC). SINCE THE NECESSARY FACTS FOR THE DETERMINATION OF THE QUANTUM OF DEDUCTION U/S 80HHC AS DISCUSSED ABOVE ARE NOT AVAILABLE ON RECORD WE T HEREFORE SET ASIDE THE IMPUGNED ORDERS AND DIRECT THE AO TO COMPUTE THE AMOUNT OF RELIEF IN ACCORDANCE WITH THE VIEW EX PRESSED BY US HEREINABOVE. 6.1 ACCORDINGLY THE LD. COUNSEL CONTENDED THAT THE ISSUE INVOLVED MAY KINDLY BE REMITTED TO THE FILES OF THE AO SO THAT T HE HE MAY ADJUDICATE THE ISSUE AFTER EXAMINING THE FACT IN THE LIGHT OF THE ABOVE SAID DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL. LD. DR FAIRLY AGREED TO TH IS PROPOSITION. ACCORDINGLY THE ISSUE IS REMITTED TO THE FILES OF AO TO CONSIDE R THE SAME IN ACCORDANCE WITH THE DECISION OF SPECIAL BENCH CITED ABOVE. NEEDLES S TO ADD THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEA RD. 7. THE ASSESSEE HAS RAISED A PRAYER FOR ADMISSIO N OF ADDITIONAL GROUND FOR ASSESSMENT YEARS 1999-2000 2001-02 AND 2003-04. T HE COMMON GROUND RAISED READS AS UNDER:- THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE JURISDICTION ASSUMED TO REOPEN AND REASSESS THE INC OME WAS NOT IN ACCORDANCE WITH LAW LAID DOWN BY SECTION 147 TO 151 OF THE ACT MORE SO WHEN THERE WAS NO FAILURE OF THE APPELLANT TO DISCLOSE ALL MATERIAL FACTS AND WHEN REOPENING IS BASED ON CHANG E OF OPINION ON THE SAME SET OF FACTS AND THUS THE ASSESSMENT O RDER PASSED IS WITHOUT JURISDICTION. SINCE THIS GROUND IS PURELY LEGAL GROUND AND DOES NOT REQUIRE FRESH FACTS TO BE INVESTIGATED AND GOES TO THE ROO T OF THE MATTER IT IS PRAYED THAT THE SAME MAY PLEASE BE ADMITTED IN VOW OF 229 ITR 383 (SC). ITA NOS. 4372 4373 4374 4375 & 4376/DEL/2007 A.YRS. 99-00 00-01 01-02 03-04 & 04-05 4 8. WE HAVE CAREFULLY CONSIDERED THE PRAYER FOR AD MISSION OF ADDITIONAL ROUND AND HEARD BOTH THE COUNSELS ON THE ISSUE. IN OUR CONSIDERED OPINION IN THE LIGHT OF THE HONBLE APEX COURT DECISION IN THE CASE OF NTPC CITED ABOVE WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSES SEE AS THE SAME IS A PURELY LEGAL GROUND AND GOES TO THE ROOT OF THE MATTER. WE FIND THAT IN THE ADDITIONAL GROUND THE ASSESSEE HAS AGITATED THAT REOPENING I S BAD AS THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE OF MATERIAL FACTS AND THE REOPENING WAS BASED UPON CHANGE OF OPINION ON THE ON THE SAME SET OF FACTS AND THUS THE ASSESSMENT ORDER PASSED WAS WITHOUT JURISDICTION. IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THE LATEST DECISION O F THE HONBLE APEX COURT IN THE CASE OF CIT VS. M/S KELVINATOR INDIA LTD. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAD ALSO AGITAT ED THE ISSUE OF REOPENING BEFORE THE AO BUT THE AO HAD FAILED TO RESPOND TO THE SAME. ACCORDINGLY LD. COUNSEL SUBMITTED THAT THIS ISSUE OF REOPENING MAY BE RESTORED TO THE FILES OF THE AO SO THAT HE CAN DISPOSE THE MATTER AS PER LA W. LD. DR FAIRLY ACCEPTED THIS PROPOSITION. 8.1 ACCORDINGLY AFTER CAREFUL CONSIDERATION WE RE STORE THE ISSUE TO THE FILES OF AO TO CONSIDER THE ISSUE AND DECIDE AS PER LAW. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT ALL THESE APPEALS STAND ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10/02/2010 UPON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 10/02/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R ITAT BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES