THE ACIT CIR 21(3), MUMBAI v. M/S. UMC EXPORT CORPORATION, MUMBAI

ITA 5854/MUM/2007 | 2003-2004
Pronouncement Date: 13-04-2010 | Result: Allowed

Appeal Details

RSA Number 585419914 RSA 2007
Assessee PAN AAAFV0867G
Bench Mumbai
Appeal Number ITA 5854/MUM/2007
Duration Of Justice 2 year(s) 7 month(s) 2 day(s)
Appellant THE ACIT CIR 21(3), MUMBAI
Respondent M/S. UMC EXPORT CORPORATION, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 13-04-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted K
Tribunal Order Date 13-04-2010
Date Of Final Hearing 06-04-2010
Next Hearing Date 06-04-2010
Assessment Year 2003-2004
Appeal Filed On 11-09-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K MUMBAI BEFORE SHRI SHRI A.L. GEHLOT A.M. & SMT. ASHA VIJ AYRAGHAVAN J.M. ITA NO. 5854/M/2007 ASSESSMENT YEAR: 2003-04 ASSTT. COMMISSIONER OF INCOME-TAX APPELLANT CIRCLE 21(3) 5 TH FLOOR C-11 BANDRA KURLA COMPLEX BANDRA MUMBAI 400 051 VS. M/S UMC EXPORT CORPORATION RESPONDENT 6 MARWAH INDUSTRIAL ESTATE OFF SAKI VIHAR ROAD ANDHERI (E) MUMBAI 400 072. (PAN AAAFV0867G) APPELLANT BY : MR. AMOL KAMAT RESPONDENT BY : MR. R.C. JAIN ORDER PER A.L. GEHLOT A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-XXI MUMBAI PASSED ON 21.06.2007 FOR THE AS SESSMENT YEAR 2003-04. 2. THE EFFECTIVE GROUND RAISED IN THIS APPEAL IS TH AT THE CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSESSEE HAS IT SELF HAS TAKEN ITS EXPORT TURNOVER (FOB VALUE) AT RS. 10.46 CRORE WHIL E COMPUTING THE DEDUCTION U/S 80 HHC FILED ALONG WITH AUDITED ACCOU NTS. 3. THE REVENUE HAS MODIFIED THE GROUNDS OF APPEAL WHICH ARE BY WAY OF ADDITIONAL GROUNDS READ AS UNDER:- 1. THE LD. CIT(A() GROSSLY ERRED IN ADMITTING ADDIT IONAL EVIDENCE UNDER RULE 46A OF THE IT RULES WITHOUT GIVING AN O PPORTUNITY TO THE AO TO VERIFY THE ALLOWABILITY OF THE ASSESSEES NEW CLAIMS ITA NO. 5854/M/07 M/S UMC EXPORT CORPORATION 2 AGAINST EXPORT TURNOVER THAT ARE AGITATED FOR THE FIRST TIME BEFORE THE CIT(A) AND NEVER BEFORE THE AO. 2. WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT(A) E RRED IN GIVING A FINDING AND DIRECTING THE AO TO TREAT THE APPELLANT AS HAVING EXPORT TURNOVER NOT EXCEEDING RS. 10 CRORES AND SUB SEQUENTLY ASKING THE AO TO VERIFY THE ALLOWABILITY OF THE CLA IMS MADE BY THE ASSESSEE BEFORE HIM. BY ARRIVING AT A FINDING EVEN BEFORE VERIFICATION THE LD. CIT(A)S FINDING TANTAMOUNTS TO MERE CONJECTURE AND SHOULD BE REJECTED. 3. THE LD. CIT(A) ERRED IN REDUCING FREIGHT FROM TH E FOB VALUE OF EXPORT TURNOVER IGNORING THE FACT THAT FOB VALUE BY DEFINITION EXCLUDES FREIGHT AND INSURANCE. 4. THE LD. CIT(A) ERRED IN NOT GIVING THE AO AN OPP ORTUNITY TO VERIFY WHETHER THE TERMINAL HANDLING CHARGES ARE IN CURRED BEYOND THE CUSTOMS STATION FOR IT TO BE REDUCED FROM EXPO RT TURNOVER WHICH IS A REQUIREMENT AS PER THE DEFINITION OF EXP ORT TURNOVER IN EXPLANATION (B) TO SECTION 80 HHC. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE AS SESSEE DID NOT SATISFY THE CONDITION REQUIRED U/S 80 HHC THEREFOR E THE PROFIT ON SALE OF DEPB CANNOT BE INCLUDED WHILE ENHANCING THE DEDUCTION U/S 80 HHC AS PER THE PROVISO TO SECTION 80 HHC(3) OF T HE ACT AS THE ASSESSEE WAS HAVING EXPORT TURNOVER MORE THAN RS. 1 0 CRORES. THE AO RECOMPUTED DEDUCTION U/S 80 HHC ACCORDINGLY. BEFORE THE CIT(A) THE ASSESSEE FURNISHED THE CALCULATION OF EXPORT TURNOV ER WHICH IS AS UNDER:- FOB VALUE OF EXPORT TURNOVER AS PER ASSESSMENT ORDER LESS: EXCLUSION FOR UNREALIZED FOREIGN EXCHANGE AS HELD BY THE AO (REFER SECTION 8OHHC (2)(A) 10.46 CR. 0.38 CR. EXPORT TURNOVER DETERMINED BY AO 10.08 CR. LESS: EXCLUSIONS BY WAY OF - FOREIGN EXCHANGE GAIN - TERMINAL HANDLING CHARGES FORM PART OF FREIGHT CHARGES & HENCE EXCLUDED IN TERMS OF DEFINITION OF EXPORT TURNOVER IN TERMS OF EXPLANATION (B) 0.05 CR 0.09 CR. 00.14 CR EXPORT TURNOVER 9.94 CR. ITA NO. 5854/M/07 M/S UMC EXPORT CORPORATION 3 5. THE CIT(A) DID NOT ACCEPT THE ASSESSEES CONTENT ION THAT FOREIGN EXCHANGE GIVEN WAS NOT PART OF EXPORT TURNOVER. HOW EVER THE CIT(A) DIRECTED THE AO AS UNDER:- THUS THE AO IS DIRECTED TO CONSIDER THE CLAIM OF T HE APPELLANT ON THE ISSUE OF DEDUCTION OF DEPB LICENSE DURING THE Y EAR BY TREATING THE APPELLANT AS HAVING EXPORT TURNOVER NO T EXCEEDING RS. 10 CRORES THAT IS TO SAY THE CLAIM OF DEDUCTIO N U/S 80 HHC IN RESPECT OF DEPB LICENSE IS TO BE CONSIDERED BY THE AO IN TERMS OF SECOND PROVISO TO SECTION 80 HHC(III) SUBJECT TO VE RIFICATION OF THE AMOUNT SHOWN BY THE APPELLANT BEFORE ME WHICH ARE ( A) UNREALIZED FOREIGN EXCHANGE IS RS. 0.38 CRORES (B) TERMINAL HANDLING CHARGES INCLUDED IN THE FREIGHT CHARGES OF RS. 0.09 CRORES TOTALING TO RS. 0.47 CRORES (FOB VALUE OF E XPORT TURNOVER : RS. 10.46 CRORES (RS. 0.38 CR + RS. 0.09 CR.) = R S. 9.99 CR.} SINCE THE APPELLANT HAS SUCCEEDED ON THE ISSUE OF M ERIT/FACTS OF HAVING TURNOVER NOT EXCEEDING RS. 10 CRORES THEREF ORE ALTERNATIVE GROUND AND ARGUMENT AS INCORPORATED IN SUBMISSION/PAPER BOOK ARE NOT BEING DISCUSSED IN DE TAIL WHICH IS REPRODUCED ABOVE AS (B) (C) (D) & (E) EXCEPT WITH THE REMARK THAT THE PROVISIONS OF SECTION 80 HHC WERE AMENDED VIDE TAXATION LAWS AMENDMENT ACT 2005 AND APPELLANT WAS REQUIRED TO FULFILL THE CONDITIONS AS LAID DOWN IN THE STATUTE NAMELY T HIRD PROVISO TO SECTION 80 HHC IN CASE OF HAVING EXPORT TURNOVER EX CEEDING RS. 10 CRORES. THE ALTERNATIVE GROUNDS FOR DEDUCTION OF DEPB LICENSE IN THE CASE OF HAVING TURNOVER EXCEEDING RS. 10 CRO RES HAVE NO FORCE AND SAME ARE AGAINST THE EXISTING PROVISIONS OF THE STATUTE THEREFORE LIABLE TO BE DISMISSED. 6. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSING THE RECORD WE NOTICE THAT THE CIT(A) DIRE CTED THE AO THAT THE CLAIM OF DEDUCTION U/S 80 HHC IN RESPECT OF DEPB LI CENSE IS TO BE CONSIDERED IN TERMS OF SECOND PROVISO TO SECTION 8 0 HHC(III) SUBJECT TO VERIFICATION OF THE AMOUNT SHOWN ON ACCOUNT OF (A) UNREALIZED FOREIGN EXCHANGE IS RS. 0.38 CRORES (B) TERMINAL H ANDLING CHARGES INCLUDED IN THE FREIGHT CHARGES OF RS. 0.09 CRORES TOTALING TO RS. 0.47 CRORES (FOB VALUE OF EXPORT TURNOVER : RS. 10.46 CR ORES (RS. 0.38 CR + RS. 0.09 CR.) = RS. 9.99 CR. WE ARE OF THE VIEW T HAT THE FINDING OF THE CIT(A) ARE SUBJECT TO VERIFICATION BY THE AO. IN FA CT THE CIT(A) WRONGLY ITA NO. 5854/M/07 M/S UMC EXPORT CORPORATION 4 QUOTED SECTION 80 HHC(III) AS THE EXPORT TURNOVER H AS BEEN DEFINED IN EXPLANATION (B) TO SECTION 80 HHC WHICH READS AS U NDER:- (B) EXPORT TURNOVER MEANS THE SALE PROCEEDS RECE IVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE F OREIGN EXCHANGE IN ACCORDANCE WITH CLAUSE (A) OF SUB-SECTI ON (2) OF ANY GOODS OR MERCHANDISE TO WHICH THIS SECTION APPLIES AND WHICH ARE EXPORTED OUT OF INDIA BUT DOES NOT INCLUDE FREIGHT OR INSURANCE ATTRIBUTABLE TO THE TRANSPORT OF THE GOODS OR MERCH ANDISE BEYOND THE CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT 1962 (52 OF 1962]. 7. THE GRIEVANCE OF THE REVENUE IS THAT BIFURCATION FILED BEFORE THE CIT(A) WAS NOT FILED BY THE ASSESSEE BEFORE THE AO THEREFORE THE AO DID NOT GET OPPORTUNITY TO VERIFY THE SAID BIFURCAT ION. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE MODIFY THE ORDER OF CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE BIFURCATION AND CALCULATE THE DEDUCT ION OF DEPB IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED ON THIS 13 TH DAY OF APRIL 2010. SD/- SD/- (ASHA VIJAYRAGHAVAN) (A.L. GEHL OT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 13 TH APRIL 2010. ITA NO. 5854/M/07 M/S UMC EXPORT CORPORATION 5 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE K BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 6.4.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 7.4.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER