ACIT, CHENNAI v. M/s. M.R.F.Limited, CHENNAI

ITA 707/CHNY/2010 | 1999-2000
Pronouncement Date: 16-07-2010 | Result: Dismissed

Appeal Details

RSA Number 70721714 RSA 2010
Assessee PAN AAACM4154G
Bench Chennai
Appeal Number ITA 707/CHNY/2010
Duration Of Justice 2 month(s) 2 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. M.R.F.Limited, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 16-07-2010
Assessment Year 1999-2000
Appeal Filed On 14-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P.GEORGE AM AND SHRI GEORGE MATHA N JM .. I.T.A. NOS. 707 & 708/MDS/2010 A YS: 1999-2000 & 2000-01 THE A.C.I.T LARGE TAXPAYER UNIT CHENNAI VS. M/S M.R.F. LIMITED 124 GREAMS ROAD CHENNAI (PAN: AAACM 4154 G) (APPELLANT) (RESPONDENT) CO NO. 39 & 40/MDS/2010 [A/O I.T.A. NOS. 707 & 708/MDS/2010] A YS: 1999-2000 & 2000-01 M/S M.R.F. LIMITED VS. THE A.C.I.T 124 GREAMS ROAD L ARGE TAXPAYER UNIT CHENNAI CHENNAI (PAN: AAACM 4154 G) ASSESSEE BY : SHRI P.B. SEKHARAN DEPARTMENT BY : SHRI R. VIJAYARAGHAVAN O R D E R PER ABRAHAM P. GEORGE AM THESE ARE APPEALS OF THE REVENUE AND CROSS OBJECTIO NS OF THE ASSESSEE FOR ASSESSMENT YEARS 1999-2000 AND 2000-01 RESPECTIVELY PAGE 2 OF 7 I.T.A. NO. 707-708 & CO. 39-40MDS/2010 DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE LD. CIT(A) CHENNAI DATED 26.2.2010 FOR THE IMPUGNED ASSESSMENT YEARS. SINCE THE CROSS OBJECTIONS OF THE ASSESSEE GO TO THE ROOT OF THE MA TTER THESE ARE TAKEN UP FIRST FOR DISPOSAL. 2. SHORT FACTS APROPOS RELATING TO THE CASE ARE THA T THE ASSESSING OFFICER HAD THROUGH AN ORDER DATED 29.11.2002 REC TIFIED THE INTIMATION U/S 143(1)(A) OF THE INCOME-TAX ACT 196 1 [IN SHORT THE ACT] IN RESPECT OF THE RETURNS FILED BY ASSESSEE FOR ASS ESSMENT YEAR 1999- 2000. SIMILARLY ON 5.11.2007 RECTIFICATION WAS E FFECTED ON THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2000-01. THE ONLY DIFFERENCE BETWEEN THESE TWO ORDERS ARE THAT IN THE LATTER CAS E WHAT WAS RECTIFIED U/S 154 OF THE ACT WAS AN ORDER U/S 143(3 ) OF THE ACT WHEREAS IN THE FORMER IT WAS AN INTIMATION U/S 143 (1)(A) OF THE ACT. THEREAFTER ON 13.3.2009 AND 16.3.2009 THROUGH SEP ARATE NOTICES ASSESSEE INFORMED BY THE ASSESSING OFFICER OF HIS I NTENTION TO AGAIN PASS RECTIFICATION ORDERS FOR ASSESSMENT YEARS 1999 -2000 AND 2000-01. REASON FOR INITIATING THE SECOND RECTIFICATION PROC EEDINGS WAS THAT ASSESSEES EXPORT TURN OVER FOR BOTH THE YEARS HAD EXCEEDED RS. 10 CRORES AND IN VIEW OF THE TAXATION LAWS [AMENDMENT ACT] 2005 PAGE 3 OF 7 I.T.A. NO. 707-708 & CO. 39-40MDS/2010 DEDUCTION COULD NOT BE GIVEN TO IT U/S 80HHC OF THE ACT WITH RESPECT TO DEPB RECEIPTS UNLESS ASSESSEE HAD MET THE REQUI REMENTS SPECIFIED UNDER THIRD PROVISO TO SECTION 80HHC OF THE ACT. A SSESSEE OBJECTED TO THESE NOTICES ON THREE COUNTS. FIRST WAS THAT THE ISSUE WAS DEBATABLE SECOND WAS THAT THE RECTIFICATIONS PROPOSED WERE BA RRED BY LIMITATIONS AND THIRD WAS THAT TAXATION LAWS [AMENDMENT ACT] 20 05 APPLIED ONLY TO PROFITS ON SALE OF DEPB. NEVERTHELESS ASSESSING OFFICER DID NOT ACCEPT THESE CONTENTIONS AND WENT AHEAD WITH THE SE COND RECTIFICATION AND PASSED ORDERS FOR RECTIFICATION FOR ASSESSMENT YEAR 1999-2000 ON 8.10.2004 AND FOR ASSESSMENT YEAR 2000-01 ON 15.10. 2004. 3. ASSESSEE MOVED IN APPEAL AGAINST THE SECOND RECT IFICATION BEFORE THE LD. CIT(A). SAME CONTENTIONS WHICH WERE TAKEN UP BY ASSESSEE BEFORE THE ASSESSING OFFICER WERE REITERATED BEFOR E THE LD. CIT(A). IN OTHER WORDS IT AGAIN CONTENDED THAT THE ISSUES INV OLVED WERE DEBATABLE PROCEEDINGS WERE TIME BARRED AND AMENDME NTS ONLY BROUGHT INTO THE PURVIEW SECTION 80HHC PROFITS ON SALE OF DEPB. LD. CIT(A) WAS OF THE OPINION THAT IN VIEW OF THE DECIS ION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF TOPMAN EXPORT S VS. ITO 318 ITR [AT] 87 ONLY EXCESS OF SALE PROCEEDS ON THE FACE V ALUE OF DEPB COULD PAGE 4 OF 7 I.T.A. NO. 707-708 & CO. 39-40MDS/2010 BE CONSIDERED AS PROFITS SPECIFIED IN SECTION 28(II ID) OF THE ACT. THEREFORE ACCORDING TO HIM PROFIT ON SALE OF DEPB WAS TO BE EXCLUDED. THOUGH HE DECIDED ON MERITS IN FAVOUR OF THE ASSESSEE HE REFUSED TO ADJUDICATE ON THE OTHER TWO GROUNDS NAM ELY ON LIMITATION AND ON THE DEBATABLE NATURE OF THE ISSUE SINCE ACC ORDING TO HIM THESE BECAME ACADEMIC. 4. NOW BEFORE US IN ITS CROSS OBJECTIONS CONTENTI ON OF THE ASSESSEE IS THAT EXCLUSION OF DEPB RECEIPTS FOR PURPOSE OF C ALCULATION OF DEDUCTION U/S 80HHC OF THE ACT WAS A HIGHLY DEBATAB LE ISSUE NOT AMENABLE TO A RECTIFICATORY PROCEEDING U/S 154 OF T HE ACT. LD. A.R. IN SUPPORT OF THIS POINTED OUT THAT THE DECISION OF TH E SPECIAL BENCH IN TOPMAN EXPORTS [SUPRA] CLEARLY BROUGHT OUT THE DEBA TABLE NATURE OF THE ISSUE. FURTHER ACCORDING TO HIM RECTIFICATIO N ORDER WAS TIME BARRED AS WELL. 5. PER CONTRA THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. PAGE 5 OF 7 I.T.A. NO. 707-708 & CO. 39-40MDS/2010 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS. QUESTION IS WHETHER EXCLUSION OF DEPB RECEIPTS FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 80HHC I.E. WHETHER WHOLE OF THE AMOUNT HAD TO BE EXCLUDED OR ONLY THE PROFITS HAD TO BE EX CLUDED WOULD BE AN ISSUE AMENABLE TO A RECTIFICATORY PROCEEDINGS U/S 1 54 OF THE ACT. AS PER THE ASSESSEE THERE WAS NO SALE OF ANY DEPB DUR ING THE IMPUGNED ASSESSMENT YEARS AND HENCE NO PROFITS. IN OUR OPIN ION THE CONTENTION OF THE LD. AR THAT THE ISSUE REGARDING DEPB CREDITS AND ITS EFFECT ON CALCULATION OF DEDUCTION U/S 80HHC OF THE ACT WAS A HIGHLY DEBATABLE ONE DESPITE AMENDMENTS MADE THROUGH TAXATION LAWS [AMENDMENT ACT] 2005. AT THE TIME WHEN THE AO PASSED THE ORDE R U/S 154 THERE COULD HAVE BEEN DEFINITELY TWO VIEWS ON THE WORD P ROFIT MENTIONED IN THIRD PROVISO TO SECTION 80HHC OF THE ACT. AS H ELD BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. MAX INDIA LIMITED 295 ITR 282 THE PROBLEM WITH SECTION 80HHC WAS THAT IT HAS BEEN AME NDED ELEVEN TIMES. AS OBSERVED BY THEIR LORDSHIPS THE MECHANI CS OF THAT SECTION HAD BECOME SO COMPLICATED OVER THE YEARS THAT TWO V IEWS WERE INHERENTLY POSSIBLE. CRUCIAL EXPRESSION MISTAKE A PPARENT FROM RECORD CAME UP FOR ADJUDICATION BEFORE THE HONBLE APEX CO URT IN THE CASE OF T.S. BALRAM VS. WOLKART BROTHERS 82 ITR 50. IN TH IS CASE IT WAS HELD PAGE 6 OF 7 I.T.A. NO. 707-708 & CO. 39-40MDS/2010 THAT A MISTAKE APPARENT FROM RECORD MUST BE AN OBVI OUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS ON REASONING OF POINTS ON WHICH THERE MAY B E CONCEIVABLY TWO OPINIONS. A DECISION ON DEBATABLE POINTS OF LAW IS NOT A MISTAKE APPARENT FROM RECORD. AGAIN IN THE DECISION OF AC IT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (305 ITR 227) CAME TO HOL D AS UNDER:- A PATENT MANIFEST AND SELF-EVIDENT ERROR WHICH DO ES NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT CAN BE SAID TO BE AN ERROR APPARENT O N THE FACE OF THE RECORD AND CAN BE CORRECTED WHILE EXERCISING CE RTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPAREN T ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECOR D TO SEE WHETHER THE JUDGEMENT IS CORRECT OR NOT. AN ERROR A PPARENT ON THE RECORD MEANS AN ERROR WHICH STRIKES ON MERE LOO KING AND DOES NOT NEED A LONG DRAWN OUT PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. SUC H ERROR SHOULD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY IT SHOULD BE S O MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGEM ENT IS ONE OF POSSIBLE VIEWS THE CASE CANNOT BE SAID TO BE CO VERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. PAGE 7 OF 7 I.T.A. NO. 707-708 & CO. 39-40MDS/2010 THUS WE ARE OF THE OPINION THAT THE ISSUES DEALT W ITH IN THE ORDERS U/S 154 OF THE ACT WERE NOT AMENABLE TO A RECTIFIC ATORY PROCEEDINGS. SUCH ORDERS U/S 154 CANNOT BE SUSTAINED. THESE ARE THEREFORE QUASHED. SINCE THE ORDERS ARE QUASHED GROUND RAIS ED AT 3.3 OF ITS CROSS OBJECTIONS OTHER ISSUES RAISED THEREIN ARE N OT NECESSARY TO BE DEALT WITH. IN THE RESULT CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. 7. SINCE THE CROSS OBJECTIONS FILED BY ASSESSEE HAV E BEEN ALLOWED THE APPEALS OF THE REVENUE AGAINST THE ORDERS OF TH E CIT(A) HAVE BECOME INFRUCTUOUS. 8. TO SUMMARIZE THE RESULTS APPEALS OF THE REVENUE ARE DISMISSED WHEREAS CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWE D. PRONOUNCED IN THE COURT ON 30.07.2010 SD/- SD/- ( GEORGE MATHAN) ( ABRAHAM P.GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 30 TH JULY 2010. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE