DCIT 17(1), MUMBAI v. AMAR INTERNATINAL, MUMBAI

ITA 730/MUM/2010 | 2002-2003
Pronouncement Date: 22-07-2011 | Result: Allowed

Appeal Details

RSA Number 73019914 RSA 2010
Assessee PAN AAAFA2660E
Bench Mumbai
Appeal Number ITA 730/MUM/2010
Duration Of Justice 1 year(s) 5 month(s) 23 day(s)
Appellant DCIT 17(1), MUMBAI
Respondent AMAR INTERNATINAL, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 22-07-2011
Date Of Final Hearing 03-05-2011
Next Hearing Date 03-05-2011
Assessment Year 2002-2003
Appeal Filed On 29-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R V EASWAR PRESIDENT AND SHRI RAJENDRA SINGH ACCOUNTANT MEMBER I T A NOS : 729/MUM/2010 AND 730/MUM/2010 (ASSESSMENT YEARS : 2001-02 AND 2002-03) DEPUTY COMMISSIONER OF INCOME TAX 17(1) APPELLANT MUMBAI VS AMAR INTERNATIONAL MUMBAI RESPONDENT (PAN: AAAFA2660E) CROSS OBJECTION NOS: 153/MUM/2010 AND 154/MUM/2010 (ARISING OUT OF I T A NOS : 729/MUM/2010 AND 730/MU M/2010) (ASSESSMENT YEARS : 2001-02 AND 2002-03) AMAR INTERNATIONAL MUMBAI CROSS OBJECTOR VS DEPUTY COMMISSIONER OF INCOME TAX 17(1) RESPONDEN T ASSESSEE BY: DR K SHIVARAM AND MR PARAS S SAVLA REVENUE BY: MR M R KUBAL O R D E R R V EASWAR PRESIDENT: THE APPEALS ARE BY THE REVENUE AND THE CROSS OBJEC TIONS ARE BY THE ASSESSEE. THEY RELATE TO THE ASSESSMENT YEA RS 2001-02 AND 2002-03. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGE D IN THE EXPORT OF GENERAL MERCHANDISE ITEMS. 2. ASSESSMENT YEAR 2001-02 : - THE ONLY GROUND TAKEN BY THE REVENUE IN ITS APPEAL IS THAT THE CIT(A) ERRED IN D IRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80HHC ON DEPB WITHOUT TAKING INTO CONSIDERATION THE AMENDED PROVISIONS OF SECTION 28(IIID) OF THE INCOME TAX ACT 1961. IN T HE CROSS OBJECTION ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 2 FILED BY THE ASSESSEE THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT U NDER SECTION 147 OF THE ACT. SINCE THE ASSESSEE HAS RAISED A FU NDAMENTAL ISSUE WE PROPOSE TO DECIDE THE SAME FIRST. 3. THE ASSESSMENT IN THIS CASE WAS ORIGINALLY COMPL ETED ON 28.02.2003 UNDER SECTION 143(3) OF THE INCOME TAX A CT. IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS THE A SSESSING OFFICER ISSUED A NOTICE ON 23.10.2002 TO THE ASSESS EE CALLING UPON THE ASSESSEE INTER ALIA TO STATE WHETHER THE ASSE SSEE WAS DECLARING THE DEPB AMOUNTS ON CASH BASIS OR ACCRUAL BASIS AND ALSO ASKING IT TO STATE THE REASONS AS TO WHY THEY SHOULD BE TREATED AS BUSINESS INCOME UNDER SECTION 28(IIIA) TO SECTIO N 28(IIIC) OF THE ACT. A COPY OF THE NOTICE IS AT PAGE 21 OF THE PAP ER BOOK. IN RESPONSE TO THE SAME THE ASSESSEE REPLIED BY LETTER DATED 20.11.2002 STATING THAT IT WAS ACCOUNTING FOR THE D EPB LICENSE AS AND WHEN THE SAME WAS SOLD AND FURTHER THAT THE DUT Y DRAWBACK WAS ACCOUNTED FOR ON MERCANTILE BASIS SINCE MANY YE ARS. A COPY OF THIS REPLY IS AT PAGE 23 OF THE PAPER BOOK. THEREA FTER THE ASSESSEE AGAIN WROTE A LETTER ON 17.12.2002 TO THE ASSESSING OFFICER STATING AS UNDER: - .. AS REGARDS ALLOWABILITY OF DEDUCTION U/S. 80HHC WITH RESPECT TO DEPB LICENSE PREMIUMS WE ENCLOSE HEREWITH DETAILED EXPLANATION WHY THE SAME SHALL BE CONSIDERED AS EXPORT INCENTIVE AND ALLOWED DEDUCTION U/S.80HHC. WE ARE OF STRONG VIEW THAT THE BENEFIT OF DEDUCTION U/S.80HHC BE GIVEN FOR THE DEPB LICENSE PREMIUMS . ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 3 A COPY OF THIS LETTER IS AT PAGE 25 OF THE PAPER BO OK. THE DETAILED EXPLANATION REFERRED TO IN THE ABOVE LETTER HAS BEE N PLACED AT PAGES 27 TO 33 OF THE PAPER BOOK WHICH EXPLAINS WHY ACCO RDING TO THE ASSESSEE THE DEPB SHALL BE CONSIDERED AS EXPORT INC ENTIVE AND ALLOWED DEDUCTION UNDER SECTION 80HHC OF THE ACT. THEREAFTER ON 27.02.2003 THE ASSESSEE FILED A REVISED WORKING FOR THE DEDUCTION UNDER SECTION 80HHC IN WHICH ALSO THE DEPB WAS CON SIDERED AS EXPORT INCENTIVE FOR THE PURPOSE OF CLAIMING DEDUCT ION UNDER SECTION 80HHC OF THE ACT. IN THIS REVISED WORKING THE FIGU RE OF THE DEPB LICENSE PREMIUM WAS TAKEN AT ` 22 29 679/- AND 90% THEREOF WAS TAKEN AS AMOUNT ELIGIBLE FOR THE DEDUCTION UNDER SE CTION 80HHC. THE LETTER AND THE REVISED WORKING ARE AT PAGES 35 TO 38 OF THE PAPER BOOK. THE ASSESSING OFFICER ON THE BASIS OF THE ABOVE DETAILS FURNISHED BY THE ASSESSEE AND APPARENTLY AF TER CONSIDERING THE SAME COMPLETED THE ASSESSMENT UNDER SECTION 14 3(3) ON 28.02.2003 IN WHICH HE ALLOWED THE DEDUCTION UNDER SECTION 80HHC IN THE AMOUNT OF ` 31 91 392/- BY OBSERVING AS UNDER: - 4. IT IS OBSERVED THAT THE ASSESSEE HAS NOT REALIZED EXPORT PROCEEDS TO THE EXTENT OF ` 3 56 501/-. THIS EFFECT IS NOT GIVEN BY THE ASSESSEE WHILE WORKING OUT DEDUCTION U/S.80HHC. FURTHER IT IS ALSO SEEN THAT DEDUCTION U/S.80HHC IN RESPECT OF 90% OF INCENTIVES HAVE BEEN WRONGLY CALCULATED. THE CORRECT WORKING COMES TO ` 20 02 296/- (90% OF ` 22 29 679/- X 0.9978) AS AGAINST ` 22 28 787/-. IN THE LIGHT OF THE ABOVE FACTS THE DEDUCTION U/S.80HHC IS REWORKED OUT WHICH COMES TO ` 31 91 392/- AS AGAINST ` 36 51 234/- . ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 4 IT MAY BE NOTED THAT THE ASSESSING OFFICER HAS ALSO INCLUDED 90% OF THE DEPB INCOME FOR THE PURPOSE OF ALLOWING DEDUCTI ON UNDER SECTION 80HHC OF THE ACT. THEREAFTER THE ASSESSEE BY LETTER DATED 17.04.2003 APPLIED FOR RECTIFICATION OF THE DEDUCTI ON UNDER SECTION 80HHC ON THE GROUND THAT CERTAIN PROPORTIONATE PURC HASE COSTS ATTRIBUTABLE TO THE UNREALIZED EXPORT PROCEEDS SHOU LD HAVE BEEN REDUCED FROM THE DIRECT COSTS WHILE CALCULATING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT. THIS APPLICATION WAS REJ ECTED BY THE ASSESSING OFFICER BY ORDER DATED 18.09.2003. 4. ON 27.03.2008 THE ASSESSING OFFICER ISSUED A NOT ICE UNDER SECTION 148 OF THE ACT (PAGE 49 OF THE PAPER BOOK). THE ASSESSEE ASKED FOR THE REASONS FOR REOPENING THE ASSESSMENT AND THE SAME WERE FURNISHED BY THE ASSESSING OFFICER BY LETTER D ATED NIL A COPY OF WHICH IS AT PAGE 51 OF THE PAPER BOOK. THE SAID LETTER READS AS UNDER: - SUB: ISSUE OF NOTICE U/S 148 FOR AY 2001- 02 REASONS THEREOF. KINDLY REFER TO THE ABOVE. IN VIEW OF THE BOARDS LATEST AMENDMENT IN RESPECT OF DEDUCTION U/S. 80HHC THE SAID DEDUCTION IN RESPECT OF DEPB IS ELIGIBLE ONLY IN CASES WHERE THE TURNOVER IS LESS THAN ` 10 CRORES. VERIFICATION OF YOUR RECORDS SHOWS THAT TURNOVER IS MORE THAN ` 10 CRORES FOR AY 2001-02 AND HAVE CLAIMED DEDUCTION U/S. 80HHC IN RESPECT OF DEPB CREDITS. KEEPING IN VIEW THE RECENT AMENDMENT IN RESPECT OF DEDUCTION U/S. 80HHC WITH RETROSPECTIVE EFFECT FROM 01.04.1998 I HAVE REASON TO BELIEVE THAT YOU HAVE INCORRECTLY ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 5 CLAIMED DEDUCTION U/S. 80HHC ON DEPB CREDITS RESULTING IN UNDER ASSESSMENT OF INCOME FOR AY 2001-02. YOURS FAITHFULLY SD/- (A M KAMBLE) ASSISTANT COMMISSIONER OF INCOME TAX 17(1) MUMBAI. THE ASSESSEE OBJECTED TO THE AFORESAID REASONS BY L ETTER DATED 22.04.2008 (PAGE 52 OF THE PAPER BOOK) ON THE GROUN D THAT THE REASSESSMENT WAS BASED ON A MERE CHANGE OF OPINION. HOWEVER A RETURN OF INCOME WAS FILED IN RESPONSE TO THE NOT ICE WITHOUT PREJUDICE TO THE ASSESSEES OBJECTIONS. 5. THE ASSESSING OFFICER COMPLETED THE REASSESSMENT BY ORDER DATED 23.12.2008 UNDER SECTION 143(3) READ WITH SEC TION 147 OF THE ACT. HE OVERRULED THE ASSESSEES OBJECTIONS AND RE CALCULATED THE DEDUCTION UNDER SECTION 80HHC AT ` 17 92 625/- AS AGAINST ` 31 91 392/- COMPUTED IN THE ORIGINAL ASSESSMENT ORD ER. THE ASSESSEE FILED AN APPEAL TO THE CIT(A) INTER ALIA CHALLENGING THE JURISDICTION OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. THE CIT(A) TURNED DOWN THE CHALLENGE BY HOLDING THAT IN COME HAD ESCAPED ASSESSMENT DUE TO THE RETROSPECTIVE AMENDME NT BROUGHT BY THE TAXATION LAWS (AMENDMENT) ACT 2005 IN RESP ECT OF DEPB RECEIPTS RECEIVED BY EXPORTERS WITH A TURNOVER EXCE EDING ` 10 CRORES. HE ACCORDINGLY HELD THAT THERE WAS VALI D REASON TO REOPEN THE ASSESSMENT. ON MERITS HOWEVER HE DIRE CTED THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION UNDER SECTION 80HHC BY HOLDING AS UNDER: - ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 6 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE REASONING OF THE ASSESSING OFFICER AND THE SUBMISSION OF THE APPELLANT. THE CASE OF THE APPELLANT IS NOW COVERED BY THE DECISION OF TOPMAN EXPORT IN ITA NO: 5769/M/2006 SPL. BENCH MUMBAI. ACCORDING TO THE DECISION OF THE TRIBUNAL THE ENTIRE SALE PROCEEDS OF DEPB IS TO BE TREATED AS BUSINESS INCOME FROM EXPORT. HOWEVER A PART THEREOF TO THE EXTENT OF PROFIT COVERED BY SECTION 28(IIID) WILL NOT BE ELIGIBLE FOR DEDUCTION U/S. 80HHC WHERE THE TURNOVER EXCEEDS ` 10 CRORES. IN SUCH A CASE EXPLANATION (BAA) WOULD APPLY TO EXCLUDE 90% OF SUCH PROFIT AND THE BENEFIT OF PROVISO (IV) & (V) WILL NOT BE ALLOWED UNLESS IT IS EXPLAINED THAT THE APPELLANT HAD OPTION TO CHOOSE BETWEEN THE DUTY DRAW BACK AND DEPB AND THE APPELLANT HAD CHOSEN DEPB INSPITE OF THE RATE OF DUTY DRAW BACK BEING LOWER. THE FACE VALUE OF THE DEPB / DFRC IS TO BE TAXED AS BUSINESS INCOME U/S. 28(IIIB) AND DEDUCTION U/S. 80HHC WILL BE AVAILABLE ON THIS AMOUNT IN THE YEAR OF ACCRUAL. THE PROFIT ON SALE WILL BE TAXED IN THE YEAR OF ACTUAL SALE OF DEPB LICENSE. IN THE CASE OF THE APPELLANT THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE DEDUCTION U/S. 80HHC BY INCLUDING THE FACE VALUE OF DEPB ACCRUED DURING THE YEAR FOR THE PURPOSES OF SECTION 80HHC. DEDUCTION U/S. 80HHC WILL BE AVAILABLE ON THIS AMOUNT. HOWEVER THE DEDUCTION WILL NOT BE AVAILABLE ON PROFIT ELEMENT IF ANY. IN THE YEAR UNDER CONSIDERATION DEPB LICENSES OBTAINED THIS YEAR AMOUNT TO ` 20 98 731/-. THE PROFIT ON SALE OF DEPB LICENSES AMOUNT TO ` 1 30 948/- ONLY. ON AMOUNT OF ` 20 98 731/- DEDUCTION U/S. 80HHC WILL BE AVAILABLE AS IT WILL BE TREATED AS BUSINESS INCOME U/S. 28(IIIB). THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY TO RECOMPUTE THE DEDUCTION U/S. 80HHC. IN THE RESULT THIS GROUND IS PARTLY ALLOWED. 6. THE CONTENTION OF THE LEARNED COUNSEL FOR THE AS SESSEE BEFORE US IS THAT THE REASSESSMENT IS BAD IN LAW AS IT IS IN CONTRAVENTION OF THE FIRST PROVISO TO SECTION 147 O F THE ACT. THIS ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 7 PROVISO SAYS THAT WHERE AN ASSESSMENT UNDER SECTION 143(3) IS MADE NO ACTION SHALL BE TAKEN TO REOPEN THE ASSESS MENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR UNDER SECTION 142(1) OR UNDER SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR THE ASSESSMENT. IN THE PRESENT CASE WE ARE CONCERNED W ITH THE ASSESSMENT YEAR 2001-02. FOUR YEARS FROM THE END O F THE ASSESSMENT YEAR EXPIRED ON 31.03.2006. THE ASSESSI NG OFFICER HAS ISSUED THE NOTICE UNDER SECTION 148 ON 27.03.20 08 WHICH IS BEYOND THE FOUR YEAR PERIOD. THE ORIGINAL ASSESSME NT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE PROVISO IS THEREFORE ATTRACTED TO THE PRESENT CASE. THEREFORE UNLESS THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO FILE THE RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT NO ACTION CAN BE TAKEN TO REOPEN THE AS SESSMENT PROCEEDINGS. ACCORDING TO THE REASONS GIVEN BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT THE ASSESSMEN T WAS REOPENED BECAUSE OF THE AMENDMENT MADE TO SECTION 8 0HHC BY THE TAXATION LAWS (AMENDMENT) ACT 2005 WITH RETRO SPECTIVE EFFECT FROM 01.04.1998. BY THIS AMENDMENT THE SECOND PROV ISO BELOW SUB-SECTION (3) OF SECTION 80HHC WAS INSERTED AND T HE SAME READ AS UNDER: - ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 8 PROVIDED FURTHER THAT IN THE CASE OF AN ASSESSEE HAVING EXPORT TURNOVER NOT EXCEEDING RUPEES TEN CRORES DURING THE PREVIOUS YEAR THE PROFITS COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION OR AFTER GIVING EFFECT TO THE FIRST PROVISO AS THE CASE MAY BE SHALL BE FURTHER INCREASED BY THE AMOUNT WHICH BEARS TO NINETY PER CENT OF ANY SUM REFERRED TO IN CLAUSE (IIID) OR CLAUSE (IIIE) AS THE CASE MAY BE OF SECTION 28 THE SAME PROPORTION AS THE EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE; . ACCORDING TO THE REASONS RECORDED FOR REOPENING THE ASSESSMENT THE ASSESSEE HAD INCORRECTLY CLAIMED THE DEDUCTION UNDER SECTION 80HHC ON DEPB CREDITS BECAUSE ITS TURNOVER WAS MORE THAN ` 10 CRORES AND THEREFORE IT WAS NOT ENTITLED TO CLAI M THE DEDUCTION. HOWEVER IT CANNOT BE SAID THAT THERE WAS ANY FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ITS ASSESSMENT AT THE TIME OF THE ORIGINAL ASSE SSMENT PROCEEDINGS. AS WE HAVE ALREADY NOTICED THE ASSES SEE HAD FILED COMPLETE DETAILS ABOUT ITS CLAIM UNDER SECTION 80HH C AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD ALSO APPLIED HIS MIND TO THE SAME AND HAD ALLOWED T HE DEDUCTION. IT IS NOT THE ASSESSING OFFICERS CASE THAT THE ASSESS EE DID NOT DISCLOSE THAT ITS TURNOVER WAS MORE THAN ` 10 CRORES. EVEN IN THE REASONS RECORDED THE ASSESSING OFFICER HAS STATED THAT THE VERIFICATION OF THE ASSESSEES RECORDS REVEALED THA T THE TURNOVER WAS MORE THAN ` 10 CRORES. THIS MEANS THAT THE ASSESSEE ITSELF HAD DISCLOSED THAT ITS TURNOVER WAS MORE THAN ` 10 CRORES. EVEN ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 9 OTHERWISE IN THE DETAILED REVISED WORKING OF THE DE DUCTION UNDER SECTION 80HHC FURNISHED TO THE ASSESSING OFFICER UN DER COVER OF THE LETTER DATED 27.02.2003 THE ASSESSEE HAS SHOWN THE SEPARATE FIGURES OF ITS TOTAL TURNOVER WITH BIFURCATION OF L OCAL SALES AND EXPORT SALES. THUS IT CANNOT BE SAID NOR HAS IT BEEN SAI D THAT THE ASSESSEE DID NOT DECLARE THAT ITS TURNOVER WAS MORE THAN ` 10 CRORES FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE Q UESTION WHETHER A RETROSPECTIVE AMENDMENT CAN CLOTHE THE AS SESSING OFFICER WITH JURISDICTION TO REOPEN THE ASSESSMENT IN THE LIGHT OF THE PROVISO TO SECTION 147 CAME UP FOR CONSIDERATION BE FORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DHARMIK EXIM PVT. LTD. VS. ACIT IN ITA NO: 232/MUM/2009 DATED 09.09.2010. IN THIS CASE FOLLOWING THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF DENISH INDUSTRIES LTD. VS. ITO (2004) 271 ITR 340 ( GUJ) IT WAS HELD THAT WHILE JUDGING WHETHER THE ASSESSEE HAS DISCLOS ED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT IT IS RELEVANT TO SEE ONLY THE LAW APPLICABLE AS ON THE DATE OF FILIN G THE RETURN AND ANY SUBSEQUENT DEVELOPMENT OR AMENDMENT TO THE LAW WAS NOT TO BE LOOKED INTO. IN THAT CASE BEFORE THE TRIBUNAL THE REOPENING WAS BASED ON THE SAME RETROSPECTIVE AMENDMENT WITH WHIC H WE ARE CONCERNED. THE TRIBUNAL HELD THAT THERE CAN BE NO QUESTION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THIS ORDER OF THE TRIBUNAL WAS FOLLOWED BY THE MUMBAI BENCH OF THE TR IBUNAL IN ITS ORDER DATED 15.06.2011 IN THE CASE OF DURATEX EXPOR T IN ITA NOS: ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 10 3088 & 3089/MUM/2010 AND CO NOS: 19 & 20/MUM/2011. THIS WAS ALSO A CASE WHERE THE SAME RETROSPECTIVE AMENDM ENT CONSTITUTED THE BASIS FOR REOPENING THE ASSESSMENT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO BROUGH T TO OUR NOTICE THE JUDGMENT OF THE GUJARAT HIGH COURT IN SA DBHAV ENGINEERING LTD. VS. DCIT (2011) 333 ITR 483 (GUJ) AS WELL AS THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN RALLIS INDIA LTD. VS. ACIT (2010) 323 ITR 54 (BOM). THE GUJARAT HIGH COU RT HAS HELD WHERE NOTICE FOR REOPENING THE ASSESSMENT WAS ISSUE D BEYOND FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND WHERE THE ASSESSMENT HAD BEEN ORIGINALLY FRAMED UNDER SECTION 143(3) OF THE ACT THAT IF THE NOTICE IS BASED ON A SUBSEQUENT AM ENDMENT OF LAW WITH RETROSPECTIVE EFFECT THERE IS NO QUESTION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS AND THUS THE SAID NOTICE WOULD BE WITHOUT JURISDICTION. THIS CASE DIRECTLY APPLIES TO THE FACTS BEFORE US. IN THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT IT WAS HELD THAT WHERE THE COMPU TATION OF THE BOOK PROFITS OF A COMPANY WAS IN ACCORDANCE WITH TH E DECISION OF THE SUPREME COURT AND WHERE THE LAW WAS CHANGED WIT H RETROSPECTIVE EFFECT SUBSEQUENT TO THE ISSUE OF NOT ICE UNDER SECTION 148 THE REASSESSMENT PROCEEDINGS WOULD NOT BE VALI D. WE ARE OF THE VIEW THAT THE JUDGMENT OF THE GUJARAT HIGH COUR T GOVERNS THE PRESENT CASE SINCE THE FACTS ARE THE SAME. ACCORDI NGLY RESPECTFULLY FOLLOWING THE JUDGMENT WE HOLD THAT T HE NOTICE OF REASSESSMENT ISSUED BY THE ASSESSING OFFICER ON 27. 03.2008 WAS ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 11 WITHOUT JURISDICTION. THE REASSESSMENT IS ACCORDIN GLY HELD BAD IN LAW. THIS CROSS OBJECTION IS THUS ALLOWED. 8. SINCE THE CROSS OBJECTION FILED BY THE ASSESSEE IS BEING ALLOWED THE APPEAL FILED BY THE DEPARTMENT DOES NO T SURVIVE FOR CONSIDERATION AND IS DISMISSED AS SUCH. 9. TO SUM UP THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS AL LOWED. 10. ASSESSMENT YEAR 2002-03 : - IN THIS YEAR THE DEPARTMENTS GROUND IS IDENTICAL WITH THE ASSESSMENT YEAR 2001-0 2. THE CROSS OBJECTION FILED BY THE ASSESSEE IS HOWEVER DIFFEREN T FROM THE ASSESSMENT YEAR 2001-02. IN THE CROSS OBJECTION TH E ASSESSEE CLAIMS THAT IT SHOULD BE ALLOWED ALTERNATIVELY TO REDUCE THE AMOUNT RECEIVED ON SALE OF DEPB / DFRC LICENSES FROM THE D IRECT COSTS ATTRIBUTABLE TO THE EXPORT OF GOODS WHILE CALCULAT ING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT. 11. AT THE TIME OF THE HEARING THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT THE APPEAL OF THE DEPAR TMENT IS COVERED IN ITS FAVOUR BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. KALPATARU COLOURS & CHEMICALS (2010) 328 IT R 451(BOM). RESPECTFULLY FOLLOWING THE SAID JUDGMENT WE DIRECT THE ASSESSING OFFICER TO CALCULATE THE DEDUCTION UNDER SECTION 80 HHC IN ACCORDANCE WITH THE AFORESAID JUDGMENT. THE APPEAL OF THE DEPARTMENT IS THUS ALLOWED. 12. AS REGARDS THE CROSS OBJECTION FILED BY THE ASS ESSEE AGAIN IT IS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT IT HAS NO ITA NO: 729/MUM/2010 ITA NO: 730/MUM/2010 CO NO: 153/MUM/2010 CO NO: 154/MUM/2010 12 MERIT IN THE LIGHT OF THE JUDGMENT OF THE HONBLE B OMBAY HIGH COURT CITED ABOVE. IN THIS VIEW OF THE MATTER THE CROSS OBJECTION IS DISMISSED. 13. TO SUM UP ITA NO: 729/MUM/2010 FILED BY THE DE PARTMENT IS DISMISSED ITA NO: 730/MUM/2010 FILED BY THE DEPART MENT IS ALLOWED. CROSS OBJECTION NO: 153/MUM/2010 FILED BY THE ASSESSEE IS ALLOWED AND CROSS OBJECTION NO: 154/MUM/2010 FIL ED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY 2011. SD/- SD/- (RAJENDRA SINGH) (R V EASWAR) ACCOUNTANT MEMBER PRESIDE NT MUMBAI DATED 22 ND JULY 2011 SALDANHA COPY TO: 1. AMAR INTERNATIONAL AMAR HOUSE 14/16 NEAR SHARDA TALKIES MMGS MARG DADAR (EAST) MUMBAI 400 014 2. DCIT 17(1) MUMBAI 3. CIT-17 MUMBAI 4. CIT(A)-29 MUMBAI 5. DR D BENCH TRUE COPY BY ORDER ASSTT. 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