The DCIT, Circle 1, JUNAGADH v. Shri Lakhambhai Damjibhai Bhensala, Veraval

ITA 75/RJT/2011 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 7524914 RSA 2011
Assessee PAN ABVPB5860F
Bench Rajkot
Appeal Number ITA 75/RJT/2011
Duration Of Justice 1 year(s) 26 day(s)
Appellant The DCIT, Circle 1, JUNAGADH
Respondent Shri Lakhambhai Damjibhai Bhensala, Veraval
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 30-03-2012
Date Of Final Hearing 23-03-2012
Next Hearing Date 23-03-2012
Assessment Year 2004-2005
Appeal Filed On 04-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI T.K. SHARMA JM AND SHRI D. K. SRIVASTAV A AM. ITA NO. 75/RJT/2011. (ASSESSMENT YEAR 2004-05) THE DY. C.I.T. VS SHRI LAKHAMBHAI DAMJIBHAI BHE NSALA. CIRCLE-1 JUNAGADH. PROP. OF GOPAL SEA FOODS VE RAVAL. PAN: ABVPB5860F. (APPELLANT) (RESPONDENT) DATE OF HEARING : 23-03-2012. DATE OF PRONOUNCEMENT : 30-03-2012. REVENUE BY : SHRI M. K. SINGH D. R. ASSESSEE BY : SHRI J. C. RANPURA C. A. O R D E R T. K. SHARMA J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED 24-12-2010 OF CIT (A)-XXI AHMEDABAD FOR THE ASSES SMENT YEAR 2004-05. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AS UNDE R:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.13 34 812/- MADE BY THE AO BY DISAL LOWING THE ASSESSEES CLAIM U/S.80HHC WITHOUT CONSIDERING THE FACTS BROUGHT ON RECORD BY THE AO. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL DOING BUSINESS OF MARINE FOODS EXPORT IN HIS PROPRIETORSH IP CONCERN NAMELY; GOPAL SEA FOODS. FOR THE ASSESSMENT YEAR UNDER APPEAL H E FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.31 95 400/-. IN THE R ETURN OF INCOME THE ASSESSEE CLAIMED DEDUCTION U/S.80HHC AMOUNTING TO RS.13 34 8 12/- ON DEPB SALES INCOME OF RS.89 35 302/-. IN THE ASSESSMENT ORDER AO HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80HHC ON DEPB LICE NSE SALES INCOME. HE ACCORDINGLY WORKED OUT THE DEDUCTION U/S.80HHC AT NIL. ON APPEAL IN THE IMPUGNED ORDER THE LD. CIT(A) DIRECTED THE AO TO A LLOW THE DEDUCTION U/S.80HHC ITA NO 75/RJT/2011. 2 OF DEPB SALES AFTER RE-COMPUTING THE PROFIT. AGGR IEVED WITH THE ORDER OF LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. 4. AT THE TIME OF HEARING BEFORE US BOTH SIDES HAV E CONCEDED THAT NOW DEDUCTION U/S.80HHC OF THE INCOME TAX ACT IS REQUIR ED TO BE RE-COMPUTED AS PER LATEST DECISION OF HONBLE SUPREME COURT IN THE CAS E OF TOPMAN EXPORTS V. CIT REPORTED IN 67 DTR (SC) 185. THEREFORE MATTER BE RESTORED TO THE FILE OF AO FOR RE-COMPUTING THE DEDUCTION U/S.80HHC. WE HAVE CARE FULLY GONE THROUGH THE ORDER OF AUTHORITIES BELOW AS WELL AS THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA) RELIED BY BOTH S IDES. THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS HELD AS UNDER : - (I) FACE VALUE OF DEPB TAXABLE UNDER SECTION 28(II IB) IN THE YEAR IN WHICH ASSESSEE APPLIED FOR DEPB CREDIT AGAINST EXPO RTS WHILE THE EXCESS OF SALES PROCEEDS OF DEPB OVER ITS FACE VALUE IS TA XABLE UNDER SECTION 28(IIID) IN THE YEAR OF TRANSFER. (II) DEPB IN CASH ASSISTANCE RECEIVABLE BY ANY PE RSON AGAINST EXPORTS UNDER THE SCHEME OF GOVERNMENT OF INDIA AND IS TAXABLE UNDER CLAUSE (IIIB) OF SECTION 28 UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION EVEN BEFORE IT IS TRANSFERRED BY THE AS SESSEE; FACE VALUE OF DEPB IS TAXABLE UNDER SECTION 28(IIIB) IN THE YEAR IN WHICH ASSESSEE APPLIED FOR DEPB CREDIT AGAINST EXPORTS. (III) PROFIT ON THE TRANSFER OF THE DUTY ENTITLEME NT PASS BOOK SCHEME IS THE EXCESS OF SALES PROCEEDS OF DEPB OVER ITS FACE VALUE AND IS TAXABLE UNDER SECTION 28(IIID) IN THE YEAR OF TRANSFER. (IV) THE COST OF ACQUIRING DEPB IS NOT NIL AS THE PERSON ACQUIRES IT BY PAYING CUSTOMS DUTY ON THE IMPORT CONTENT OF THE EX PORT PRODUCT AND THE FACE VALUE OF DEPB REPRESENTS ITS COST. (V) FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SE CTION 80HHC 90% OF THE DEPB WHICH IS CASH ASSISTANCE AND COVE RED BY SECTION 28(IIIB) SHALL BE EXCLUDED FROM PROFITS OF THE BUS INESS OF THE ASSESSEE IF THE DEPB HAS ACCRUED TO THE ASSESSEE DURING THE PRE VIOUS YEAR IF DURING THE SAME PREVIOUS YEAR THE ASSESSEE TRANSFERS THE DEPB AND ITS SALES PROCEEDS EXCEEDS ITS FACE VALUE 90% OF THE DIFFERE NCE BETWEEN SALES PROCEEDS AND FACE VALUE WILL GET EXCLUDED FROM THE PROFITS OF THE BUSINESS. ITA NO 75/RJT/2011. 3 (VI) IF DEPB ACCRUES TO ASSESSEE IN THE FIRST PREVI OUS YEAR AND IS TRANSFERRED IN THE SECOND YEAR AT A PRICE EXCEEDING ITS FACE VALUE 90% OF THE DIFFERENCE BETWEEN SALES PROCEEDS AND FACE VALU E AND NOT 90 OF THE ENTIRE SALES PROCEEDS WILL GET EXCLUDED FROM PROFI TS OF THE BUSINESS IN THE SECOND PREVIOUS YEAR AND THE ASSESSEE GETS HIGHER D EDUCTION UNDER SECTION 80HHC AS BIGGER FIGURE OF PROFITS OF THE B USINESS BECOMES THE MULTIPLIER IN THE FORMULA UNDER SECTION 80HHC(3)(A) FOR ARRIVING AT THE FIGURE OF PROFIT DERIVED FROM EXPORTS. 6. WE THEREFORE SET-ASIDE THE ORDER OF LD. CIT(A) ON THE ISSUE AND DIRECT THE AO TO RE-COMPUTE THE DEDUCTION U/S.80HHC OF THE I.T . ACT AFRESH IN THE LIGHT OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TO PMAN EXPORTS(SUPRA) AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT FOR THE STATISTICAL PURPOSES THE APPEAL OF REVENUE IS TREATED AS ALLOWED. THIS ORDER PRONOUNCED IN THE OPEN COURT ON 30-03-20 12. SD/- SD/- ( D. K. SRIVASTAVA ) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 30-03-2012. NVA/- COPY TO: 1. THE DY. C.I.T. CIRCLER-1 JUNAGADH. 2. SHRI LAKHAMBHAI DAMJIBHAI BHENSALA VERAVAL. 3. THE CIT-III RAJKOT. 4. THE CIT-(A)-XXI AHMEDABAD. 5. THE DR I.T.A.T. RAJKOT 6. THE GUARD FILE. (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT