Akshar Chem (India) Ltd, Ahmedabad v. The Income tax Officer, Ward-1(1),, Ahmedabad

ITA 901/AHD/2007 | 2004-2005
Pronouncement Date: 30-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 90120514 RSA 2007
Assessee PAN AABCA2805M
Bench Ahmedabad
Appeal Number ITA 901/AHD/2007
Duration Of Justice 3 year(s) 2 month(s) 1 day(s)
Appellant Akshar Chem (India) Ltd, Ahmedabad
Respondent The Income tax Officer, Ward-1(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-04-2010
Date Of Final Hearing 22-04-2010
Next Hearing Date 22-04-2010
Assessment Year 2004-2005
Appeal Filed On 27-02-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD BBENCH BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.901/AHD/2007 [ASSTT.YEAR: 2004-05] AKSHAR CHEM (INDIA) LTD. VS INCOME TAX OFFICER 30 AMBICA SOCIETY WARD-1(1) AHMEDABAD OPP. USMANPURA GARDEN ASHRA ROAD AHMEDABAD PAN NO.AABCA2805M (APPELLANT) (RESPONDENT) REVENUE BY : SMT. NEETA SHAH SR-DR ASSESSEE BY: SHRI D.K. PARI KH AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-X AHMEDABAD IN APPEAL NO. CIT (A)-X/44/06-07 DATED 07-12- 2006. THE ASSESSMENT WAS FRAMED BY THE ITO WARD-1(1 ) AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 30-08-2006 FOR ASSESSMENT YEAR 2004-05. 2. THE ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAI NST THE ORDER OF CIT(A) CONFIRMING THE LOSS SUFFERED IN TRADING AS WELL AS MANUFACTURING EXPORT U/S.80HHC OF THE ACT. FOR THIS ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS :- 1. THE LEARNED C.I.T. (APPEALS) ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE ORDER OF LEARNED INCOME TAX OFFICER HOLDING THA T HE APPELLANT HAD SUFFERED LOSS IN TRADING AS WELL AS MANUFACTURING EXPORT AND THEREFORE THE APPELLANT COMPANY WAS ENTITLED TO CLAIM DEDUCTION U/S.80 HHC ONLY AFTER SET OFF THE LOSS. ON THE FACTS AND IN VIEW OF LEGAL POSITION TH E LEARNED C.I.T. (APPEALS) OUGHT TO HAVE DIRECTED TO GRANT DEDUCTION U/S.80HHC AS CLAIMED BY THE APPELLANT. IT IS PRAYED THAT THE DEDUCTION AS CLAIM ED BY THE APPELLANT IN THE RETURN OF INCOME BE ALLOWED. ITA NO.901/AHD/2007 A.Y. 2004-05 AKSHAR CHEM (I) LTD. V. ITO WD-1(1) ABD PAGE 2 2. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED C.I.T . (APPEALS) FURTHER ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT THE LEARNE D INCOME TAX OFFICER HAS PROPERLY DEALT WITH THE AMENDED PROVISIONS OF SEC. 80HHC. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T.(APPEAL S) OUGHT TO HAVE APPRECIATED THE UNJUST EFFECT TO THE AMENDED PROVIS O TO SEC. 80HHC SUB- SECTION (3) AND UNDER THE MAIN SECTION 80HHC AND TH E LEARNED C.I.T. (APPEALS) OUGHT TO HAVE DIRECTED TO ALLOW FULL DEDU CTION AS CLAIMED. IT IS THEREFORE PRAYED THAT ORDER OF THE LEARNED C.I.T.(A PPEALS) BE SET ASIDE AND THE DEDUCTION U/S.80HHC BE GRANTED AS CLAIMED. 3. THE LEARNED C.I.T.(APPEALS) OUGHT TO HAVE DIRECT ED TO GRANT DEDUCTION U/S.80HHC ON DEPB AS CLAIMED BY THE APPELLANT THE SAME BEING EXPORT PROFIT. THE SAME BE DIRECTED NOW AND IT BE HELD THA T DEPB INCOME IS ELIGIBLE TO DEDUCTION U/S.80HHC. 3. AT THE TIME OF HEARING BEFORE US IT IS SATED BY THE LD. COUNSEL FOR THE ASSESSEE SHRI D.K. PARIKH THAT THE GROUNDS RAISED IN THE APPEAL ARE RELATED TO COMPUTATION OF DEDUCTION U/S. 80HHC OF THE ACT AND ESPECIALLY AS TO HOW THE TREATMENT IS TO BE GIVEN TO SALE PROCEEDS OF THE DE PB ENTITLEMENT. HE SUBMITTED THAT THIS ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF TOPMAN EXPORTS V. ITO (2009) 318 ITR (AT) 87 (MUM) (SB). THEREFORE THE ASSESSING OFFICER SHOULD BE DIRECTED TO RE-COMPUTE DEDUCTION U/S 80HHC AS PER THE ABOVE DECISION OF ITAT. THE LD. SR -DR SMT. NEETA SHAH ON THE OTHER HAND HAS NO OBJECTION IN THE ABOVE REQUEST O F THE ASSESSEE. 4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE SPE CIAL BENCH OF THE ITAT MUMBAI IN THE CASE OF TOPMAN EXPORTS (SUPRA) HAS HELD AS UNDER:- BUSINESS INCOME BENEFIT OR PERQUISITE UNDER S. 2 8(IIID) DEPB ENTITLEMENT VIS--VIS OF ACQUISITION THEREOF THOUGH DEPB IS P OST-EXPORT INCENTIVE BUT ITS OBJECTIVE IS TO COUNTERBALANCE THE EFFECT OF CUSTOM S DUTY INCLUDED IN THE COST OF PURCHASES INCURRED DIRECTLY OR INDIRECTLY BY TH E EXPORTER IT CANNOT BE SEEN AS AN INCENTIVE DETACHED FROM COST OF GOODS PURCHAS ED IT IS ONLY ON THE MAKING OF AN APPLICATION FOR DEPB THAT THE ASSESSEE ACQUIRES THE RIGHT TO RECEIVE THE DEPB AND INCOME ACCRUES AT THAT STAGE FACT THAT THE ASSESSEE SELLS THE DEPB ENTITLEMENT IN THIS YEAR OR LATER YE AR AND HENCE THE INCOME BE CONSIDERED TO HAVE ACCRUED IN ENTIRELY ON THE DATE OF SUCH SALE IS TOTALLY IRRELEVANT INSOFAR AS THE ORIGINAL AMOUNT BEING TH E FACE VALUE OF THE DEPB IS CONCERNED LANGUAGE OF CLS. (IIID) AND (IIIE) OF S . 28 IS CRYSTAL CLEAR WHICH TALKS OF ANY PROFIT ON THE TRANSFER OF DEPB/DFRC REFERENCE IS NOT TO THE SALE PROCEEDS BUT TO THE PROFIT ON THE TRANSFER OF DEPB-DFRC. SALE PROCESS CANNOT BE CONFUSED WITH PROFIT IN AS MUCH AS THE PR OFIT CAN ONLY BE AN ITA NO.901/AHD/2007 A.Y. 2004-05 AKSHAR CHEM (I) LTD. V. ITO WD-1(1) ABD PAGE 3 INCREMENTAL AMOUNT AND NOT THE WHOLE. THEREFORE THE WORD PROFIT IN S. 28(IIID) REFERS TO THE EXCESS OF SALE PROCEEDS OVER THE FACT VALUE OF DEPB. ENTIRE AMOUNT RECEIVED ON SALE OF DEPB ENTITLEMENT IS NOT PROFIT CHARGEABLE UNDER S. 28(IIID) BUT THE FACT VALUE OF DEPB HAS TO BE DEDUC TED FROM THE SALE PROCEEDS. THE ABOVE DECISION OF THE SPECIAL BENCH OF MUMBAI T RIBUNAL WOULD BE SQUARELY APPLICABLE TO THE ISSUE UNDER APPEAL BEFORE US. WE THEREFORE SET ASIDE THE ORDERS OF LOWER AUTHORITIES ON THIS POINT AND RESTORE THE MAT TER BACK TO THE FILE OF ASSESSING OFFICER. WE DIRECT THE ASSESSING OFFICER TO RE-COMP UTE DEDUCTION U/S. 80HHC AFTER TAKING INTO ACCOUNT THE ABOVE DECISION OF THE SPECI AL BENCH OF MUMBAI TRIBUNAL AND AS PER THE PROVISION OF THE ACT. 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON THIS DAY OF 30 TH APRIL 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 30/04/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-X AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD