The ACIT, Circle-1,, RAJKOT-GUJARAT v. Jayshri Impex,, Jetpur

ITA 975/RJT/2009 | 2004-2005
Pronouncement Date: 11-11-2011 | Result: Allowed

Appeal Details

RSA Number 97524914 RSA 2009
Assessee PAN AAEFR5521M
Bench Rajkot
Appeal Number ITA 975/RJT/2009
Duration Of Justice 2 year(s) 2 month(s)
Appellant The ACIT, Circle-1,, RAJKOT-GUJARAT
Respondent Jayshri Impex,, Jetpur
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 11-11-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2004-2005
Appeal Filed On 11-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.945/RJT/2009 (ASSESSMENT YEAR 2004-05) M/S ROYAL IMPEX (INDIA) VS THE DY.CIT CIR.1 NATIONAL HIGFHWAY 8-B RAJKOT PEDHALA JETPUR DIST : RAJKOT PAN : AAEFR5521M (APPELLANT) (RESPONDENT) I.T.A. NO.944 & 974/RJT/2009 (ASSESSMENT YEAS 2004-05 & 2005-06) THE ACIT CIR.1 VS M/S ROYAL IMPEX (INDIA) LTD RAJKOT NATIONAL HIGHWAY 8-B PEDHALA JETPUR DIST : RAJKOT PAN : AAEFR5521M (APPELLANT) (RESPONDENT) I.T.A. NO.944/RJT/2009 (ASSESSMENT YEAR 2004-05) M/S JAYSHRI IMPEX (INDIA) VS THE ACIT CIR.1 DHORAJI ROAD NAVAGADH RAJKOT JETPUR-360 370 DIST : RAJKOT PAN : AAFFM6794G (APPELLANT) (RESPONDENT) I.T.A. NO.975 & 976/RJT/2009 (ASSESSMENT YEAS 2004-05 & 2005-06) THE ACIT CIR.1 VS M/S JAYSHRI IMPEX RAJKOT DHORAJI ROAD NAVAGADH JETPUR DIST : RAJKOT PAN : AAFFM6794G (APPELLANT) (RESPONDENT) ITA NO.944 & 945/RJT/2011 ITA 974-976/RJT/2011 2 DATE OF HEARING : 04-11-2011 DATE OF PRONOUNCEMENT : 11 -11-2011 ASSESSEE BY : SHRI DD SHAH RESPONDENT BY : SHRI SL MEENA O R D E R PER BENCH APPEALS IN THE CASE OF ROYAL IMPEX (INDIA) FOR THE ASSESSMENT YEAR 2004- 05 ARE CROSS APPEALS AND THEY ARISE OUT OF THE ORDE R OF CIT(A)-I RAJIOT DATED 29- 06-2009 FOR THE ASSESSMENT YEAR 2004-05 WHEREAS THE CROSS APPEALS IN THE CASE OF JAYSHRI IMPEX FOR THE ASSESSMENT YEAR 2004-05 AL SO ARISE OUT OF THE SEPARATE ORDER OF THE CIT(A)-I RAJKOT DATED 29-06-2009 FOR THE ASSESSMENT YEAR 2004-05. APPEAL FILED BY THE ASSESSEE M/S ROYAL IMPEX (INDI A) AND THE APPEAL FILED BY THE ASSESSEE M/S JAYSHRI IMPEX ARE DIRECTED AGAINST TH E INDEPENDENT ORDERS OF THE CIT(A)-I RAJKOT BOTH DATED 29-06-2009 FOR THE ASSE SSMENT YEAR 2005-06. SINCE THESE APPEALS PERTAIN TO THE SAME GROUP OF ASSESSEE S AND THEY CARRY COMMON ISSUE FOR CONSIDERATION FOR THE SAKE OF CONVENIENC E THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. THE SOLE COMMON ISSUE INVOLVED IN THESE SIX APPE ALS PERTAINS TO DEDUCTION U/S 80HHC VS PROFIT ON SALE OF DEPB LICEN CE. 3. THE LD. D.R. SUBMITTED THAT THIS ISSUE IS COVERE D IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE APEX COURT IN THE CASE OF LI BERTY INDIA LTD. VS. CIT 317 ITR 218(SC) AND A JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ITA NO.944 & 945/RJT/2011 ITA 974-976/RJT/2011 3 KALPATARU COLOURS & CHEMICALS 328 ITR 451 (BOM). TH E LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE ISSUE BEFORE THE APEX COUR T WAS IN RESPECT OF DEDUCTION U/S.80IA WHEREIN EXPRESSION PROFIT DERIVES FROM IND USTRIAL UNDERTAKING WHEREIN IN THE CASE OF DEDUCTION U/S.80HHC ONLY BUSINESS PROFI T IS TO BE CONSIDERED. THIS CONTENTION OF LD.AR IS NOT ACCEPTABLE IN THE LIGHT OF FOLLOWING DISCUSSION. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF PAR TIES RECORD PERUSED AND GONE THROUGH DECISIONS CITED. THE APEX COURT IN TH E CASE OF LIBERTY INDIA LTD. VS. CIT 317 ITR 218(SC) WHEREIN IT HAS BEEN HELD TH AT THE DEPB IS AN INCENTIVE WHICH FLOWS FROM THE SCHEME FRAMED BY THE CENTRAL G OVERNMENT OR FROM THE SECTION 75 OF THE CUSTOMS ACT HENCE PROFIT BY WAY OF SUCH INCENTIVE IS NOT FALL WITHIN THE EXPRESSION PROFIT DERIVED FROM INDUSTRIA L UNDERTAKING. THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS 328 ITR 451 (BOM) WHEREIN IT HAS BEEN HELD THAT THERE WAS NO DI SPUTE THAT ENTIRE AMOUNT RECEIVED ON TRANSFER OF DEPB BUT THE DISPUTE WAS WH ETHER OR NOT SUCH PROFITS WOULD CONSTITUTE EXPORT PROFITS. BY THE FINANCE ACT 2005 PARLIAMENT RESOLVED THE CONTROVERSY BY INSERTING A SPECIFIC CLAUSE NAM ELY CL. (IIID) IN S. 28 TO THE EFFECT THAT PROFITS ON TRANSFER ON DEPB I..E. THE AMOUNT RECEIVED ON TRANSFER OF DEPB IS INCOME CHARGEABLE TO TAX UNDER THE HEAD PR OFITS AND GAINS OF BUSINESS AND PROFESSION. AS REGARDS THE DEDUCTION UNDER S.8 0HHC THE LEGISLATURE SUBSTITUTED EXPLN. (BAA) IN S.80HHC SO AS TO EXCLUD E 90 PER CENT OF THE PROFITS RECEIVED ON TRANSFER OF DEPB FROM THE PROFITS OF BU SINESS FOR THE PURPOSES OF S.80HHC AND INSERTED THE SECOND PROVISOS TO S.80HHC (3). BY THE SECOND ITA NO.944 & 945/RJT/2011 ITA 974-976/RJT/2011 4 PROVISO IT WAS PROVIDED THAT IN THE CASE OF ASSESSE E HAVING AN EXPORT TURNOVER NOT EXCEEDING RS.10 CRORES THE PROFITS COMPUTED UN DER S.80HHC(3) SHALL BE INCREASED BY 90 PER CENT OF THE SUM REFERRED TO IN S. 28(IIID). BY THE THIRD PROVISO IT WAS PROVIDED THAT IN THE CASE OF AN ASSESSEE HAV ING AN EXPORT TURNOVER EXCEEDING RS.10 CRORES THE PROFITS COMPUTED UNDER S.80HHC(3) SHALL BE INCREASED BY 90 PER CENT OF THE SUM REFERRED TO IN S.28(IIIB) SUBJECT TO THE TWO CONDITIONS SET OUT THEREIN. AFTER CONSIDERING ABOV E JUDGMENTS WE NOTICED THAT IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAD AN E XPORT TURNOVER EXCEEDING RS.10 CRORES AND DID NOT FULFILL THE CONDITIONS SET OUT IN THIRD PROVISO TO S.80HHC(3). THEREFORE THE ASSESSEE IS NOT ENTITLE D TO DEDUCTION U/ S.80HHC ON THE AMOUNT OF DEPB. WE THEREFORE SET ASIDE THE OR DER OF CIT(A) ON THE ISSUE AND ORDER OF THE AO IS RESTORED. 5. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE AS M ENTIONED ABOVE. SD/- SD/- (T.K. SHARMA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 11 TH NOVEMBER 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-I RAJKOT 4. THE CIT-I RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT ITA NO.944 & 945/RJT/2011 ITA 974-976/RJT/2011 5