MANOJ KUMAR JOHARI,SIKAR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, SIKAR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 839/JP/2017 fu/kZkj.k o"kZ@Assessment Year :2010-11 cuke Manoj Kumar Johari, A.C.I.T., Vs. Prop.- The Art Palace, outside Circle- Sikar. Churu Gate, Ramgarh- Shekhawati, Sikar. PAN No.: ADWPJ 8870 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Vikash Rajvanshi (CA) jktLo dh vksj ls@ Revenue by : Shri J.C. Kulhari (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 12/12/2018 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 17/12/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the assessee is directed against the order dated

25/09/2017 of ld. CIT (A)-3, Jaipur arising from the order passed U/s 154

of the Income Tax Act, 1961 (in short the Act) for the A.Y. 2010-11. The

assessee has raised following grounds of appeal: “1. The ld. CIT(A) has erred in law and fact in holding that duty drawback and sale of export licence received as subsidy from Government of India amounting to Rs. 1,84,99,161/- by the assessee is not eligible for deduction U/s 80IB of the Income Tax Act, 1961. He also ignored the Topman Exports (SC) & Meghalaya Steels Ltd. (SC) and Jodhpur ITAT decisions.

ITA 839/JP/2017_ 2 Manoj Kr. Johari Vs ACIT

Also ld. CIT(A) and A.O. erred that after retrospective amendment in Section 28 of the Income Tax Act, DEPB is part of business income in view of the Topman Exports (SC) & Meghalaya Steels Ltd. (SC) judgment, hence wrong 154 made by A.O. may be annulled and relief may be granted to assessee.

During the year under consideration, the assessee has claimed deduction

U/s 80IB of the Act of Rs. 31,17,420/-. The Assessing Officer while

passing the assessment U/s 143(3) of the Act, disallowed the claim of

deduction U/s 80IB by holding that the assessee is not eligible for the

deduction U/s 80IB of the Act.

the ld. CIT(A) and the ld. CIT(A) allowed the claim of deduction U/s 80IB

of the Act to the extent of 95% of the amount which comes to Rs.

29,61,550/-.

the order of the ld. CIT(A) allowing the claim to the extent of 95%. In the

mean time, the Assessing Officer has passed giving effect order to the

order of the ld. CIT(A) and allowed the deduction U/s 80IB of the Act to

the tune of Rs. 29,61,550/-. Subsequently, the Assessing Officer has

passed order U/s 154 of the Act on 26/10/2015 whereby the deduction

ITA 839/JP/2017_ 3 Manoj Kr. Johari Vs ACIT

U/s 80IB of the Act was recomputed after making a disallowance in

respect of Duty Drawback and sale of import licence. Consequently, the

Assessing Officer has disallowed entire claim of deduction U/s 80IB of the

Act by observing that if the said amount of DEPB/Duty Drawback is

excluded from the profits of the assessee then a negative income has

resulted.

the order passed U/s 154 of the Act before the ld. CIT(A) but could not

succeed.

claim of the assessee U/s 80IB of the Act was allowed by the Tribunal

which has attained the finality, the Assessing Officer is not justified in

disallowing the claim while passing the order U/s 154 of the Act. Thus,

the ld AR has contended that it was beyond the jurisdiction of the

Assessing Officer to disallow the claim of the assessee while passing the

impugned order U/s 154 of the Act. Alternatively, the ld AR has submitted

that the Assessing Officer has disallowed the claim by holding the decision

of Hon'ble Supreme Court in the case of Liberty India 317 ITR 218 (SC)

whereas in the subsequent decisions in case of CIT Vs. Meghalaya Steels

Ltd. 383 ITR 2017 as well as in the case of Topman Exports Vs. CIT 342

ITA 839/JP/2017_ 4 Manoj Kr. Johari Vs ACIT

ITR 0049. The Duty Drawback and DEPB shall be part of the business

income of the assessee and consequently the claim of deduction U/s 80IB

of the Act has to be allowed as per the formula by considering these two

receipts as part of the business profits of the undertaking. The ld AR has

also relied upon the decision of Nagpur Bench of the Tribunal in the case

of ITO Vs Air Developers 122 ITD 0125 and the decision of the Hon’ble

Jurisdictional High Court in the case of Shri Manoj Kumar Johari in D.B.

Income Tax Appeal No. 47/2011 and the decision of Hon'ble Supreme

Court in the Topman Exports Vs CIT (supra) and the decision in the case

of CIT Vs. Meghalaya Steels (supra). Thus, the ld AR has submitted that

the profits of DEPB and Duty Drawback shall be part of the business profit

for the purpose of deduction U/s 80IB of the Act. He has relied upon the

order of the Jodhpur Bench of the Tribunal in the case of M/s Suraj

Exports India Vs ITO in ITA No. 336/Jodh/2011, 360/Jodh/2012 and

386/Jodh/2011 decision dated 31/1/2013.

assessment U/s 143(3) of the Act, the Assessing Officer has decided the

issue of allowability of claim U/s 80IB of the Act in respect of Duty

Drawback and DEPB, however, since the Assessing Officer has disallowed

the entire claim of the assessee U/s 80IB of the Act by holding that the

ITA 839/JP/2017_ 5 Manoj Kr. Johari Vs ACIT

assessee is not eligible for the deduction, therefore, no separate

disallowance was made by the Assessing Officer on account of

disallowance in respect of DEPB and Duty Drawback. The ld. DR has

further submitted that this issue was decided against the assessee by the

ld. CIT(A) in the first round of litigation and further the assessee did not

press this issue before the Tribunal and it was accordingly dismissed in

the cross appeal filed by the assessee. Thus, while passing the giving

effect order, the Assessing Officer has allowed the entire claim without

making a correct computation of the deduction by excluding DEPB and

Duty Drawback amount. Subsequently, the Assessing Officer has rectified

the said order U/s 154 of the Act and recomputed the deduction after

excluding the DEPB and Duty Drawback which is within the ambit of the

provisions of Section 154 of the Act. He has relied upon the orders of the

authorities below.

material on record. As far as the jurisdiction of the Assessing Officer to

pass the order U/s 154 of the Act is concerned, we note that while

passing the assessment U/s 143(3) of the Act, the Assessing Officer has

clearly taken a decision that the amount of DEPB and Duty Drawback is

not eligible for deduction U/s 80IB of the Act. Further the Assessing

ITA 839/JP/2017_ 6 Manoj Kr. Johari Vs ACIT

Officer had also disallowed the entire claim of the assessee U/s 80IB by

holding that the assessee is not eligible for deduction U/s 80IB of the Act.

On appeal, the ld. CIT(A) allowed the claim of deduction U/s 80IB of the

Act to the extent of 95% and further the issue of claim of deduction in

respect of Duty Drawback and DEPB was decided against the assessee.

On further appeals by the revenue as well as the assessee, this Tribunal

though confirmed the order of the ld. CIT(A) on the issue of allowability

of deduction U/s 80IB of the Act to the extent of 95%, however, since the

assessee did not press the issue in respect of the denial of the claim in

respect of the Duty Drawback and sale of export of licence, therefore, the

said issue was also decided against the assessee and consequently, the

order of the ld. CIT(A) was confirmed by the Tribunal. Therefore, the

issue on merits regarding the disallowance of deduction U/s 80IB of the

Act in respect of the Duty Drawback and sale of export of licence was

decided against the assessee during the assessment passed U/s 143(3) of

the Act which was confirmed by the Ld. CIT(A) as well as by this Tribunal.

The Assessing Officer while passing the giving effect order, has allowed

the claim of the assessee U/s 80IB to the extent of 95% but did not make

adjustment in respect of the Duty Drawback and DEPB. Therefore, the

Assessing Officer has passed the impugned order U/s 154 of the Act to

make necessary disallowance of deduction U/s 80IB of the Act in respect

ITA 839/JP/2017_ 7 Manoj Kr. Johari Vs ACIT

of the Duty Drawback and DEPB which in our view is very much in the

ambit of the provisions of Section 154 of the Act as the Assessing Officer

has not taken any fresh decision on this issue while passing the impugned

order U/s 154 of the Act but recomputed the deduction in terms of the

issue already decided up to the stage of this Tribunal. Hence, we do not

find any substance or merits in the objection and grounds of the assessee

challenging the jurisdiction of the Assessing Officer.

8.1 As regards the total disallowance of claim U/s 80IB of the Act, we

find that there are various decisions as relied upon by the assessee

wherein it has been held that Duty Drawback and DEPB licence are very

much part of profits and gains of the undertaking and therefore while

computing the deduction U/s 80IB this amount shall be included in the

profits of the business, however, will be excluded from the export

turnover. The assessee has filed revised computation of deduction by

considering the amount reduced from the export turnover, however, this

is a factual aspect of computation of deduction. Accordingly, in the facts

and circumstances of the case and in the interest of justice, we set aside

this issue to the record of the Assessing Officer to recomputed the

deduction U/s 80IB of the Act by considering the revised computation

filed by the assessee as well as the various decisions wherein it was held

ITA 839/JP/2017_ 8 Manoj Kr. Johari Vs ACIT that the Duty Drawback and DEPB are part of the business profits,

though, the same are not part of the export turnover. Accordingly, the Assessing Officer is directed to recompute the deduction.

Sd/- Sd/- ¼foØe flag ;kno½ ¼fot; iky jko½ (VIKRAM SINGH YADAV) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 17th December, 2018 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Manoj Kumar Johari, Sikar. 1. izR;FkhZ@ The Respondent- The ACIT, Circle- Sikar. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 839/JP/2017) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत