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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: S/SHRI B.R.BASKARAN & SHRI SANDEEP GOSAIN
O R D E R PER SANDEEP GOSAIN, JM: These two appeals by the revenue are directed against the common order dated 28.2.2014 passed by the ld. CIT(A)-38, Mumbai for the assessment years 1999-2000 and 2000-01. 2. Since the issue involved in both these appeals are common except amount in dispute involved. Therefore, for the sake of convenience, we have heard these appeals together and these are being decided by this consolidated order, for the sake of convenience.
2 and 4071/Mum/2014 3. Only issue urged by the revenue in these appeals are that the ld.CIT(A) erred in directing the AO to recompute the deduction u/s 80HHC of the Act.
The facts of the case are that the assessee filed return of income on 30.12.1999 and 30.11.2000 declaring total income of Rs.1,68,57,457/- 1,51,00,819/- and for the assessment years 1999-2000 and 2000-01 respectively. The assessee is involved in the business of manufacturer and exporter of food colours, acid colour, dyes and intermediates etc. The original assessment for the year 1999-2000 was completed at Rs.4,40,27,450/- and for the assessment year 2000-01 at Rs.2,94,03,980/- after allowing deduction u/s 80HHC of the Act of Rs.12,80,05,512/- and Rs.22,26,93,635/- respectively. The assessment was reopened by the AO u/s 143(3) r.w.s.147 vide order dated 16.12.2010 and revised assessment at Rs.7,81,75,917/- for the assessment year 1999-2000 and at Rs.11,76,43,708/- for the assessment year 2000-2001. Assessee filed appeals before the first appellate authority against this revision, who upheld the order of the AO. Against this confirmation, the assessee had preferred the appeals before the Mumbai Bench of the Tribunal and the Tribunal following the decision in the case of M/s GKN Driveshafts (India) Ltd reported in (2003) 256 ITR 19 (SC) directed the AO to furnish the copy of reasons recorded to assessee enabling the appellant to raise objections if so desired and then proceed as per law. Giving effect to the Tribunal’s order u/s 143(3) r.w.s 147 and 254 completed assessment at Rs.7,81,75,917/- and Rs.11,76,43,708/- respectively without giving deduction u/s 80HHC of the Act on DEPB license sales and also reducing the deduction u/s 80HHC by the amount of deduction u/s 80IB allowable to the assessee by applying provisions of section 80HHC(4B) of the Act. Aggrieved by the decision of the AO, the assessee had preferred appeals before the ld.CIT(A) and the ld.CIT(A) by following the decision of Hon’ble Supreme Court in the case of Topman Exports v.
3 and 4071/Mum/2014 CIT, (2012) 3 SCC 593 (Civil Appeal No. 1699 of 2012 decided on February 8, 2012) held that “Only profit from Duty Entitlement Pass Book (DEPB) sale is taxable and entire sale proceeds of DEPB and Duty Free Replenishment Certificate (DFRC) are not to be treated as profit for working out deduction under S. 80-HHC, Income Tax Act, 1961”. Accordingly, directed the AO to verify the facts and act as per the directions given.
With regard to the deduction u/s 80IA(1), the ld. CIT(A) by following the decision rendered by the Hon’ble High Court in the case of Associated Capsules Pvt Ltd V/s DCIT (2011) 332 ITR 42(Bom) and the decision of Mumbai Bench of the Tribunal in assessee’s own case for the assessment year 2001-02 held that the benefit of computation has already been granted to the assessee. Therefore, the ld.CIT(A) allowed the claim of the assessee for both the years.
Aggrieved by the decision of the ld.CIT(A), the revenue is in appeal before us. After hearing both the parties at length and on perusal of the record available before us, this issue stands covered in favour of the assessee by the decision of Mumbai Bench of the Tribunal in assessee’s own case I ITA No.8843/Mum/2010 (AY-2003-04) order dated 31.1.2013. For the sake of convenience, we reproduce relevant portion of the order as under:
“7 We have heard the ld AR as well as the ld DR and considered the relevant material on record. This issue before us is no longer res- integra in view of the decision of the Hon'ble jurisdictional High Court in the case of Associated Capsules P. Ltd. v. Deputy Commissioner of Income-tax, reported in 332 ITR 42 (Bom). We further not that this issue has been considered and decided by this Tribunal in assessee's own case for the AY 2001-02 vide order dt 20.5.2011 in MA No. 73/Mum/2011 in in para as under:
4 and 4071/Mum/2014 “’12. After considering the rival submissions, we find that the Honble Bombay High Court in the case of Associated Capsules Pvt. Ltd. s's. DCIT [supra], has decided the issue vide para-39which reads as under:
“39. In the result, we hold that Section 81A(9) does not affect the computability of deduction under various provisions under heading 'C' of Chapter VIA, but it affects the allowability of deductions computed under various provisions under heading C of Chapter VIA, so that the aggregate deduction under Section 80IA and other provisions under heading C of Chapter VIA do not exceed 100% of the profits of the business of the assessee. Our above view is also supported by the C.B. D. T Circular no. 772 dated 23/2/998, wherein it is stated that Section 80IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the some amount of eligible income and that too in excess of the eligible profits. Thus, the object of Section 801A(9) being not to curtail the deductions computable under various provisions under heading 'C" of Chapter, it is reasonable to hold that Section 80lA(9) affects allowability of deduction and nor computation of deduction. To illustrate, if ` 100/- is the profits of the business of the undertaking. Rs. 30/is the profits allowed as deduction under Section 80IA(1) and the deduction computed as per Section 80HHC is Rs.80/, then, in view of Section 80IA(9), the deduction under Section 80HHC would be restricted to Rs. 70/, so that the aggregate deduction does not exceed the profits of the business. Respectfully following the said decision, we decide the issue in favour of the assessee and direct the Assessing Officer to compute the deduction as held by the Hon'ble Bombay High Court in para 39 above." Accordingly, this issue is decided in favour of the assessee and against the revenue. 8 Ground no.3 is regarding exclusion of interest while computing the deduction u/s 80HHC.