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Income Tax Appellate Tribunal, MUMBAI BENCHES ‘A’ MUMBAI
Before: SHRI RAJENDRA & SMT. BEENA PILLAI
PER BEENA PILLAI J.M: The present appeal has been filed by the assessee, against the order passed by Ld. CIT(A)-14, Mumbai vide order dated 14/10/2011, for assessment year 2002-03. The assessee has raised the following grounds of appeal:- “1. In the facts and circumstances of the case and in law, the learned Assessing Officer erred in assessing total income at Rs.80,60,225/- as against returned income of Rs.31,65,660/-.
2. In the facts and circumstances of the case and in law, the learned Assessing Officer erred in disallowing deduction under section 80HHC amounting to Rs.46,76,641/- even though the appellant is an exporter, by wrongly interpreting Sec. 80HHC particularly when the decision of the Apex Court is yet to be passed in respect of Topman and Kalpataru Chemicals etc.
3. In the facts and circumstances of the case and in law, the learned Assessing Officer erred in disallowing deduction under section80HHC amounting to Rs.46,76,641/- by holding that after reducing the figure of DEPB , business income is reduced to negative figure. 4. In the facts and circumstances of the case and in law, the learned Assessing Officer erred in disallowing deduction under section80HHC amounting to Rs.46,76,641/- even though as per the amended provisions, the DEPB has to be included in business profits & the Associations have represented before the Government to treat all exporters alike irrespective of their turnovers.”
2. The brief facts of the case as recorded by the ld.AO are as under. The assessee filed its return of income declaring total income of Rs.31,65,660/- on 29/10/2002. The total income was worked out after claiming deduction under section 80HHC of the Income Tax Act, 1961 (in short “the Act”) amounting to Rs.46,76,641/-. The assessment was completed under section 143(1) of the Act, computing the total income as per the returned income. Subsequently, it was noticed by the Assessing Officer that, during the relevant previous year, the assessee had received export incentives, being DEPB amounting to Rs.1,28,20,204/-, which was credited to the P&L Account. He has also noted from the computation of deduction under section 80HHC that, the total business income of the assessee was Rs.80,35,225/-, which included the export incentives. Therefore, if the export incentives are reduced from the business income, the eligible profit for deduction under section 80HHC becomes a negative figure. The Assessing Officer accordingly following the judgment in the case of Ipca Laboratories P. Ltd., 251 ITR 401(Mum), and disallowed the deduction under section 80HHC of the act. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A).
3. The CIT(A) held as under: “5. I have considered the above submission of the appellant. It is seen that the export turnover of the appellant is more than Rs.10.00 crores. Hence, in view of the amended provisions of Sec.80HHC, applicable to the relevant year, deduction under section 80HHC in respect of DEPB is allowable only if the conditions given in the 3rd and 4th proviso of Sec. 80HHC(3) are satisfied. In this regard, Hon’ble Bombay High Court have in the case of Kalpataru Colours & Chemicals (supra) have held that if the assessee did not prove that it has been fulfilled the conditions set out in the 3rd proviso to Sec.
80HHC(3), he is not entitled to deduction under section80HHC. Since the facts of the case of the appellant are identical, I hold that the appellant is not entitled to deduction under section80HHC and the Assessing Officer has rightly disallowed the deduction. His order is therefore, upheld.”
Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us. The assessee submits that the issue is squarely covered by the decision of Hon’ble Supreme Court in the case of Topman Exports vs. CIT, reported in 342 ITR 49(SC). Ld. DR, fairly conceded that the issue stands covered by the aforesaid decision in the case of Topman Exports (supra). Respectfully following the aforesaid decision of the Hon’ble Supreme Court, we allow the grounds of appeal
raised by the assessee.
5. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 29/10/2015 आदेश क� घोषणा खुले �यायालय म� 29/10/2015 को क� गई । Sd/- Sd/- (राजे��, /RAJENDRA ) ( बीना �प�लै/ BEENA PILLAI) लेखा सद�य /ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated 29/10/2015