Karnataka High Court
The Commissioner Of Income Tax vs M/S Ttk Prestige Ltd on 18 March, 2009
Author: K.L.Manjunath
Bench: K.L.Manjunath
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE ISTHDAY OF MARCH, 2009
PRESENT
THE i-ION'BLE MR. JUSTECE K:L. MANJUi:_\TATH"C5.' ._
AND
THE I-ION'BLE MR. JUSTICE Ags. £f.A.cTHH.A.PIj'RE..
INCOME TAX AH'EAL No. 415 '£21? 2o§)'éz;,S1 :2
BETWEEN: T 2 T A
1. The CornrnisS§.c.>_"r:1'--er ixof Tax,
CR. Building, Q.1,1ée»n'$& fR0ad,
2. The Sointriissiofier Of._Inr5ome Tax,
Sp_1." R3,ngr3%;II, A CR, *V..Bu--ild--i_ng?_ 'Queen'S
Roagi, --;E§ég;&_rV1gaT0'reV L
TTTT J T .Appe11ants
" {TBS}? Sri ' -S(=,'sT:1fiLV;€Lc}ia1a, advocate)
AND.-. V' ' A' T"
é " '1*'1i1< Pre's'£ige Ltc1., 7--B, Old Madras
' » 1?.,(_)a.:l,'«D"oo'rvani Nagar, Bangalore -- 16.
Respondent
Sri RB. Krishna, advocate) " T' " THIS I.T.A. FILED UNDER SEC. 260A OF THE INCOME ACT, 1961 ARISING OUT OF THE ORDER DT. 10.2.2004 _ PASSED EN ETA NO. 514/BANG/1999 FOR THE " ASSESSMENT YEAR 1994-95 PRAYING THAT THIS HONBLE A ...COURT MAY BE PLEASED TO;
'A 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; AND
2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATETRIBUNAL, 2 i.T.A. 415 » 04
2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATETRIBUNAL, BANGALORE IN ITA NO. 514/BANG/1999 DT. 10.2.2004 CONFIRMING THE ORDER OF' THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED THE DEPUTY COMMISISONER OF INCOME _. CENTRAL CIRCLE-II, BANGALORE ETC., THIS I.T.A. HAVING BEEN HEARD AND REs"ER_vEn" ~ COMING ON FOR PRONOUNCEMENT, --T§IIS"~.ipD.AY,A PACHHAPURE, J., DELIVERED THE ':4 I JUDGMENEIDIC This appeal is by'.',::pm_ the concurrent findings of theu:'orde.rpA passed the Commissioner of Incon:ieii.Tso_<' and further confirmed by the Incofnei; Tribunal, Bangalore iin.;TA,iw3.§S14/Eang/1998, dt 10.2.2ooeiior.the1;3§séssn{§':--;t~--gggr 1994-95.
2. * 4iT}1:=,-V: .for the purpose of this appeal areCas_iiunder__; I ' respon'dent_/assessce is being assessed in the rstatus -o_fioo__r_npany and for the assessment year assessee fiied a return of income. An order .p came fiber.' passed under Sec. 143 (3) of the Act on I After passing the assessment order,- the
- Assessing officer initiated rectification proceedings under "Sec. 154 of the 'Act and he found that the claim of Rs. 93,14,820/- as deduction under Sec. 80 IA being 30 per 3 E.T.A. 415 ~ 04 cent on Rs. 3,10,49,~'~¥~OO/~ included a sum of Rs. 97,61,594/~ being the export incentive received by the company. It is the contention of the Revenue that incentive is only a scheme by the Central Govern§nien't' _ encourage the exports and it is not an incon1'e"ear_nedV.b'y_ the industrial undertaking of the asses_s'ee{ Aynotice 5: ' issued under Sec. 154 of the':Arf_£ for lliecltificatilori; of gthis mistake and there was no response,sfrom"thle'assessee and therefore, a sum oi"---..1_§s._ "1'~.e., 30 per cent on Rs. 97,61,594/- deductionivas"'disal1sWed as per. Sec. 80 IA rectification came to be The assessee being aggrievied"_vby _rei:ltiltl'1cation, preferred an appeal of the Income Tax (Appeals) of Bangalore} ..lThVe.7'Appellate Commissioner holding that V. l"-therel v;f"errel'l'numbeVrl'llofv judgments in respect of Sec. 80 of Aicgtalgiving contrary view and that Sec. 80 IA oftl'1e Act similarly placed concluded with the mattei.sy:ith regard to whether the export incentive qualify for deduction under Sec. 80 IA of the Act vvas held to be highly debatable and therefore, he set aside the order passed under Sec. 154 of the Act and the Revenue being aggrieved by this order, preferred an or K 4 I.T.A. 415 ~ 04 appeal to the Encome--Tax Appellate Tribunal, Bangalore Bench and the said appeal also came to be dismissed (vide Order, dt. 10.2.2004).
3. The Revenue aggrieved by the 0 ' findings of both the authorities, .has..approiachie:d court to set aside the orders by ;":raisin'gi substantial questions of law;
1) Whether the;appellate:'authoritieswere correct in holdingifgthait . Viithe'»,Vc'or1_troversy decided by the in rectification a "debatable issue. was not entitled "C:_(l!_?'lai.Ii'ii 'thieiicleductioii under Sec. 80 of (hereinafter referred to_as_ the iftcitlV_iin_i_:respect of a sum of Rs. 9'7,i61..,S94/09»._being.:the export incentive i.e., 0 the duty' rl_ravvback received by the assessee frioimithe Government to encourage t"}1e"e.Xp:o1'trs, which could not be treated as of the assessee in order to satisfy the' -eligibility criterian under Sec. 80 IA of Act?
if 2) Whether the appellate authorities failed 0 to record a finding that export incentives i.e., duty draw back received by the assessee did not amount to profit earned by the assessee which could be treated as an eligible 5 [.T.A. 415 - 04 deduction under Sec. 80 IA of the Act before holding that it was a debatable issfiue?
4. We have heard the learned advocates for the Revenueand the Assessee on the above said substantial "
questions of law.
5. _ It is the contention of._th:e'rounse'l. Revenue that both the appellate authorities'ifailedmto appreciate that the export incentive i,_e., Vfiback served by the Assesseefiof a 97,61,954/-- cannot be included in the.:protiit_i r{s*.t_'3;1isi:,_o,é9,4o0/~ in respect of purpose of computatidn..V.Vo'fi_ii 80 IA of the Act and it 154 of the Act. It is also both the appellate authorities failedto appreciate' that there was no debatable issue as ' iriv respect ivofiiithe Assessee being entitled to Sec. 80 EA of the Act over the export iniceuntive,. a"s,L'he said incentive was given by the Central V'-.Governn'_1ent to encourage the exports and it is not an earned by the industrial undertaking of the Assessee. On these grounds, he has sought for setting aside the orders and the concurrent findings of the authorities below. M;
6 I.T.A. 415 ~ 94
6. Per contra, it is the contention of the learned counsel for the Assessee that the matter with regard to whether the export incentive would qualify for deductions under Sec. 80 1A of the Act is highly debatable...mattuer'V;~ and it does not come within the purview of 1514.5: "
the Act. It is his further contentiohnmithatthe has been allowed at the time of pasisiznig the order Sec. 143 (1--A) and Sec.143 the*--Ac't?iand".:it"Wis clearly a case of change of .Vopinioi1iipiiand thaVt"'there is nothing as such to say apparent on the record ..iri._the order assessment and therefore, the pro~Vi.g,ionsr.of.i:i3ee.. 154.01' the.....Aht cannot be invoked for rec'tification."Thei »pi~'ox;isacris of Sec. 154 of the Act read as under :
'iWith "view___to rectifying any mistake from the record an income tan ' an-thoiri'ty:i_i7eferred to in Sec. 116 may --
(a)y.'i'iia:'j_airnend any order passed by it under A .' 'the provisions of this Act; (13).. amend any intimation or deemed intimation under sub-sec (1) of Sec.
143."
So, as could be seen from the provision, it is only in case if a mistake has been crept into the order, which is apparent from the record that the Assessing 5-4 7 ].T.A. 415 - 04 officer has got the authority to amend the order passed by it under the provisions of this Act. On this aspect of the matter, the Hon'ble High Court of Calcutta decision reported in Income Tax Reports, Vol_.f:2i6 :_. page 331 (Commissioner of Schlumberger Sea Co., Inc.) held;thatrxi?to3in*.rokei"the provisions of Sec. 154 of the.Aet__ to rectify the subject matter must be beyioiad Clebate inigsuch circumstances, only the i"'mis-iakfs. Vco.mVr_f1'itted could be arnended.
7. Whether the subject matter is beyond deba.te'~i,ii_and'"thatiiwhether it was a mistake apparen't.i:'frorn.vithreirecord, in this context, it is relevant tiounoteiii Hon'ble Apex Court in the deois;ionii'reported.in____l999 Income Tax Reports at page took consideration the export promotional scheme;'i.iv_h_erei'iunder the export entitlements became available', it held that there must be a nexus between the prvofitsiiiiiand gains and the industrial undertaking. urther, it observed that the nexus was not direct and it i only an incidental. It also held that the assessee was entitled to impart entitlements which it could sell and the sale consideration there from could not be held to x' f>C-.i_ 8 I.T.A. 4E5 - 04 constitute a profit and gain derived from the assessee industrial undertaking and further, that the receipts from the sale of impart entitlements could not..Vibeii~.V_ included in the income of assessee for the :_. computing the relief under Sec. 80 HH of the*';'xctl: it IA is similarly placed. Further Inorefi-..it3is3re1evant"to note that there are concurrent -findings.'ho1dingi"tphat_:the export incentive would qualify'iior_:deductionA_iunder; See. 80 IA of the Act is a there are judgments on both to Whether the export incenitfpire'Vwoiuéldi In the circumstances,:::_ii_\?§re.V. lthatiit is a debatable matteriand come within the purview of Sec. of the Assessing officer allowed the i{:ieduct'ion.i"at"the time of passing the order .,-.i1pné1'er Sec. "1é}&3 (liwliliiiand also at the time of passing the 143 (3), it is clearly a case of change of opi1nion..~This cannot be said to be a mistake apparent Wfrom theiecord and therefore, the provisions of Sec. 154 I' Act, cannot be invoked. The question as to vvhether the Assessee was entitled for deduction or not, is a matter to be decided on merits and cannot be said to be an error apparent on record. BL 9 E.'I'.A. 415 ~ 04
8. In the circumstances, we do not find any infirmity in the findings arrived at, by the Commissioner of Income Tax and the Income Tax Appellate Trib1.V1n_ait._V_ and answer the substantial questions of la:vv""1lf_* affirmative and 2 in negative and in the appeal is dismissed.
ie.Tudge Sal. .X Tudqe mu" .V