Income Tax Appellate Tribunal - Mumbai
Balaji Filaments Ltd. , vs Assessee on 3 June, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'B' MUMBAI
BEFORE SHRI PRAMOD KUMAR (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM)
M.A. 727/Mum/2010
(Arising out of ITA No. 934/Mum/2007
Assessment Year-2003-04
M/s. Balaji Filaments Ltd., The DCIT-4(1),
st
1 Floor, Bandrawala Bldg., Aayakar Bhavan,
16, Dadi Seth Agyari Lane, Mumbai-400 020
Mumbai-400 002 Vs.
PAN-AAACB2550M
(Appellant) (Respondent)
Appellant by: Shri Percy J Pardiwala
Respondent by: Shri V.V. Shastri
Date of Hearing: 3.6.2011
Date of Pronouncement:17.8.2011
ORDER
PER SMT. ASHA VIJAYARAGHAVAN (JM) By this Miscellaneous Application filed by the assessee, it has been pointed out that the Hon'ble Tribunal vide order dt. 29th October, 2009 has agreed that the computation of claim u/s. 80HHC of the Act has given by the AO.
2. The Hon'ble Bench while giving to the above conclusion has relied on the decision of the Apex Court in the case of Mysodet Pvt. Ltd. Vs CIT 305 ITR 276. The Tribunal had extract the decision of the Apex Court vide para 5 at page 3 & 4 of its order. The Hon'ble Tribunal has recorded the finding at para-7 page 4 & 5 of the order which is extracted below:
"From the above, it is clear that under sub-section (3) of 80HHC the profits and turnover both the export and total for the entire business 2 M.A No. 727/M/2010 has to be taken into account and cannot be restricted to any single unit of the assessee. As held by the Apex Court, the relief u/s.80HHC is granted on the proportionality basis of the entire business. The wording of the section 80HHC nowhere indicates that this proportionality has to be restricted to only the unit which has made exports ignoring the other units where no export is made. Even though the decision of the Supreme Court relates to the assessment year 1990-91 there are only two material changes in the section before the assessment year 2003-04.
3. It has been now submitted as follows:
"The order of the Tribunal as set out in para 7 of their order require correction as it displays manifest errors of facts and law. Firstly, the Hon'ble Tribunal before applying the decision of the Hon'ble Apex Court ought to have noticed and recorded the findings of fact regarding the business of the appellant. This is a case where the appellant carries on several independent business deriving income there-from and one particular business viz., the Fabric unit was deriving income only from export. The case of the appellant before both the lower authorities was always that the export unit was a separate business unit in so far as this unit derives income only from export and there was no local business. The entire business receipts & expenditure were separately recorded in separate set of books maintained for that particular business. The appellant's claim was supported directly by the decisions of the Hon'ble Madras High Court in CIT Vs Rathore Bros. 254 ITR 656 and CIT Vs Gani & Co. 301 ITR 381. That the Hon'ble Tribunal incorrectly applied the decision of the Hon'ble Supreme Court. The said decision of the Apex Court has no application to the facts of the present case. The said decision was applicable to cases where while carrying on export business, the assessee from the same business was also carrying on and deriving income from local business. That is, the same business derived income from export business and local business. Most respectfully, the Tribunal has inadvertently omitted to appreciate this point. The fact that the appellant's export unit was a separate business and there was no local business went unnoticed.
That the decision of the Hon'ble Supreme Court not having been adverted to or cited at the time of hearing of the appeal and its usage in arriving at the decision is opposed to natural justice for neither party was given any opportunity for meeting the judgement.3 M.A No. 727/M/2010
That the decision of the Hon'ble Mumbai Tribunal in the case of Mandhana Industries Pvt. Ltd Vs DCIT in ITA No. 5961/M/06, which was cited during the course of the hearing and a copy furnished, which on identical facts was decided by the Hon'ble Bench in favour of the appellant. The jurisdictional decision of the Bench on this point also went unnoticed."
4. We have gone through the M.A filed by the assessee. The assessee has relied on the decision of the Mumbai Tribunal in the case of Mandhana Industries Pvt. Ltd Vs DCIT in ITA No. 5961/M/06 and also has stated that the decisions of the Hon'ble Madras High Court in the case of CIT Vs Rathore Bros. 254 ITR 656 and CIT Vs Gani & Co. 301 ITR 381 support his stand.
5. However in the case of Sayyed Hidayat Gulam Abbas Vs ITO in ITA No. 4668/M/05 the ITAT 'E' Bench has held at para 14 as follows:
"Thus the ratio of the decision of the Apex Court in Lakshmi Machine Works has been reiterated and reaffirmed in the case of CIT Vs K. Ravindranathan Nair. In both the cases the Apex Court has held that what is to be considered is the total income of the Assessee. In both Lakshmi Machine works case as well as Ravindranathan Nair's case the court was concerned with what has to be included as part of Total Turnover and they have explained how the four limbs of the formula for computing the relief u/s 80 HHC will have to be worked out. In both the cases the Apex court has made it clear that the profits of business is the profits of the business of the assessee and is not restricted to the profits of the export business alone."
6. Further the Kanataka High Court in the recent decision in the case of G.J. Fernandez Vs ACIT 52 DTR 345 has held as follows:
"For the purpose of 80HHC of the Act, even though the assessee had maintained separate books for each business, deduction u/s. 80HHC is to be computed on the basis of profit derived from all the business."4 M.A No. 727/M/2010
7. We wish to point out that the earlier decision cited by the assessee in the case of Rathore Bros. 254 ITR 656 has not considered all these decisions.
8. However this aspect of the issue has not been put to the assessee or an opportunity has been given to submit their arguments in this matter.
9. The Bombay High Court decision in the case of Inventure Growth & Securities Ltd. Vs ITAT 324 ITR 319 holds that Tribunal should not decide the cases, relying on the decision which has not been put to the assessee or department at the time of hearing. The decision of the Apex Court in the case of Mysodet Vs CIT 305 ITR 276 was not put to the assessee or department at the time of hearing. Therefore in the interest of justice, we deem it fit to recall the order for the limited purpose of giving an opportunity of hearing the assessee on this judicial precedent and the Registry is directed to fix a suitable date for hearing the same.
10. In the result the M.A. filed by the assessee is allowed.
Order pronounced on this 17th day of August, 2011.
Sd/- Sd/- (PRAMOD KUMAR) (ASHA VIJAYARAGHAVAN) Accountant Member Judicial Member Mumbai, Dated 17th August, 2011 Rj 5 M.A No. 727/M/2010 Copy to : 1. The Appellant 2. The Respondent 3. The CIT-concerned 4. The CIT(A)-concerned 5. The DR 'B ' Bench True Copy By Order Asstt. Registrar, I.T.A.T, Mumbai 6 M.A No. 727/M/2010 Date Initials 1 Draft dictated on: 8.8.2011 Sr. PS/PS 2. Draft placed before author: 8.8.2011 ______ Sr. PS/PS 3. Draft proposed & placed before _________ ______ JM/AM the second member: 4. Draft discussed/approved by _________ ______ JM/AM Second Member: 5. Approved Draft comes to the Sr. _________ ______ Sr. PS/PS PS/PS: 6. Kept for pronouncement on: _________ ______ Sr. PS/PS 7. File sent to the Bench Clerk: _________ ______ Sr. PS/PS 8. Date on which file goes to the _________ ______ Head Clerk: 9. Date of dispatch of Order: _________ ______