Income Tax Appellate Tribunal - Mumbai
Nulux Engineers, Mumbai vs Addl Cit 20(2), Mumbai on 6 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " B" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM
ITA No. 2309/Mum/2013
(A.Y:2003-04)
M/s Nulux Engineers Addl. Commissioner of
5-Beach Queen, 33-J.P. Road, Vs. Income Tax W ard-20(2),
Versova, Mumbai-400 061 Mumbai
Appellant .. Respondent
PAN No.AAAFN1423C
ITA No. 7341/Mum/2014
(A.Y:2002 -03)
Addl. Commissioner of M/s Nulux Engineers
Income Tax W ard-20(2), Vs. 5-Beach Queen, 33-J.P. Road,
Mumbai Versova, Mumbai-400 061
Appellant .. Respondent
PAN No.AAAFN1423C
Assessee by .. Shri Manish Shah, AR
Revenue by .. Shri Suman Kumar, DR
Date of hearing .. 04-09-2017
Date of pronouncement .. 06-09-2017
ORDER
PER MAHAVIR SINGH, JM:
These two appeals are arising out of the different orders of CIT(A)- XX & CIT(A)-31, Mumbai, in appeal Nos. CIT(A)XX/IT- 197/Addl.cit.20(2)/2005-06 & CIT(A)-31/IT-204/ACIT 20(20)/13-14 dated 27-12-2006 & 24-09-2014. The Assessments were framed by ACIT, Mumbai for the A.Ys. 2003-04 & 2002-03 vide orders dated 20-02-2006 & 2 ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04 30-08-2013 under section 143(3) and 154 of the Income Tax Act, 1961(hereinafter 'the Act').
2. At the outset, the learned Counsel for the assessee stated that this appeal is time barred by 2216 days and for the delay he has filed condonation petition along with affidavit stating the reason that the appeal by CIT(A) was disposed off vide order dated 27-12-2006 and in the said order the CIT(A) has followed the 3rd proviso under section 80HHC(3) of the Act and confirmed the action of the AO in reducing the deduction claimed by assessee under section 80HHC of the Act. It was claimed by the assessee that this appellate order of CIT(A) was received by him on 28-12-2006 and accordingly, the appeal was to be filed before Tribunal against this order on or before CIT(A) 28-02-2007. He stated that actually, the appeal was filed only on 22-03-2013 thereby this delay of filing in appeal by 2216 days. For this the learned Counsel for the assessee stated that following reasons for the delay: -
"5. I say that although we had informed our tax consultant that Federation of Indian _Exports Association (of which we are also member) is contesting the retrospectivity on behalf of all the members and there was no need to contest individually, our tax consultant, Mr. V.C. Shah aged 80 in February 2007 advised based on his experience &that the allowability of deduction under section SOHHC for export incentive (DEPB) was settled by the Taxation laws (Amendment) Act, 2005 and thus the CIT (A) has correctly applied the law and based on his experience very rarely retrospective amendment in revenue laws is struck down by any Court. Furthermore, the Commissioner of Income Tax (Appeal) and Income Tax Appellant Tribunal being creature of the Act cannot decide the 3 ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04 constitutional validity of such an amendment. He also opinioned that in view of aforesaid it is not advisable to litigate and he even opinioned that the argument that only "profit" is to be excluded and whole is against the assessee as is evident by the Commissioner of Income Tax (Appeal)'s order who has followed binding decision of Income Tax Appellant Tribunal.
6. I say that the argument on "profit" was also decided against the assessee by jurisdictional High Court in the case of CIT Vs Kalpataru Colours & Chemicals (2010) 328 ITR 451 on 29.06.2010, which was informed by our earlier tax consultant
7. I say that the assessee firm very recently in the month of February 2013 appointed Sudit K Parekh & Co., Chartered Accountants to review their tax files (Appointment letter is attached as Annexure
- 1). On review of the files and after analyzing the facts related to the above mentioned assessment year, they have pointed out that as per Supreme Court decision in the case of Topman Exports Vs. Commissioner of Income Tax (2012) 67 DIR (SC) 185 the assessee firm would be eligible for deduction u/s 80NHC on the face value of DEPS which will be considered as "cash assistance" and would be taxable under section 28(iiib) and not u/s 28(iiid) of the Income Tax Act and hence the 3rd proviso to section SOHHC would not apply to such receipt. Based on this correct legal position of section BOHHC as confirmed by the Supreme Court by reversing decision of jurisdictional High Court and therefore tax paid on this amount is without 4 ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04 authority of law, the deduction u/s 80HHC would work out to Rs.1,34,24,286/- (Invoice of Sudit K Parekh & Co. for the said services is attached as Annexure -2).
8. I say that they have also pointed out the very recent decision of the Mumbai High Court in the case of Vijaya Silk House (Bangalore) Ltd. Vs. Union of India & ANR 349 FIR 566 (Born) in which Mumbai High Court has held that the amendment in sec 80HHC relating to DEPB benefits deprives the benefit granted earlier to a class of assessee's and is accordingly violative for its retrospective operation. This decision was delivered on 16.08.2012. I say that these decisions of Supreme Court and High Court were not brought to our notice by anyone prior to February 2013.
9. I say that the firm relied on tax consultant's advice in taking a decision that due to retrospective amendment and binding Income Tax Appellant Tribunal decision not to challenge the Commissioner of Income Tax (Appeal)'s order on this issue. I say that striking down of the retrospective amendment and binding decision of Supreme Court in the case of CIT Vs Kalpataru Colours & Chemicals (2010) 328 1W 451 reversing the earlier line of cases resulted in the firm paying tax contrary to the provision of law. I say that on receipt of SKP's advice and reviewing legal position, the firm decided to file appeal belated by 2214 days. I say and pray that the facts constitute "sufficient cause" for delay in filing appeal."5
ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04
3. The learned Counsel for the assessee filed copy of Tribunal order of Kolkata Bench in the case of Magnum Exports Vs. ACIT in ITA No. 1111/Kol/2012 for the AY 2003-04 wherein facts are exactly identical. The delay of 2078 days was condoned exactly on identical circumstances. We find that exactly identical facts and circumstances are here in the present case and hence, we condoned the delay and admit the appeal of the assessee.
4. Further, we find that the assessee's matter is regarding disallowance of claim of deduction under section 80HHC of DEPB profit by the AO and confirmed by CIT(A) applying third proviso to section 80HHC of the Act as inserted by Taxation Laws (Amendment) Act, 2015. For this assessee has raised the following grounds: -
"1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax(Appeals) - XX (hereinafter referred to as CIT(A) has heard in considering benefit under Duty Entitlement Pass Book Scheme ('DEPB') a DEPB' instead of 'cash assistance' and accordingly applying the 3rd Proviso to section BOHHC of the Income Tax Act, as inserted by Taxation Laws (Amendments Acts) Act, 2005.
2. Without prejudice to ground no. 1, the appellant submits that Bombay High Court in the case of Vijay Silk House (Banglore) Limited vs. Union of India & Anr has accepted the decision of Gujarat High Court in the case of Avani Exports & others vs CIT, wherein the court has held that the retrospective amendments to section SOHHC is not constitutionally valid."6
ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04
5. We find that this issue is clearly covered by the decision of Hon'ble Bombay High Court in the case of CIT vs Kalpataru Colours and Chemicals 328 ITR 451 (2010) (Bom) and also followed by Mumbai Tribunal In ITA No. 1398/Mum/2012 for the Ay 2004-05 vide order dated 28-08-2013, whereby Tribunal has directed the AO to recompute the deduction under section 80HHC of the Act in respect of DEPB profit in the light of judgement of Hon'ble Supreme Court in the case of M/s Topman Exports (2012) 342 ITR 49 (Mum) by observing as under: -
"4. We have perused the records and considered the matter carefully. The dispute is regarding allowability of claim of deduction in relation to DEPB income. The special bench of Tribunal in case of Topman Exports Ltd.(33 SOT 337) had earlier held that face value of DEPB has to be considered as business income u/s 28(iii b) and in case of sale the excess of sale price over the face value has to be considered as business profit u/s 28(iii d) and deduction u/s 80HHC had to be computed accordingly. The said decision of Tribunal has however not been upheld by Hon'ble High Court of Bombay in case of CIT Vs. Kalpataru Colours & Chemicals Ltd.(328 ITR 451) in which it was held that the entire DEPB income including the face value has to be considered as a profit u/s 28(iii d). However the Hon'ble Supreme Court recently in case of Topman Exports Ltd. (Supra) have not upheld the view taken by the Hon'ble High Court of Bombay and have confirmed the order passed by special bench of Tribunal on this issue, as per which the face value of DEPB has to be considered as income u/s 28 (iiib) and excess of sale price over the face value has to be considered as profit u/s 7 ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04 28(iii d). The deductor u/s 80HHC is, therefore, required to be computed accordingly. We, therefore, set aside the order of CIT(A) and direct the AO to re compute the deduction u/s 80HHC in respect of DEPB income in the light of Judgment of Hon'ble Supreme Court in case of Topman Exports Ltd (Supra)."
6. As the issue is covered, we also directed the AO to recompute the deduction in respect of DEPB profit and accordingly, the assessee's appeal is allowed.
7. Similar is the issue raised by Revenue in ITA No 7341/Mum/2014 for the AY 2002-03, whereby the same ground is raised by Revenue against the order of CIT(A) which reads as under: -
"1. On the facts and circumstances of the case and in, law, the Ld. CIT(A) has erred in directing the AO to rectify' the assessment wherein the original assessment, the AO disallowed part of the deduction u/s. 80HHC of Rs. 66,72,275/- being deduction on DEPB as per the proviso 3 to section 80HHC did not permit DEPB rate profit a/s. 28(iii)(d) unless certain conditions are satisfied.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in considering decision of Hon'ble Supreme Court which was not in existence when the order was passed and treated as mistake apparent liable for rectification u/s. 154 of the I.T. Act."
8. As the Issue in this appeal of revenue is also exactly identical, and hence, taking a consistent view, we here in this appeal also confirm the 8 ITA No. 2309/ Mum/2013 & ITA No. 7341/ Mum/2014 M/s Nulux Engineers ; AY s 02-03 & 03-04 order of CIT(A) and allow the deduction. This appeal of Revenue is dismissed.
9. In the result, the appeal of assessee in ITA No. 2309/Mum/2013 is allowed and Revenue's appeal in ITA No. 7341/Mum/2014 is dismissed.
Order pronounced in the open court on 06-09-2017.
Sd/- Sd/-
(MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 06-09-2017
Sudip Sarkar /Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file. //True Copy//
BY ORDER,
Assistant Registrar
ITAT, MUMBAI