Raghuvir Exim Ltd., Ahmedabad vs Assessee

ITA No. 1268/Ahd/2011 िनधा रण वष /Assessment Year: 2001-02 DCIT, Raghuvir Exim Pvt Ltd, Circle-5, Ahmedabad Ahmedabad PAN : AAACR 7492 N

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Assessee(s) by : Shri P.M. Mehta with Shri G.M. Thakor, AR Revenue by : Shri Dinesh Singh, Sr. DR.

सु नवा ई क# ता र% ख / Date of Hearing : 09/04/2015 घोषणा क# तार%ख / Date of Pronouncement: 17/04/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

These are the cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income-tax (Appeals)-XI, Ahmedabad dated 24.02.2011 for Assessment Year 2001-02.

2. In these cross appeals, the assessee has raised following grounds:-

1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the disallowance for ITA Nos. 1222 & 1268/Ahd/2011 Raghuvir Exim Pvt Ltd v. DCIT AY: 2001-02 2

deduction u/s 80HHC on Duty Entitlement Pass Book (DEPB) income when no such action is called for.

1.2 Without prejudice to above, the learned CIT(A) ought to have appreciated that as per new Taxation Laws Amendment Act, 2005 only profit on sale/transfer of DEPB licenses are covered u/s 28(iiid) of the Act and not reimbursement of duty component in the DEPB scheme.

1.3 Without prejudice to above, the learned CIT(A) ought to have appreciated that rules pertaining to duty drawback applicable for the year under consideration did not prescribe any allocation towards custom duty in case of appellant hence computation provisions as per Taxation laws Amendment Act fails in case of appellant.

3. The grounds raised by the Revenue in its appeal read as under:-

1. The Ld. Commissioner of Income tax (A) has erred in law and on facts in allowing assessee's in Ground No.3 that "having assessed income at Rs.89,27,214/- at the first assessment proceedings and (CIT) having given relief against that order, the AO can never enhance the assessed income and AO has no jurisdiction to do so, hence the enhancement of income from Rs.89,27,214/- to Rs.1,05,01,690/- at the time of passing assessment u/s.143(3) r.w.s.254 giving effect to the order of ITAT is void."

2. The Ld. Commissioner of Income tax (A) has erred in law and on facts in directing the AO to modify the assessment order passed u/s. 143(3) r.w.s.254, by allowing assessee's in Ground No.3 as above.

3. The Ld. Commissioner of Income tax (A) has erred in law and on facts in holding that the impugned order was passed to give effect to Tribunal's order, the Tribunal's decision was specific, the issue of giving effect to first limb of the proviso to Sec. 80HHC was not before the Tribunal and it is beyond the mandate of the Tribunal's order, without appreciating the fact that the income enhanced is on account of the consequential effect of re-working of allowable deduction u/s.80HHC.

4. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer.

5. It is , therefore , prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored.

ITA Nos. 1222 & 1268/Ahd/2011 Raghuvir Exim Pvt Ltd v. DCIT AY: 2001-02 3

4. The facts of the case are that the original assessment was completed u/s 143(3) on 26.03.2004 at the total income of Rs.89,27,214/-. The above income was determined after allowing deduction u/s 80HHC amounting to Rs.51,63,378/-. While computing the deduction u/s 80HHC, the Assessing Officer has excluded the DEPB credit. On appeal, the CIT(A) directed the Assessing Officer to grant deduction u/s 80HHC with reference to DEPB incentive as claimed by the assessee. Against the order of the ld.CIT(A), the Revenue was in appeal wherein the ITAT set aside the matter back to the file of the Assessing Officer with the following directions:-

"For this issue, we find that neither of the authorities below has considered the amendment brought out in Section 28(iiia) as inserted by the Taxation Laws Amendment Act, 2005 w.r.e.f. 1-4-1998 consequent to which the income from DEPB license was to be considered under the head profit and gains of business or profession and consequently the second proviso to sub- section 3 of Section 80HHC as inserted by the Taxation Laws Amendment Act, 2005 w.r.e.f. 1-4-1998. We find that both the parties agreed that this issue requires reconsideration by the Assessing Officer in view of the above mentioned provisions. Accordingly, we set aside this issue of the Revenue's appeal and Cross Objection of the assessee to consider this issue in the light of amended provisions as brought out in the statute. Accordingly, this appeal of the Revenue and the CO of the assessee are allowed for statistical purposes."

5. While giving effect to the order of the ITAT, the Assessing Officer again held that the assessee is not entitled to deduction u/s 80HHC on DEPB license. However, he further reduced the deduction u/s 80HHC which was originally allowed on the ground that at the time of original assessment the loss under the first limb of the proviso to section 80HHC has not been considered. Accordingly, the Assessing Officer allowed deduction u/s 80HHC at Rs.35,88,903/- as against the deduction originally allowed at Rs.51,63,317/-. The assessee, aggrieved with the order of the Assessing Officer, filed appeal before the CIT(A) who agreed with the assessee that the ITA Nos. 1222 & 1268/Ahd/2011 Raghuvir Exim Pvt Ltd v. DCIT AY: 2001-02 4

Assessing Officer while giving effect to the order of the Tribunal could not have considered the loss as per first limb of the proviso to section 80HHC. The relevant finding of the ld. CIT(A) reads as under:-

"5.2 The contentions of the learned A.R. are tenable. The impugned order was passed to give effect to Tribunal's order. Tribunal's directions were specific. The issue of giving effect to the first limb of the proviso to Sec. 80HHC was not before the Tribunal and it is beyond the mandate of the Tribunal's order. Both the decisions relied on by the A.R. are applicable to the facts of the case. This ground of appeal is allowed. A.O. id directed to modify the impugned order accordingly."

6. The Revenue, aggrieved with the above findings of the ld. CIT(A), is in appeal before us.

7. So far as the consideration of DEPB license for the purpose of 80HHC is concerned, the ld. CIT(A) did not allow any relief to the assessee. Hence, the assessee's appeal.

8. We have carefully considered the arguments of both the sides and perused the material placed before us. From the order of the ITAT, relevant portion which has already been reproduced by us above, it is evident that the ITAT has set aside only one issue to the file of the Assessing Officer - that was for consideration of DEPB license for the purpose of 80HHC. It has not set aside the assessment order in general. Therefore, the jurisdiction of the Assessing Officer while giving effect to the order of the ITAT was limited to the issue set aside by the ITAT. We, therefore, agree with the ld. CIT(A) that the adjustment of loss as per first limb of proviso to section 80HHC, while giving effect to the order of the ITAT, was beyond the ITA Nos. 1222 & 1268/Ahd/2011 Raghuvir Exim Pvt Ltd v. DCIT AY: 2001-02 5

mandate of the Tribunal's order. Accordingly, the Revenue's appeal is dismissed.

9. So far as the assessee's appeal is concerned, we find that now the issue is squarely covered in favour of the assessee by the decision of Hon'ble Apex Court in the case of Topman Exports v. CIT, reported in (2012) 342 ITR 49 (SC) [BCAJ]. We, therefore, direct the Assessing Officer to allow the deduction u/s 80HHC in the light of above decision of the Hon'ble Apex Court in the case of Topman Exports (supra).

10. In the result, Revenue's appeal is dismissed while the assessee's appeal is allowed pro tanto.

Order pronounced in the Court on 17th April, 2015 at Ahmedabad.

Sd/- Sd/-

(S. S. GODARA) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 17/04/2015 Biju T., PS

षत Copy आदे श क# ूितिल+प अमे+षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू यथ / The Respondent. 3. संबंिधत आयकर आयु. / Concerned CIT 4. आयकर आयु.(अपील) / The CIT(A)-XI, Ahmedabad

5. +वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

/ BY ORDER, आदे शानुसार

TRUE COPY

Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad