2013 (6) TMI 400 - AT - Income Tax

Appeal Dismissed Despite Merit: Upholding Judicial Discipline in Tax Disallowance Case

The appeal, delayed by 129 days due to a partner's accident, was condoned by the Tribunal for substantial justice. Despite recognizing the merit of the ... Disallowance of deduction u/s 80HHC on DEPB license sold - Held that:- No doubt, the assessee's appeal is both factually and legally acceptable on merits in view of the judgement Topman Exports [2012 (2) TMI 100 - SUPREME COURT OF INDIA]. However, in view of the existing direction in the assessee's own case [2010 (10) TMI 928 - BOMBAY HIGH COURT] directing the AO to consider the claim of the assessee in accordance with the decision of Topman Exports & Others [2009 (8) TMI 827 - ITAT MUMBAI]. In the said judgement, the Hon'ble Bombay High Court has directed the AO to dispose off the issue in the light of their judgment in the case of Kalpataru Colours and Chemicals [2010 (6) TMI 63 - BOMBAY HIGH COURT] wherein held that sale of the Duty Entitlement Passbook is taxable under section 28(iiid) - face value is not required to be deducted from the sale proceeds . Thus due to judicial discipline, we are procedurally constrained to provide the requisite relief to the assessee as this Tribunal has no authority to direct the AO to follow the decision of the Supreme Court in contravention of the said existing direction of the jurisdictional High Court. Hence, the assessee is directed to approach the appropriate forum to seek the relief in view of the existing direction of the jurisdictional High Court. Appeal filed by the assessee dismissed. Issues:1. Delay in filing the appeal.2. Disallowance of deduction u/s 80HHC on DEPB license sale.3. Validity of the decision based on jurisdictional High Court's order.4. Applicability of Supreme Court's judgment in the case.Issue 1: Delay in filing the appealThe appeal filed by the assessee was delayed by 129 days. The reason cited for the delay was the partner of the assessee being bedridden due to an accident. The Tribunal considered the reasons provided and noted that the delay was not mala fide but due to genuine circumstances. Following the principle of substantial justice, the Tribunal decided to condone the delay and proceed with the adjudication on merits.Issue 2: Disallowance of deduction u/s 80HHC on DEPB license saleThe AO disallowed the claim of deduction u/s 80HHC on the sale of DEPB licenses based on the jurisdictional High Court's order in the case of Kalpataru Colours and Chemicals. The Ld.CIT(A) confirmed this disallowance, stating that the decision of the Tribunal in Topman Exports had been reversed by the High Court. However, the Tribunal noted that the Supreme Court, in its decision in the case of Topman Exports, dated Feb.2012, upheld the order of the ITAT Mumbai Special Bench. Despite recognizing the merit of the assessee's appeal, the Tribunal, bound by the existing direction of the High Court, directed the assessee to seek relief from the appropriate forum. Consequently, the appeal was dismissed.Issue 3: Validity of the decision based on jurisdictional High Court's orderThe AO and Ld.CIT(A) relied on the jurisdictional High Court's order in the case of Kalpataru Colours and Chemicals to disallow the deduction u/s 80HHC. However, the Tribunal observed that the High Court's decision had been reversed by the Supreme Court in the case of Topman Exports. Despite this, the Tribunal, out of judicial discipline, upheld the High Court's direction and dismissed the appeal, advising the assessee to seek relief through the appropriate channel.Issue 4: Applicability of Supreme Court's judgment in the caseThe Tribunal recognized the relevance of the Supreme Court's judgment in the case of Topman Exports, which upheld the order of the ITAT Mumbai Special Bench regarding the deduction u/s 80HHC. However, due to the existing direction of the jurisdictional High Court, the Tribunal refrained from providing relief to the assessee, emphasizing the need to follow judicial discipline. As a result, the appeal was dismissed, and the assessee was directed to pursue relief through the appropriate forum in line with the High Court's order.This detailed analysis of the judgment highlights the issues of delay in filing the appeal, disallowance of deduction u/s 80HHC, validity of decisions based on court orders, and the applicability of the Supreme Court's judgment, providing a comprehensive understanding of the legal complexities involved in the case.