AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 800
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....cts and in the circumstances of the case, the Ld.CIT(A) has erred in restricting the relief u/s.80HHC, while computing book profit, merely for the reason that the assessment reopened u/s.147 cannot result into excess relief, when he himself has accepted that the assessee is entitled to get higher relief, on the basis of the decision of Supreme Court in case of CIT v. Ajanta Pharma Ltd. dated 9th September, 2010. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3. Briefly stated facts are that the case of the assessee was reopened and the reassessment u/s.143(3) r.w.s.147 of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 30/12/2008, thereby the Assessing Officer (AO in short) held that since the amount deductible u/s.80HHC of the Act is NIL, no deduction u/s.80HHC is admissible to the assessee for the year under consideration. Against the said assessment order, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee, partly allowed the appeal. Against the order of the ld.CIT(A),....
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....Court rendered in the case of P.V.Doshi vs. CIT report at (1978) 113 ITR 22 (Guj.). He also placed reliance on the judgement of Hon'ble Gujarat High Court in the case of Vishwanath Engineer vs. ACIT reported at (2012) 21 txmann.com 5 (Guj.). 4.1. On the contrary, ld.Sr.DR supported the order of the AO and submitted that there is no illegality in rejecting the ground No.1 of the appeal. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. As per Form No.35, ground No.1 raised in the assessee's appeal reads as under:- 1. In law and in the facts and circumstances of the appellant's case, the impugned reassessment order is void and deserves to be cancelled. Inter alia, for the reason that it has been passed without jurisdiction. 5.1. However, the ld.CIT(A) has dismissed the ground by observing as under:- "2. The ground No.1 is general in nature and therefore not required to be adjudicated." 5.2. It is a settled position of law that whenever a question of jurisdiction is raised, the same is required to be adjudicated and cannot be termed as general in nature. From the records, ex-facie it is transp....
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....nguished on the ground of change in language. The assessee company also relied on CBDT Circular no. 55.9 and 680. The claim of deduction under section 80HHC was examined in detail from all above angels. The similar claim was also made in the immediately preceding assessment year which was found in order after detail examination. Therefore following the assessment order for immediately preceding assessment year, for MAT computation under section 115JB, contention of the assessee company are accepted and for section 80HHC relief quantum is allowed based on book profit of the assessee company. 5.2 The assessee company in its letter dated 23.5.2005 stated that while passing the assessment order, the whole of the export profit shall be reduced from the book profit and not to restrict amount of deduction to the extent of 30% profit as provided in subsection (1B) of section 80HHC of the I.T. Act. The contention of the assessee company are examined in detail herein below: On the point whether the assessee company should compute the relief under section 80HHC without giving effect to section 80HHC.(1B) of the I.T. Act. The assessee company in this connection during the course of discu....
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....B). This issue was also examined during the course of assessment proceeding for immediately preceding assessment year and after detailed examination the claim was accepted. Following the same, the claim arid contention of the assessee company are also acceptable for present assessment, year, however, it is rejected on the ground that the same is not made through filing a revise return of income but it is claimed by way of letter. The Supreme Court of India in the case of Goetze (India) Ltd. v CIT (284 ITR 323) has uphold the contention of the Assessing Officer there are no provision under the Income-tax Act to make amendment in the Return of Income by modifying an application at the assessment stage without revising the return. Thus though the claim of the assessee company is genuine it is not entertained in view of above clear cut finding of the apex court. 5.3 The assessing company, in its letter dated 23.5.2005 also stated that DEPB should be considered as business income if the same is not held to be export incentive and hence no justification is required. During the course of the assessment proceedings, the assessee company was also asked clarify whether they are satisfyin....
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....and with a view to encouraging larger exports of goods. ii) By Finance Act, 1983, the aforesaid provision was renumbered as 80-HHC. Subsequently, there have been various amendments in the provisions of section 80HHC including the amendment brought about in the year 1991 to cover all the cases of export incentives, available at that point of time. As a result, various export incentive including profit and gain as well as premium on sale of licence, cash assistance and duty draw back were covered under the scheme of Section 80HHC. This was further clarified through CBDT circular, bearing Ref. F. 133/131/97-TPL dated 23.02.1998, by treating premium on sale of quota as other export Incentives as envisaged under clauses (iiia), (iiib) and (iiic) of Section 28. Thus, the history of Section 80HHC clearly points towards the assurance of the Government to the taxpayer that the larger the export greater would be the benefit under Section 80HHC. It is well known fact that in the pre-liberalised Indian Economy, the Indian products were not internationally cost competitive but at the same time, India was in dire need of foreign exchange. With a view to encourage earning of more foreign exch....
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....e and Development Regulation Act, 1992. Accordingly though amendment are not made in 1. T. Act, in Section 28(iiia), reference to the Imports and Exports (Control) Act, 1947 has to be read as reference to the Foreign Trade and Development Control Regulation Act, 1992 as per the provisions of Section 8(1) of General Clause Act. In. view of provisions of Section 8(1) of General Clauses Act, premium on sale of DEPB licence, granted to the exporter under new Foreign Trade and Development Regulation Act, would stand at par with Duty Drawback. Now, we give herein below our detail submission as to how the new provisions are unconstitutional and illegal and how it do not apply to the fact of our case. At the outset, we submit that the above amendment is ex facie discriminatory vis-a-vis the exporters like the assesses, company having turnover, of over Rs. 10 crores and exporters with turnover of less than Rs. 10 crores. It is submitted that the classification sought to be introduced through the impugned amendment is not only without any reasonable basis and it tries to create new burden on the various exporters having annual turn of over Rs. 10 crores and having availed of DEPB Scheme,....
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....ards custom duty in case of manufacturer of cotton fabrics. The applicable rules of drawback credit attributes entire rate to the central excise for the year under consideration. Thus in our case so far as second condition is concern, the computation provision fails and therefore as per the settled provisions of the law, the above referred amendment do not apply to the fact of our case. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, Your honour will please note that above provisions are inserted in the statute book to neutralize effect of the judgement of ITAT as well as due to the contention of the revenue that the premium on the sale of DEPB licence is not an export incentive. This interpretation is based on the wording-of Section 28(iiia) of the Act which reads asunder: "Profit on sale of licence granted under the Imports (Control) Order 1955 made under the .Imports and Exports (Control) Act, 1947". According to the revenue, in the. proviso to Section 80HHC(3) the reference is to above section 28(iiia), As such, anything falling outside the scope of Section 28(iiia) will not be eligible while computing deduction under Section 80HHC. Probably the revenue has got carried away by....
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....inarily saleable in the market. The nature and character of the credit of the amount in the passbook, nowhere entitles any particular item or goods at any concessional rate or at a specific rate. In this case whenever credit has to be availed, import duty on the imported goods is computed In an ordinary manner and thereafter instead of making payment of that liability, the credit in the passbook can be used. It is just like money in the bank account with the government to be used as and. when required to.The basic objective of coming out with the scheme by the government was to help its own fund flow because the government was not required to pay the money in cheque. As regards the transfer of DEPB, there is a Restriction on the transfer. An exporter can avail of the DEPB in his own name even when the export proceeds have not been realized. The transfer of the DEPB credit can be made by the exporter only when the payment of export has been realized. This is a very vital difference which endorses the above argument that it is a credit to the exporter and the facility of transfer is only an additional advantage given to the exporter to allow the credit to be used by other person. A....
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....eed to be construed liberally in favour of the assessed Any other interpretation would mean depriving the assesses of the benefit, which the legislature desired to give to the assesses. In view of above, your honour will please appreciate that the premium on sale of DEPB licence is squarely covered under the provisions of section 28(iiia) and there was no need to insert new provisions viz 28(iiid) & 28(iiie) which are not only unconstitutional but also create unnecessary burden and hardship on exporters having turnover of Rs. 10 crore or more. PRESUMING BUT NOT ACCEPTING AND WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, We also respectfully state that the DEPB licence is granted to the exporter under Trade and Development Regulation Act. Under the scheme an exporter is entitled to get refund of the duty paid in respect of the purchases made by him by way of license/credit in the passbook. This license/credit can be utilized by the exporter against payment of custom/import duty, if any, in respect of import of any material or he is not in position to utilise the said license/credit, he can transfer this license/credit at a premium or discount to any other person who can claim thi....
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....and with respect to various arguments similar to arguments put forwarded by the assessee company in assessment year 2003-04. As far as the argument of the assessee company concerning that the provisions are unconstitutional and illegal, non application of amendment to section 80HHC in view of failure of machinery provisions to the fact of assessee's case, DEPB credit fall under clause 28(iii)(a) and receipt are in the nature of capital receipt are not at all acceptable and hence rejected. Similarly, the argument of the assessee company that the legislature through above amendment want to tax the profit on transfer of DEPB and not the value of DEPB and while computing deduction, the value of DEPB is to be considered as business profit also do not find merit and accordingly rejected. Thus for MAT computation under section 115JB, section 80HHC relief quantum is allowed based on book profit of the assessee company but it is re-worked in view of non-acceptance the claim of the assessee company referred in para 5.2 and rejection of claim referred in para 5.3. It is also noticed that while computing the book profit, the assessee company considered the profit of Rs. 101,28,42,940/- b....
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....ction 147/148 of the Act. In this connection, we may profitably refer to the following observations made by the Supreme Court in the case of CIT v. Kelvirator of India Lid. [2010] 320 1TR 561 :: 187 Taxman 312. where the Court made the following observation on the scope of Section 147 of the Act: "5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post--1- 4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of "mere change of opinion", which cannot b....
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....ied) 9. For the aforestated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs." (Emphasis supplied). 18. After applying the aforesaid principle to the facts of the present case, we are convinced that this is a case where the Assessing Officer has reopened the proceeding merely on the ground that from the material available, the view earlier adopted by him was erroneous one. Thus, such fact cannot be a ground for reassessment." 6.1. In view of the binding precedent, we are of the considered view that it is not the case where the material was not available with the AO and AO has not applied his mind in the case under appeal. Therefore, we hold that the reopening of the assessment is made on the basis of change of opinion only as the ld.counsel for the assessee has demonstrated from the records that all information/details were available with the AO and the AO has applied his mind on the allowability of deduction u/s.80HHC and computation of book profit. Therefore, order under appeal is set aside and assessment framed u/s.143(3) read with section 147 is quashed being invalid. 7. Since we have decided the reopeni....