TMI Blog2008 (7) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... , where an assessee is entitled to both the deductions under, ss. 80HHC and 80-IA, deduction u/s. 80HHC will be available on profits derived from export business after reducing the amount of deduction allowed u/s. 80-IA of the Act - Since provisions of s. 80-IA(9) are applicable to s. 80-IB by virtue of provisions of s. 80-IB(13), the amount of deduction allowable under s. 80-IB will be reduced from profits derived from export business for the purpose of deduction under s. 80HHC. However, there was difference of opinion amongst various Benches of this Tribunal. The controversy amongst the various Benches of the Tribunal has been set at rest by the decision of Tribunal, Chennai Special Bench in the case of Asstt. CIT vs. Rogini Garments [ 2007 (4) TMI 122 - ITAT, CHENNAI] wherein it has been held that relief u/s. 80-IA should be deducted from profits and gains of assessee's business before computing relief under s. 80HHC of the Act. In the case of CIT vs. Rochi Ram Sons[ 2004 (7) TMI 75 - RAJASTHAN HIGH COURT] , the issue related to deduction under ss. 80-IA and 80HHC, but since the assessment year involved was 1995-96 and the amendment in s. 80-IA was made w.e.f. 1st A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCM Creations did not refer to the provisions of s. 80-IA(9A) before the Hon'ble Madras High Court and hence their Lordships have no occasion to examine the provisions of s. 80-IA(9A) inserted by the Finance Act, 1998 w.e.f. 1st April, 1999. At the same time we cannot overlook the insertion of sub-s. (9A) of s. 80-IA for the purpose of computation u/s. 80HHC. Tribunal in the case of Rogini Garments had examined the provisions of s. 80-IA(9A) and has held that the relief allowed u/s. 80-IA should be deducted from profits and gains of assessee's business before computing relief u/s. 80HHC of the Act. The decision of the Tribunal is binding on us. Respectfully following the same, it is held that the deduction claimed and allowed u/. 80-IB(13) will be reduced from eligible profits of business for computation of deduction u/s. 80HHC of the Act. Deduction u/s 80-IB - Duty drawback/DEPB - HELD THAT:- AO has not allowed deduction under s. 80-IB of the Act in respect of duty drawback and DEPB on the ground that these were not derived from industrial activities of the assessee. Secs. 80-IA and 80-IB were substituted for s. 80-IA by the Finance Act, 1999 w.e.f. 1st April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K.D. RANJAN, A.M. : This appeal by the assessee for asst. yr. 2002-03 arises out of order of the CIT(AJ, Bareilly. 2. The first issue for consideration relates to deduction under s. 80HHC of the IT Act by reducing the amount of deduction allowed under s. 80-IB of the Act. The relevant grounds of appeal are reproduced as under: 2. That the CIT(A) erred on facts and in law in determining deduction admissible to the appellant under s. 80HHC of the IT Act at Rs. 76,80,636 against deduction of Rs. 80,39,341 claimed by the appellant; 3. That the CIT(A) erred on facts and in law in holding that for computing allowable deduction under s. 80HHC eligible profits of the business must be reduced by deduction allowed under s. 80-IB of the Act. 3. The facts of the case stated in brief are that the assessee is a manufacturer and exporter of aluminum art wares, brass art wares, EPNS wares and other Indian handicrafts. The assessee claimed deduction under ss. 80HHC and 80-IB on business profits derived by the assessee. The AO referring to provisions of ss. 80-IB(13), 80-IA(9) and 80HHC(4B) held that once deduction under s. 80-IB had been allowed, the deduction on the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gross total income of an assessee includes any profits and gains derived from any business referred to in sub-ss. (3) to (11B) being the eligible business, the assessee shall be entitled for deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in the section. Further s. 80-IB(13) provides that the provisions contained in sub-s. (5) and sub-ss. (7) to (12) of s. 80-IB shall, so far as may be, apply to the eligible business under this section. Sec. 80-IA(9) provides for exclusion of profits allowed as deduction for the purpose of computing deduction under Chapter VI-A. It reads as under: Where any amount of profits and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading 'C.-Deductions in respect of certain incomes', and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be. 6. From the language of s. 80-IA(9) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases of interveners had not been examined and the regular Bench while deciding those appeals might keep in view the principles laid down by Special Bench. Thus from the order of Tribunal in the case of Rogini Garments, it is clear that the arguments were directed by the counsel for SCM Creations in respect of deduction under ss. 80HH and 80-I and not in respect of deduction under ss. 80-IA/80-IB and 80HHC. 8. In SCM Creations, the dispute before Hon'ble Madras High Court related to the question as whether the relief under s. 80-IA should be deducted from profits and gains of business before computing relief under s. 80HHC. The learned counsel for SCM Creations appearing before Hon'ble Madras High Court submitted that the issue had been decided in favour of the assessee in TC No. 344 of 2004 [reported as Dy. CIT vs. Chola Textiles (P) Ltd. (2008) 218 CTR (Mad) 123-Ed.]. Hon'ble Madras High Court in TC No. 344 of 2004 held as under: 5. It is submitted across the Bar by the learned counsel appearing for either side that the very issue has been considered and held against the Revenue by the Madhya Pradesh High Court in the case of J.P. Tobacco Products (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Accordingly, the civil appeal is dismissed. No costs'. 9. From the abovequoted decision it is clear that Hon'ble Madras High Court while delivering judgment in the case SCM Creations followed the decisions of Madhya Pradesh High Court in J.P. Tobacco Products (P) Ltd. vs. CIT of Hon'ble Bombay High Court in CIT vs. Nima Specific Family Trust and other High Courts where the issue before various Hon'ble High Courts in all cases except in the case of CIT vs. Rochi Ram Sons (2004) 191 CTR (Raj) 472 : (2004) 271 ITR 444 (Raj) was related to deductions under ss. 80HH and 80-I of the Act. It was held that both ss. 80HH and 80-I being independent, the deductions could be claimed under both sections on the gross total income. Since Special Leave Petitions filed by the Revenue were dismissed by the Supreme Court on various occasions and subsequently no Special Leave Petitions were preferred against the judgments deciding the issue relating to deduction under ss. 80HH and 80-I. Hon'ble Madras High Court following the ratio of aforesaid decisions held that the Department having accepted the view taken in the judgments cannot be permitted to take a contrary view in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erential finding of fact is the inference which the Judge draws from the direct or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a Court has been decided is alone binding as a precedent. A deliberate judicial decision arrived at after hearing an argument as a question which arises in the case or is put in issue may constitute a precedent, no matter for what reason, and the precedent by long recognition may mature into rule of stare decisis. It is the rule deducible from the application of law to the facts and circumstances of the case which constitutes ratio decidendi. 12. A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a mere despatch of goods was within the ambit of expression 'disposal of goods'. 17. Hon'ble Supreme Court in the case of State of Orissa vs. Sudhanshu Shekhar Mishra AIR 1968 SC 647 has held that a decision is only an authority for what it actually decides and what is of the essence in a decision is its ratio and not what logically flows from the various observations made in it. 18. From the decision of Hon'ble Madras High Court. we find that the counsel appearing for SCM Creations did not refer to the provisions of s. 80-IA(9A) before the Hon'ble Madras High Court and hence their Lordships have no occasion to examine the provisions of s. 80-IA(9A) inserted by the Finance Act, 1998 w.e.f. 1st April, 1999. At the same time we cannot overlook the insertion of sub-s. (9A) of s. 80-IA for the purpose of computation under S. 80HHC. Tribunal, Special Bench, Chennai in the case of Rogini Garments had examined the provisions of s. 80-IA(9A) and has held that the relief allowed under s. 80-IA should be deducted from profits and gains of assessee's business before computing relief under s. 80HHC of the Act. The decision of the Special Bench is binding on us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in respect of deduction under s. 80-IA of the Act. The learned Authorised Representative of the assessee placing reliance on the decision of Tribunal, Bench B New Delhi in the case of Bharat Rasayan Ltd. (ITA No. 570/Del/2002, dt. 17th Feb., 2006) submitted that Tribunal in asst. yr. 1998-99 allowed deduction under s. 80-IA of the Act in respect of DEPB. It was held that the decision of Hon'ble Supreme Court in the case of CIT vs. Sterling Foods was delivered in the context of old provisions of ss. 80HH and 80-I of the Act in which words used were profits derived from industrial undertaking and as such, the receipts were not held as directly derived from industrial undertaking and thus, not held eligible for deduction under ss. 80-I and 80HH of the Act. What is true for s. 80-IA is true for s. 80-IB. Therefore, the duty drawback and DEPB receipts have to be taken into consideration for the purpose of deduction under s. 80-IB of the Act. 22. On the other hand, the learned Departmental Representative submitted that from the language of sub-s. (3) of s. 80-IB it is clear that the deduction under s. 80-IB(1) is to be allowed on profits and gains derived from industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its and gains derived by an industrial undertaking or an enterprise from any business referred to in sub-s. (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, a deduction of an amount equal to 100 per cent of profits and gains derived from such business for ten consecutive assessment years. Sec. 80-IB was substituted as mentioned above by the Finance Act, 1999 w.e.f. 1st April, 2000. For asst. yr. 2002-03, s. 80-IB(1) stood as under: (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-ss. (3) to (11A) (such business being hereinafter referred to as eligible business, there shall, in accordance with and subject to provisions of this section, be allowed in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as is specified in this section. 24. On comparison of language employed in s. 80-IA of the Act prior to amendment by the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from the business of an industrial undertaking' is somewhere in between. Consequently, we are of the view that the source of the duty drawback is the business of the industrial undertaking which is to manufacture and export goods out of raw material that is imported and on which customs duty is paid. The entitlement for duty drawback arises from s. 75(1) of the Customs Act, 1962 read with the relevant notification issued by the Central Government in that regard. 26. We also find that Tribunal, Delhi Bench G , New Delhi, in the case of Anil Kumar Rastogi vs. Asstt. CIT in ITA. No 2465/Del/2007, order dt. 20th June, 2008) has held that assessee is entitled for deduction under s. 80-IB in respect of duty drawback and DEPB receipts. Tribunal, Delhi Bench G in the case of Anil Kumar Rastogi distinguished the case of Hon'ble Allahabad High Court in the case of Mentha Allied Products (P) Ltd. by observing as under: 6. Coming now to the judgment of the Hon'ble Allahabad High Court in the case of Mentha Allied Products (P) Ltd., it is seen that it was concerned with the deduction under s. 80HHA, which uses language that is identical with ss. 80HH, 80-I etc., v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 1228/Del/2002 for asst. yr. 1998-99 dt. 17th Feb., 2006 Tribunal, Delhi Bench B allowed the claim of the assessee for deduction under s. 80-IA of the Act in respect of DEPB receipts, by observing as under: 3.4.2 We have perused the records and considered the matter carefully. The authorities below had reduced the eligible profit of the assessee for deduction under s. 80-IA by the amounts mentioned in para 3.4.1 holding that these receipts had not been derived from the industrial undertaking and for this purpose reliance had been placed on the judgment of Hon'ble Supreme Court in the case of CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC) and in case of Ashok Leyland Ltd. vs. CIT (1997) 138 CTR (SC) 287 : (1997) 224 ITR 122 (SC). Tribunal in assessee's own case in asst. yrs. 1996-97 and 1997-98 had considered the issue relating to DEPB and QBAL licences and noted the changes in s. 80-IA in the relevant years when the eligible profit was defined as 'profit derived from the business of industrial undertaking'. The judgments of Hon'ble Supreme Court in the case of Sterling Foods and Ashok Leyland had been delivered in the context of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
