TMI Blog2008 (5) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose. Thus the Assessing Officer s action of making addition of Rs. 32,87,526 was erroneously and unjudicially confirmed by the learned CIT(A). The Tribunal may please cancel the same by allowing the appeal. 3. Briefly stated the facts of the case are that assessment in this case was completed under section 143(1) of the Act on 17-2-2003 at a total income of Rs. 43,25,970. On perusal of return, the Assessing Officer noticed that the assessee has received a sum of Rs. 52,18,296 as premium on sale of Duty Entitlement Pass Book (DEPB) credit. It was also found that the export turnover of the assessee exceeded Rs. 10 crores. A show-cause notice under section 154 of the Act was issued on 30-5-2006 asking the assessee as to why deduction allowed under section 80HHC on DEPB should not be withdrawn in view of Taxation Laws (Amendment) Act, 2005. In response thereto, the assessee furnished a written reply on 12-6-2006 contending that as per amendment in section 80HHC and section 28(iiid), it is the profit on transfer of the DEPB Scheme under the export and import policy that is to be considered as profit. If profit is there, then only the profit component has to be considered and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DEPB and determined total income at Rs. 76,13,496. 5. The learned CIT(A) found that rectification has been carried out within the powers vested under section 154 of the Act. Since in order to find out whether there is a mistake apparent on record, the Assessing Officer has to look to the amended law and not the law that was in force at the time when original order was made. Reliance was placed on the judgment rendered by the Hon ble apex Court in the case of M.K. Venkatachalam, ITO v. Bombay Dyeing Manufacturing Co. Ltd. [1958] 34 ITR 143 (SC). Similar view was again pronounced by the Hon ble Supreme Court in the case of IAC of Agrl. IT v. V.M. Ravi Namboodiripad [1974] 96 ITR 73. The Hon ble Supreme Court further affirmed the above view in its decision in the case of Basappa Bros. v. Dy. CCT 35 STC 1 (SC); CTO v. Venkateshwara Oil Mills 32 STC 660; International Cotton Corpn. (P.) Ltd. v. CTO 35 STC 1; CWT v. Sheela Devi Goel [1981] 132 ITR 517 (All.); CWT v. Lalchand Singhai [1983] 140 ITR 314 (MP); CIT v. Kelvin Jute Co. Ltd. [1980] 126 ITR 679 (Cal.); Sahu Govind Prasad v. WTO [1983] 139 ITR 825 (All) and CIT v. M.P. Electricity Board [1994] 210 ITR 425 (MP). Since the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdraw the whole amount realized on transfer of DEPB whereas the section introduced with retrospective effect from 1-4-1998 only speaks of the profit on transfer of DEPB Scheme and as such, there was no scope of there being any mistake apparent from record which could be rectified under section 154 of the Act. If was further stated that the expression used in clause (iiid) of section 28 is any profit which has so been done expressly because wherever the Parliament intended to tax whole receipt, it has so provided as will be clear from the language of clause (iiic) of section 28 where any duty of customs or excise repaid or repayable as drawback to any person has been taken as income for the purpose of section 28 of the Act. 7. The assessee s counsel also relied upon the articles placed at assessee s paper book pp. 7, 13 and 14. It was contended that the article at p. 7 of assessee s paper book reported in 283 ITR (Journal) 8 is by Shri P.S. Gopalakrishnan who has clearly established that there is a cost element involved in the DEPB entitlement. The rate pre-determined by the Director General of Foreign Trade, based on specific data collected by him, is the attributed cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to transfer of licences and shall not be applicable to him whereas the Chandigarh Bench of the Tribunal in Asstt. CIT v. Parker Cycle Industries [2007] 13 SOT 159 (URO) has entertained a view that the sale proceeds have to be excluded by taking same as profits of business and thus there being no merit in the grounds raised by the assessee the same need to be rejected. 9. We have heard the parties and have also carefully perused the material on record within the meaning of sub-rule (6) of rule 18 of ITAT Rules, 1963 and also with reference to precedents cited at Bar. Sub-section (1) of section 154 of the Income-tax Act, 1961 the Act empowers an Income-tax authority to rectify any mistake apparent from record. Clause (a) empowers him to amend any order passed under the provision of the Act, while clause (b) contained below sub-section (1) of section 154 of the Act empowers him to amend any intimation or deemed intimation under sub-section (1) of section 143 of the Act which can be so done with a view to rectify any mistake apparent from record. 10. The facts on record reveal that from its income from business, the assessee had excluded the amount received by it on transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits on transfer of DEPB were to be reduced from the profits of business as computed under the head Profits and gains of business or profession in terms of Explanation (baa) below section 80HHC of the Act and in the case of assessees having turnover exceeding Rs. 10 crores, the deduction under section 80HHC was to be given by having resort to further proviso clause inserted below sub-section (3) of section 80HHC of the Act. The assessee s claim in the return under section 143(1) was accepted which was not conforming to the amended provisions. The particulars of mistake proposed to be rectified were to withdraw the deduction allowed under section 80HHC of the Act on DEPB received by the assessee. Under the peculiar facts of this case, it can be seen that at the time when the Assessing Officer invoked action under section 154 of the Act, he found that there was a mistake of law committed by him at the time of processing the return under section 143(1) of the Act on 17-2-2003. The mistake of law was so because at the time when he invoked his powers under section 154 of the Act an amendment has been brought in the statute with retrospective effect from 1-4-1998 so as to cover the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined by the Director General of Foreign Trade for neutralizing burden of the customs duty paid on the import content of the product manufactured/purchased for export or the Government gave an incentive with the objective of (i) to double percentage share of global merchandise trade within the next five years and (ii) to act as an effective instrument of economic growth by giving a thrust to employment generation, may be relevant for allowing the credit under the DEPB Scheme, but the same would not govern/override the provisions of the Income-tax Act. It is for the appellant to show that the cost so attributed was factually incurred or stands duly accounted for in the books of account to the DEPB Scheme account by reducing the same from the cost of inputs claimed for deducing profits and gains of business. On notional basis alone, the cost cannot be attributed to DEPB account so as to work out the profits on transfer after giving deduction of same expenditure in deducing profits and gains of business as well. Such attribution or allocation having not been done by the assessee and the whole amount paid towards input costs of material having separately been claimed as deductible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 265 ITR 474 as under : There is another aspect of the matter that under the garb of rectification, the appellant cannot have an opportunity of review of the order passed earlier in the absence of any provisions for substantive review under the said provisions of law. It is a settled proposition of law that what cannot be done per direction is not permissible to be done per obliquuni, meaning thereby, whatever is prohibited by law to be done, cannot legally be affected by an indirect and circuitous contrivance on the principle of quando aliquid prohibetur, prohibetur at omne per quod devenitur ad illud . In Jagir Singh v. Ranbir Singh AIR 1979 SC 381, the Apex Court has observed that an authority cannot be permitted to evade a law by shift or contrivance . While deciding the said case, the Supreme Court placed reliance on the judgment in Fox v. Bishop of Chester [1824] 2 B C 635, wherein it has been observed as under : To carry out effectually the object of a statute, it must be construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined. Law prohibits to do something indirectly which is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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