TMI Blog2011 (1) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... Deduction u/s 80HHC - DEPB - Held that: - the matter is covered by earlier order of this Court , CIT v. M/s F.C.Sondhi and Company (P) Limited (2010 -TMI - 203399 - PUNJAB AND HARYANA HIGH COURT), remanding these issues for fresh decision to the Tribunal - The appeals are disposed of accordingly. - ITA No.721 of 2010 - - - Dated:- 31-1-2011 - MR JUSTICE ADARSH KUMAR GOEL, MR. JUSTICE AJAY KUMAR MITTAL, JJ. Mr. Yogesh Putney, Sr.Standing Counsel for the revenue. Adarsh Kumar Goel, J. 1. This order will dispose of ITA Nos.697, 689, 708 and 721 of 2010 as it has been stated by learned counsel for the revenue that all the four appeals involve common questions. 2. ITA No.721 of 2010 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short, the Act ) against the order of the Income Tax Appellate Tribunal, Delhi bench B New Delhi passed in ITA No.2726/Del/2009 dated 29.1.2010 for the assessment year 2004-05, claiming following substantial questions of law:- i) Whether on the facts and circumstances of the case and in law, the learned ITAT was right in holding that the CIT(A) had duly put all the objections and documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98? v) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in allowing deduction under section 80HHC in respect of entire DEPB amount by incorporating the same in the computation of business profit under section 28 (iiib)? vi) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in placing reliance upon the decision of Income tax Appellate Tribunal, Special Bench, Mumbai in the case of M/s Topman Exports v. ITO (2009) TOIL 531 ITAT dated 1.8.2009 despite the fact that the decision of the Mumbai ITAT Special Bench in the case of Topman Export, supra has been reversed by the decision of the Hon ble Bombay High Court in the case of CIT v. Kalpataru Colours and Chemical, 2010 TOIL- 482 HC-Mum? 3. The assessee is an exporter deriving income from manufacture and export of handloom goods. Dispute arose during the assessment proceedings as to the correct value of the construction of the factory and calculation of benefit under Section 80HHC of the Act. The Assessing Officer referred the matter to the District Valuation Officer (DVO) in whose opinion, cost of construction was much higher than the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was obtained by the AO by making a reference to DVO under section 131(1)(d) of the Act. This action of the AO to make a reference to DVO under section 131(1)(d) to determine the cost of construction of factory building has been upheld by the learned CIT(A). The learned CIT (A) in his order has observed that initially the AO made a reference within the meaning of section 131(1)(d) but subsequently a reference under section 142A was made by the AO and the DVO has furnished the valuation report in response to the reference made to him by the AO under section 142A only. The learned CIT(A) further observed that no objection was raised ever by the assessee before the AO with regard to the AO s action in making a reference to DVO for determination of the cost of factory building constructed by the assessee. Therefore, the learned CIT(A) upheld the action of AO in making a reference to DVO under section 142A by holding that the reference is proper and justified. In the light of the facts discussed just above, we are inclined to uphold the order of learned CIT(A) in holding that there is no irregularity in the reference made by the AO to determine the cost of factory building under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and explanations with regard to the cost of construction determined by the DVO as well as the cost declared by the assessee in its books of account. After series of round of remand report or clarification submitted by the AO, DVO as well as the present DVO and the assessee, the DVO modified his valuation report vide letter dated 22.12.2008 which was confirmed by the earlier DVO, Chandigarh vide his letter dated 9.1.2009. The DVO also clarified the position about the expenditure incurred under the two heads i.e. Humidification Plant and Trenches vide letter dated 11.2.2009. The DVO has finally submitted the report vide letter dated 22.2.2008 confirmed by another DVO vide letter dated 9.1.2009 and further clarified the position vide letter dated 11.2.2009. After considering all the materials and the evidences produced by the assessee as well as after making physical inspection of the building. The learned CIT(A) has ignored the DVO s report to certain extent in so far as its concerned about the expenditure incurred by the assessee on Humidification Plant and Trenches and recorded the same in the books of account under the different head. The DVO is of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factory building was physical inspected by the DVO, who has estimated the cost of construction of all the items to the factory building. Mere because, certain expenditure incurred by the assessee towards, construction of the factory building, in respect of which the value has been determined by the DVO, has been shown under different heads in the books of account that by itself cannot be a ground to ignore the expenditures incurred by the assessee towards construction of factory building when the DVO was of the opinion that the expenditure incurred towards humidification plant and trenches are also included in the cost of construction estimated by him. The learned CIT(A) s action in not accepting the DVO s revised estimate furnished vide letter dated 22.12.2008 and confirmed by another DVO vide letter dated 9.1.2008 is not based on any adequate material and evidences, when the matter was examined and considered by the expert whom the reference was made by the department itself, it is not for the department to ignore the comments and finding given by the DVO with regard to the cost of construction estimated by him vis a vis the cost of construction shown by the assessee in the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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