IN INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER I.T.A. No.380/Coch/2014 Assessment Year : 2000-01 M/s. Cochin Frozen Foods P. Vs. Assistant Commissioner of Ltd., IV/475, Arookutty Ferry Income-tax, Circle-1(3), Road, Aroor P.O., Ernakulam. Alappuzha-683 534. [PAN: AAACC 8506G] (Assessee-Appellant) (Revenue-Respondent) Assessee by Shri K.P. Paulson, CA Revenue by Shri A. Dhanaraj, Sr. DR Date of hearing 21/09/2016 Date of pronouncement 22/09/2016 ORDER Per B.P. JAIN, ACCOUNTANT MEMBER: This appeal of assessee arises from order of Ld. CIT(A)-V, Kochi for assessment year 2000-01. 2. assessee has raised following grounds of appeal:- 1. Hon ble Commissioner of Income tax (Appeals) erred in law and facts by failing to note that subsequent decision of Supreme Court/High Court which changes position, interpretation, or understanding of law, constitutes sufficient cause for condoning delay in filing appeal where it is established that on date of receipt of impugned order, 2 I.T.A. No.380/Coch/2014 filing of appeal would have been empty formality having regard to position of law then prevailing as decided in case of STATE OF ANDHRA PRADESH vs. VENKATARAMANA CHUDAVA & MURAMURA MERCHANT (1986) 159 ITR 59(AP) 2. order of Hon ble CIT(Appeals) is opposed to law, weight of evidence, facts and circumstances of case insofar as it confirms disallowance of deduction u/s. 80HHC without considering decision of Hon ble Supreme Court of India in case of TOPMQAN EXPORTS vs. COMMISSIONER OF INCOME TAX (2012) 342 ITR 49 (SC). 3. appellant craves leave to add, alter or amend any of above grounds of appeal. 3. brief facts of case are that return in present case has been filed with ACIT, Circle-I, Alleppey Range on 26/02/2013. filing of appeal against order u/s. 147 of Act was delayed by 7 years approximately. original return of income was filed on 24/11/2001 claiming deduction u/s. 80HHC which was reopened u/s. 148 of Act as mentioned hereinabove. Return was filed pursuant to Notice u/s. 148 was also filed claiming deduction u/s. 80HHC. In view of amendment to section 80HHC with effect from 01/04/1998, so far as profit from transfer of DEPB credit is concerned, it has been stated by Assessing Officer that assessee in course of assessment, in view of amended provisions of section 80HHC reworked claim of deduction u/s. 80HHC at Rs. Nil, which has been accepted by Assessing Officer and total income was assessed at Rs37,76,020/- for assessment year 2000-01. It was stated by Assessing Officer that revised return in response to notice issued u/s. 148 of Act, was 3 I.T.A. No.380/Coch/2014 processed accepting ratio of Hon ble Kerala High Court s Pronouncement in case of CIT vs. A.M. Moosa reported 272 ITR 29. 4. In appeal before Ld. CIT(A), Ld. CIT(A) vide para 4 of his order observed as under: In this case, assessee himself has revised return and paid taxes in compliances to notice u/s. 148. It means, something which has been accepted by assessee himself, by filing revised return, and Assessing Officer has accepted revised return of assessee and amount of taxes paid, issue gets closed and cannot remain open for filing appeal after 7 long years. In view of this, delay in filing these appeals are not condonable. Accordingly, appeals are dismissed. 5. Ld. Counsel for assessee, Shri K.P. Paulson, CA at outset invited my attention to affidavit filed by assessee and Chartered Accountant which is placed on record wherein it has been stated that in initial assessment, assessee company was granted deduction u/s. 80HHC of Act for impugned assessment year. Subsequently on basis of interpretation of retrospective amendments to section 80HHC read with section 28 of Act via Taxation Laws (Amendment) Act, 2005, notice u/s. 148 were issued by Assessing Officer for re-opening of completed assessment. assessee filed return for above assessment year claiming deduction u/s. 80HHC of Act. 4 I.T.A. No.380/Coch/2014 6. In view of decision of Hon ble Jurisdictional High Court of Kerala in case of CIT vs. A.M. Moosa reported in 272 ITR 29, assessee had to agree and forgo claim for deduction u/s. 80HHC of Act and re- working of claim was given as Nil. Accordingly, at relevant point of time in 2006, when impugned order dated 15/02/2006 was received, there was decision of Hon ble Jurisdictional High Court of Kerala in CIT vs. A.M. Moosa pronounced on 02/08/2004 and reported in (2005) 272 ITR 29 against assessee on basis of which assessee was advised by Ld. Counsel not to file appeal against said order regarding disallowance u/s. 80HHC, as filing appeal at that point of time would have been empty formality. 7. Subsequently, Hon ble Supreme Court of India pronounced judgment in case of Topman Exports vs. CIT, 342 ITR 49 wherein it was held that DEPB License has cost, i.e., face value of license and same is subject to tax as per provisions of section 28(iiib) of Act., while profit element (difference between sales price and face value of License), would be subject to tax as per provisions of sec. 28(iiid) of Act. Accordingly, cost being face value of DEPB licence would be allowed as addition in determining profits eligible for deduction u/s. 80HHC of Act. For availing benefit of judgment of Hon ble Apex Court, assessee was advised by Ld. Counsel to file appeal before Commissioner of Income 5 I.T.A. No.380/Coch/2014 Tax(Appeals) along with petition for condonation of delay in filing appeal. Accordingly, present appeal was filed before Ld. CIT(A). 8. It was stated by Ld. Counsel that assessee has sufficient cause for filing appeal belatedly by 7 years and therefore, assessee prayed for condonation of delay. 9. Ld. DR opposed condonation petition and relied upon order of Ld. CIT(A). 10. I have heard both parties and perused record. assessee has relied upon decision of ITAT, Mumbai Bench in case of Taxtrade vs. DCIT in I.T.A. No.2266/Mum/2010 and 226/Mum/2010 dated 30/11/2012 wherein it has been held as under: 2.2 We have perused records and considered matter carefully. guidelines for dealing with condonation application are given in judgment of Hon ble Supreme Court incase of Collector,Land Acquisition vs. Mst.Katiji (167 ITR 471). In that case Hon ble Court have held that condonation application should be considered liberally to advance cause of substantial justice. Hon ble Supreme Court also held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice should prevail. condonation application should be considered in rationale common-sense and pragmatic manner. It was also held by Hon ble Supreme Court that there could not be any presumption of deliberate delay or negligence by assessee in filing of appeal because litigant does not stand to benefit by risking delay and in fact he runs serious risk. Further it is also settled legal position that once delay is found to be based on reasonable cause, length of delay is immaterial in considering condonation. We have to consider application of 6 I.T.A. No.380/Coch/2014 assessee in back-drop of above legal position. explanation of assessee is that it had been advised by chartered accountants against filing appeal. As at relevant point of time, there were decisions of Tribunal against assessee, such advice given by chartered accountants, could not be considered totally without any basis. decision of Special Bench in case of Topman Exports (supra), which is in favour of assessee is dated 11.8.2009. case of assessee is that when it came to know about such decision it had approached counsel who advised to file appeal and thereafter appeal was filed. It may also be noted that decision of Special Bench was over-ruled subsequently by Hon ble High Court of Bombay and upheld view taken by Special Bench. This shows that issue is highly debatable. Considering facts and circumstances of case and in interest of justice, we condone delay in filing appeal and admit appeal for adjudication on merit. 4.1 In case of assessee, turnover exceeds Rs.10.00 crores and two conditions mentioned above are not satisfied. Authorities below have not allowed deduction u/s. 80HHC, as they have treated entire receipt as DEPB profit. issue has been highly debatable issue. Special Bench of Tribunal in case of Topman Exports (318 ITR 87 (AT) (Bom.) had held that face value of DEPB had to be considered as business income u/s. 28(iiib) and only excess of sale price over face value has to be considered as business profit u/s. 28(iiid) and provisions of section 80HHC have to be applied accordingly. decision of Special Bench was reversed by Hon ble High Court of Bombay in case of Kalpataru Colours & Chemicals (328 ITR 451) but recently decision of Special Bench in case of Topman Exports (supra) has been upheld by Hon ble Supreme Court in same case in (342 ITR 49), judgment. We therefore, set aside order of CIT(A) and restore issue to file of Assessing Officer for re-computation of deduction u/s. 80HHC following decision in case of Topman Exports (supra), after allowing opportunity of hearing to assessee. 5. In result, appeals of assessee are allowed for statistical purposes. 10.1 Ld. Counsel has also relied upon decision of ITAT, Kolkata Bench in case of Magnum Export vs. ACIT in I.T.A. No.1111/Kol/2012 dated 28/08/2013 where in it has been held as under:- 7 I.T.A. No.380/Coch/2014 In view of this fact, Ld. Counsel for assessee fairly stated that once Hon ble High Courts of Gujarat and Bombay have quashed amendment and which is affirmed by Hon ble Supreme Court, assessee being member of Association was under impression that it is pursuing alternative remedy and hence, this being reasonable cause delay should be condoned and appeal be heard on merits. We find from order of CIT(A) that this issue on merits regarding benefit u/s. 80HHC of Act is subject matter of challenge ..In such circumstances, we feel that delay be condoned and appeal be admitted. Hence, we condone delay and admit appeal. 10.2 Ld. Counsel for assessee also relied on decision of ITAT, Mumbai Bench in case of Pahilajraj Jaikishin vs. JCIT in I.T.A. No. 1398/Mum/2012 dated 28/08/2013 where it has been held as under: We have perused records and considered matter carefully. Considering facts and circumstances of case, we are satisfied that there was reasonable cause for delay in filing appeal. We, therefore, in interest of justice, condone delay and admit appeal for adjudicating dispute. 10.3 Ld. Counsel for assessee relied on decision of ITAT, Kolkata Bench in case of M/s. Murlidhar Ratanlal vs. ACIT in I.T.A. No. 2099 and 2100/Kol/2009 dated 31/07/2013 wherein it has been held as under:- 8, In facts and circumstances of case, we find that it is only just and proper to condone delay caused in filing appeals. Accordingly, delay in filing these appeals, before Tribunal is condoned and appeals are admitted on rolls of Tribunal for hearing and disposal Since issue is covered by decision in case of M/s. A.V. Thomas Leather & Allied Products Pvt. Ltd. supra, and respectfully following aforesaid decision, we condone delay and admit these appeals. On merits, both files are remitted to Assessing Officer for 8 I.T.A. No.380/Coch/2014 recomputation of quantum of deduction u/s. 80HHC of Act in light of judgment of Hon ble Supreme Court in case of Topman Exports vs. CIT,342 ITR 49. 10.4 Ld. Counsel for assessee also relied upon decision of ITAT, Ahmedabad Bench in case of M/s. Banner International vs. ACIT in I.T.A. No.1829-1831/Ahd./2010 dated 13/01/2012 wherein it has been held as under:- Considering facts and circumstances of case before us and case laws relied on by assessee, we are of considered opinion that assessee s arguments have merits. mere fact that assessee co- operated with Revenue based on circular issued by CBDT should not put assessee on in weaker footing. subsequent decision by Special Bench of Tribunal has enlightened assessee to knock doors befoe appellate authority for justice. In these circumstances, request of assessee for delay of condonation for all assessment years seems to be reasonable and justifiable. Therefore, in interest of justice, we hereby condone delay in filing appeals before Ld. CIT(A) by assessee .. 11. In circumstances and facts of case, I find there is sufficient cause for delay in filing appeal before Ld. CIT(A) by 7 years and I condone delay in filing appeal before Ld. CIT(A) and remit issue back to file of Assessing Officer for computing deduction u/s. 80HHC in light of decision of Hon ble Apex Court in case of Topman Exports Vs. CIT, 342 ITR 49 and make recomputation of deduction u/s. 80HHC of Act in light of decision of Hon ble Apex Court in case of Topman 9 I.T.A. No.380/Coch/2014 Exports (supra), after affording adequate opportunity of being heard to assessee. 12. In result, appeal of assessee is allowed for statistical purposes. Pronounced in open court on 22-09-2016 Sd/- (B.P. JAIN) ACCOUNTANT MEMBER Place: Kochi Dated: 22nd September, 2016 GJ Copy to: 1. M/s. Cochin Frozen Foods P. Ltd., IV/475, Arookutty Ferry Road, Aroor P.O., Alappuzha-683 534. 2. Assistant Commissioner of Income-tax, Circle-1(3), Ernakulam. 3. Commissioner of Income-tax(Appeals)-V, Kochi. 4. Commissioner of Income-tax, Kochi. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin M/s. Cochin Frozen Foods P. Ltd. v. Assistant Commissioner of Income-tax, Circle-1(3), Ernakulam