ORDER
T.K. Sharma, J.M.
1. This appeal by the Revenue and cross-objection by the assessee are directed against the order dt. 28th Nov., 1997, of CIT(A)-II, Surat, pertaining to the asst. yr. 1995-96.
2. The only ground in Revenue’s appeal is as under :
“The learned CIT(A) has erred in law and on the facts in directing the AO to allow the claim of the appellant under Section 80HHC at Rs. 2,77,688 instead of Rs. 1,28,516 allowed.”
3. At the time of hearing before us on behalf of Revenue Shri S.J. Jani, learned Departmental Representative, appeared and relying on the decision of Hon’ble Mumbai High Court in the case of IPCA Laboratories Ltd. v. Dy. CIT (2001) 251 ITR 401 (Bom) contended that following the same, the order of learned CIT(A) be set aside and that of AO be restored whereby the AO ignored the negative figure of Rs. 1,49,172 for the purpose of computing deduction under Section 80HHC of the IT Act, 1961.
4. On the other hand Shri Hiren Vepari appeared for the assessee contended that relief under Section 80HHC is to be worked out in two phases as under :
(i) After excluding export benefits, balance profit/loss is apportioned on the basis of export turnover to total turnover as per Sub-section (3) of Section 80HHC of the Act.
This amount is further increased by proviso to Sub-section (3) of Section 80HHC of the Act as under :
(ii) 90 per cent of export benefit is worked out and proportion of export turnover to total turnover to total turnover is worked out for relief.
4.1. In the assessment order, the AO has considered the negative figure of loss at Rs. 1,49,172 as per phase (i) above and deducted it from working of phase (ii). The assessee believes that negative figure is to be ignored because this controversy has been decided in favour of the assessee in the following cases :
1. A.M. Moosa v. Asstt. CIT (1996) 54 TTJ (Coch) 193;
2. Avon Cycles Ltd. v. Asstt. CIT (1997) 59 TTJ (Chd) 75;
3. Asstt. CIT v. Pratibha Syntax Ltd. (1999) 63 TTJ (Ahd) 409;
4. Pratibha Syntex Ltd. v. Jt CIT (2002) 75 TTJ (Ahd) 124 : (2002) 81 ITD 118 (Ahd);
5. Hindustan Fashions Ltd. v. Asstt. CIT (1998) 61 TTJ (Ahd) 734; and
6. Indian Sugar & General Industry Export Import Corporation Ltd. (2002) 121 Taxman 305 (Del)(Mag).
4.2. The counsel of the assessee also drew our attention to decision of this Tribunal dt. 16th April, 2003, in the case of Vipul Exports in ITA No. 4697/Ahd/96 for the asst. yr. 1994-95 and contended that view taken by learned CIT(A) is also supported by the decision of this Tribunal in this case. Regarding the reliance placed by learned Departmental Representative on the decision of Hon’ble Mumbai High Court in the case of IPCA Laboratories (supra) counsel of the assessee submitted that Mumbai Tribunal, “I” Bench vide order dt. 20th Jan., 2003 in ITA No. 1248/Mum/2002, in the case of Vishal Exports Overseas Ltd. v. ITO for the asst. yr. 1998-99, after considering the decision of Mumbai High Court in the case of IPCA Laboratories (supra), vide para 13 held as under :
“For the above reasons, we are of the view that the judgment of the Bombay High Court in IPCA Laboratories (supra) is not of assistance to the Revenue in the present controversy. Since the matter is already concluded in favour of the assessee’s claim by the orders of the Ahmedabad Cochin and Mumbai Benches of the Tribunal, respectfully following them, we uphold the assessee’s contention and direct the AO to allow the deduction under Section 80HHC without adjusting the export loss against the amount computed under the proviso to Sub-section (3). Ground No. 1 to 7 are allowed.”
4.3. The learned counsel of assessee relying on the decision of Tribunal, “I” Bench, Mumbai, in the case of Vishal Exports Overseas Ltd. (supra) contended that view taken by learned CIT(A) be upheld as same is in accordance with view taken by Tribunal, Ahmedabad Benches in the case of Pratibha Syntex Ltd. (supra) as well as in the case of Vipul Exports (supra). Therefore, appeal of the Revenue be dismissed.
44. Having hard both the sides, we have carefully gone through the orders of authorities below as well as various case laws relied by both the sides. The issue involved in this appeal is covered in favour of the assessee by various decisions of Tribunal which include decision of Tribunal Benches in the case of Pratibha Syntex Ltd. (supra) as well as in the case of Vipul Exports (supra), The learned Departmental Representative appeared for the Revenue heavily relied on the decision of Mumbai High Court in the case of IPCA Laboratories Ltd, (supra). However, we found that Tribunal, Mumbai Bench, in the case of Vishal Exports Overseas Ltd. vide order dt. 20th Jan. 2003 (supra) has decided a similar issue in favour of the assessee by distinguishing the judgment of Hon’ble Bombay High Court which reads as under :
“10. It will thus be seen that the Bombay High Court was not concerned with the controversy which arises in the case before us. In the case before us, the controversy relates to the interpretation of the proviso to Sub-section (3). The question is whether the loss computed in respect of the export business in accordance with Clause (b) of the sub-section can be adjusted against the amount computed under the proviso to the sub-section so as to restrict the deduction available to the assessee to the excess. This controversy was not before the Bombay High Court as the extract from the judgment (supra) would show. The controversy before the High Court was as to the manner in which the export profits have to be computed under Clause (c) of Sub-section (3) where there were more than one type of export business. It should be remembered that Clause (c) makes a distinction between goods manufactured or processed by the assessee himself and goods which are not manufactured or processed by the assessee (trading goods). In the case before the High Court, IPCA Laboratories had both types of exports–export of goods manufactured by itself and export of trading goods, There was profit in the export of own goods, but there was a loss in the export of trading goods, As per proviso to Sub-section (1), an assessee can issue a disclaimer certificate saying that he will not claim deduction under the sub-section, but will allow the person who manufactured the goods, which the assessee exported, to claim the deduction. Naturally such disclaimer can be given by the assessee only where there is a profit in the export of goods manufactured by others and there is no question of any disclaimer when there is a loss. This is what the High Court held. It further held that for the purpose of computation of the export profits under Clause (c) of Sub-section (3), where both the types of goods are exported by an assessee, the results of both the activities must be aggregated so as to arrive at the figure of export profits and in doing so if there is a loss in one of the two activities, the same cannot be ignored and has to be adjusted against the profits from the other. The method of computation is implicit in the clause itself. The principle of aggregation of results of both types of exports which has been highlighted in the judgment, is strengthened by the use of the conjunction “and” between Sub-clause (i) and (ii) of the clause. Sub-clause (i) speaks of export of own goods. Sub-clause (ii) speaks of export of trading goods. The main Clause (c) says that the profits derived from the export, in a case where the export consists of both own goods and goods manufactured by others shall be the aggregate of the result of both types of the exports because of the conjunction “and” appearing between the two sub-clauses. Thus, the principle of aggregation is inbuilt in the clause, Therefore, the High Court held that the loss in the export of trading goods cannot be ignored and has to be adjusted against the profits in the export of own goods, The principle is the same as the principle embedded in Section 70 of the Act, where the net result in respect of any source falling under any head of income is a loss the assessee would be entitled to have the said loss set off against his income from any other source under the same head, The principle laid down in the judgment would have been applicable to the assessee’s case if it had exported both own goods and goods manufactured by others and earned profits in one and suffered loss in the other. But the assessee’s case is governed by Clause (b) which speaks of export exclusively of trading goods, i.e., goods manufactured by others. When the entire exports are of trading goods only and the case is governed by Clause (b) of the sub-section, there is no scope for applying the principle of aggregation, for the simple reason there is nothing to be aggregated.”
4.5. The point in issue involved in this appeal is capable of a different view also after the decision of Hon’ble Bombay High Court but for the sake of consistency, earlier a co-ordinate Bench deciding a particular issue, on same facts, the subsequent Bench cannot differ as held by Hon’ble Gujarat High Court in the case of Sayaji Iron and Engg. Co. v. CIT (2002) 253 ITR 749 (Guj).
4.6. We also found that Tribunal, Ahmedabad Benches in the case of Pratibha Syntex Ltd. (supra) as well as Vipul Exports (supra) after the judgment of Hon’ble High Court in the case of IPCA Labs Ltd. (supra) taken a similar view. In these circumstances, we respectfully following the decision of Tribunal, Mumbai Bench in the case of Vishal Exports Overseas Ltd. (supra) as well as decision of Tribunal Ahmedabad Bench in the case of Vipul Exports (supra) and Pratibha Syntex Ltd. (supra) upheld the view taken by learned CIT(A) that negative figure of Rs. 1,49,172 is to be ignored for the purpose of working out the deduction under Section 80HHC of the IT Act, 1961. We are, therefore, inclined to uphold the order of learned CIT(A) and dismiss the appeal of the Revenue.
5. The only ground of cross-objection in assessee’s appeal is that learned CIT(A) erred in confirming the refusal to grant deduction under Section 80HHA of the IT Act.
5.1. The learned authorised representative appeared for the assessee contended that in the impugned order learned CIT(A) upheld the disallowance of deduction under Section 80HHA on the ground that small-scale industrial undertaking would be that undertaking where aggregate value of machinery and plant does not exceed Rs. 35 lakhs. The claim of the assessee is that as per notification of the Industries (Development & Regulation) Act, 1951, definition of small-scale industrial undertaking has been amended in 1991 fixing the limit of investment in plant and machinery at Rs. 60 lacs. This was not accepted by the AO because the limit in Section 80HHA was not amended. In this context, counsel of the assessee pointed out that Expln. (b) to Section 80HHA was amended by the Finance Act, 1999, w.e.f. 1st April, 1978, whereby the industrial undertaking shall be deemed to be a small-scale industrial undertaking which is so regarded under Section 11B of the Industries (Development and Regulation) Act, 1951. As per Section 11B, limit at the relevant time is Rs. 60 lacs whereas aggregate value of machinery and plant of the assessee is much below the limit of Rs. 60 lacs. He accordingly contended that order of learned CIT(A) be set aside and AO be directed to allow the deduction under Section 80HHA in accordance with law.
5.2. The learned Departmental Representative appeared for the Revenue contended that there are various other conditions which an assessee is required to fulfil for allowance of deduction under Section 80HHA. The other conditions need verification at the end of AO. Therefore, this issue be remitted to the file of AO for examining the other conditions prescribed in Section 80HHA.
5.3 Having heard both the sides, we found that assessee is a small-scale industrial undertaking, keeping in view the amendment made in Expln. (b) to Section 80HHA by Finance Act w.e.f. 1st April, 1978. However, where the assessee fulfil various other conditions as laid down in Section 80HHA needs verification at the end of AO. We, therefore, set aside the order of learned CIT(A) and remit the issue to the file of AO with direction that he should verify whether assessee fulfil various other conditions as laid down in Section 80HHA and readjudicate the issue after giving opportunity of being heard to the assessee.
6. Before parting we would like to record our feelings of appreciation for an admirable representation by the young chartered accountant Shri Hiren Vepari.
7. In the result, appeal of the Revenue is dismissed and cross-objection for statistical purpose is treated as allowed.