M/S AVALON BUSINESS ASSOCIATES V. PR. COMMISSIONER OF INCOME TAX-14 & ANR.

ITA/892/2017

AI Insights

The case involves M/S Avalon Business Associates appealing against the invocation of Section 263 of the Income Tax Act, 1961 by the Commissioner of Income Tax, which questioned the applicability of Section 10B to the appellant's unit for the assessment year 2011-12. The primary contention was whether the approval from the Development Commissioner was sufficient without further ratification by the Board of Approval for the EOU scheme, as required by the CBDT circular dated 09.03.2009. The appellant argued that previous circulars and the delegation of powers for automatic post-approval amendments supported their position. The court referenced decisions in similar cases and noted the need for adherence to the procedural requirements set out in the circular.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 751814 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 25-10-2017
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax v. Enable Exports (P.) Ltd., Commissioner of Income Tax v. Valiant Communications Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ASHOK MANCHANDA
• Assessee Lawyers: N P SAHNI; RUCHESH SINHA
• Keywords: CBDT Circular; Development commissioner; Export oriented unit; Income Tax; Section 10B; Section 263
• Section: 263; 10B

Judgement Text

" ITA No.892/2017 Page 1 $~ * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 25.10.2017 + ITA 892/2017 & CM No.38022/2017 M/S AVALON BUSINESS ASSOCIATES ..... Appellant Through: Mr. N.P. Sahni with Mr. Ruchesh Sinha, Advs. versus PR. COMMISSIONER OF INCOME TAX-14 & ANR. ..... Respondents Through: Mr. Ashok K. Manchanda, Sr. Standing Counsel for ITD. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE SANJEEV SACHDEVA O R D E R % 25.10.2017 1. Issue notice. 2. Mr. Ashok K. Manchanda, learned counsel for the ITD accepts notice. 3. The assessee is aggrieved by the invocation of power – by the Commissioner under Section 263 of the Income Tax Act, 1961 (hereafter referred to as ‘the Act’). ITA No.892/2017 Page 2 4. The AO, for the relevant year i.e. 2011-12 had upheld the assessee’s contention with regard to applicability of Section 10B to its unit. Section 263 was invoked primarily on the ground that the approval did not conform to the CBDT’s circular dated 09.03.2009 (F.No.178/19/2008). 5. In this regard, learned counsel submitted that the decision of the Division Bench of this Court in Commissioner of Income-Tax v. Enable Exports (P.) Ltd. [2012] 17 taxmann.com 182 (Delhi) is conclusive and the ITAT’s reliance upon its subsequent ruling in Commissioner of Income Tax v. Valiant Communications Ltd. (2013) 353 ITR 326 Del. deserves no consequence. It was highlighted that Valiant Communications Ltd. (supra) did not take into account the relevant circulars of 2008-09 as well as the decision in Enable Exports (P.) Ltd. (supra). 6. At the outset, we notice that Enable Exports (P.) Ltd. (supra) itself took note of the circular of 09.03.2009, which in material particulars records as follows: “The matter regarding validity of approvals given by Development Commissioner has been examined in the Board. It has been decided that an approval granted by the Development Commissioner in the case of a hundred percent export oriented unit will be considered valid, once such an approval is ratified by the Board of Approval for EOU scheme. [Emphasis supplied]” ITA No.892/2017 Page 3 7. Mr. N.P. Sahni, learned counsel for the assessee/appellant urged that the approval of the Development Commissioner ipso facto was sufficient having regard to the previous binding circulars of the concerned Ministry which were consistently applied by the CBDT in all Income Tax authorities. In particular, he relied upon the delegation of powers for automatic post approval amendments (press note No.5 of 1997 series) issued by the Department of Electronics. 8. We have considered the submissions. 9. The invocation of Section 263 in the opinion of this Court cannot be faulted. As to whether in fact there was no necessity for a further ratification, in the light of the appellant’s contention that a general or a specific circular, which delegated the powers of the Board of Approvals, applied after the issuance of the 09.03.2009 circular, is however kept open for consideration. In case such contention is urged by the appellant before the Income Tax authorities, the same shall be considered on its own merits. 10. The appeal is dismissed, subject to the above observations. S. RAVINDRA BHAT, J SANJEEV SACHDEVA, J OCTOBER 25, 2017 kks "