Concorde Overseas (P) Ltd., New Delhi V. ACIT, New Delhi

CO 11/DEL/2002

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5923 (ITAT-DELHI)
• Duration Of Justice: 9 year(s) 3 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-03-2011
• Assessment Year: 1993-1994
• Appeal Filed On: 17-01-2002
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: H N ARORA
• Keywords: Opportunity of being heard; Condonation of delay
• Section: 80HHC; 10B; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A BEFORE SHRI G.E.VEERABHADRAPPA, VICE PPRESIDENT AND SHRI A.D.JAIN, JUDICIAL MEMBER ITA NO.5583 & 5858/DEL/96 ASSTT.YEAR: 1992-93 & 1993-94 ASSTT. C.I.T. VS M/S CONCORDS OVERSEAS (P) LTD CO.CIR. 25(5), B-381, NEW FRIENDS COLONY, NEW DELHI. NEW DELHI-110065. ITA NO. 5610 & 5611/DEL/96 ASSTT.YEAR: 1992-93 & 1993-94 M/S CONCORDS OVERSEAS P.LTD. VS INCOME-TAX OFFICER , NEW DELHI. CO.CIR. 25(5), NEW DELHI. C.O.NO. 67/DEL/01 (ITA NO.5583/DEL/96) ASSTT. YEAR: 1992-93 & C.O.NO. 11/DEL/02 (ITA NO.5858/DEL/96) ASSTT.YEAR: 1993-94. M/S CONCORDS OVERSEAS P.LTD. VS ASSTT.C.I.T. NEW DELHI. CO.CIR. 25(5), NEW DELHI. PAN/G.I.R.NO: C-881. (APPELLANT) (RESPONDENT) ASSESSEE BY: S/SHRI K.SAMPATH & H.N.ARORA, ADV. DEPARTMENT BY: SHRI H.K.LAL, SR.D.R. ITA NO.5583/DEL/96 & ORS 2 O R D E R PER G.E.VEERABHADRAPPA, V.P: THE CROSS APPEALS AND THE ASSESSEES CROSS OBJECTIO NS ARISE OUT OF DIFFERENT ORDERS OF C.I.T (APPEALS) FOR THE ASSESSM ENT YEAR 1992-93 AND 1993-94. THEY WERE ALL HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. AT THE OUTSET, IT IS STATED THAT THE CROSS OBJEC TIONS FILED BY THE ASSESSEE IN BOTH THE YEARS ARE HOPELESSLY TIME BARRED. THERE WAS NO PRAYER FOR ANY CONDONATION OF DELAY IN FILING THESE CROSS OBJECTIO NS. THEREFORE, THE CROSS OBJECTIONS ARE TO BE TREATED AS DISMISSED. 3. NOW WE WILL TAKE UP THE APPEALS OF THE ASSESSEE. IN THE ASSESSMENT YEAR 1992-93, THE FIRST GROUND RELATES TO ASSESSEE S CLAIM FOR EXEMPTION U/S 10B OF THE INCOME-TAX ACT. THE ASSESSEE IS A LIMITE D COMPANY AND IS MANUFACTURER, EXPORTER AND INDENTING AGENT FOR EXPO RT OF GOLD JEWELLARY AND FABRIC. IT WAS CLAIMED BY THE ASSESSEE THAT THE ASS ESSEE IS A 100% EXPORT ORIENTED UNIT. FOR THE ASSESSMENT YEAR 1992-93, IT FILED AN APPLICATION DATED 1.12.1994 BEFORE THE ASSESSING OFFICER THAT IT BE A LLOWED EXEMPTION U/S 10B AND THE CLAIM FOR DEDUCTION U/S 80HHC MAY NOT BE GR ANTED. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLAIM ON THE GROUND THAT IT DID NOT FULFILL THE CONDITIONS LAID DOWN FOR EXEMPTION U/S 10B OF THE INCOME-TAX ACT FOR WHICH HE REFERRED TO SECTION 10B(7) OF THE ACT AND STATED THAT THE ASSESSEE MUST HAVE APPLIED OPTING FOR MAKING EXEMPT ION U/S 10B BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139 AN D THE ASSESSEE HAVING NOT ITA NO.5583/DEL/96 & ORS 3 DONE SO, IS NOT ENTITLED FOR EXEMPTION U/S 10B. HOW EVER, HE GRANTED BENEFIT OF DEDUCTION U/S 80HHC OF THE ACT. 4. THE C.I.T (APPEALS) MORE OR LESS ENDORSED THE FI NDINGS OF THE ASSESSING OFFICER IN THIS REGARD. 5. THE ASSESSEE BEFORE US HAS PRODUCED A LETTER DAT ED 27.06.1989 BY THE MINISTRY OF COMMERCE, GOVERNMENT OF INDIA, WHEREIN 2500 SQ.FT. OF SPACE WAS ALLOTTED TO SET UP A UNIT FOR THE MANUFACTURE O F PLAIN AND STUDDED JEWELLERY UNDER 100% EXPORT ORIENTED UNIT BASED ON THE LETTER OF INDUSTRIAL DEVELOPMENT (SECRETARIAT FOR INDUSTRIAL APPROVALS) LETTER NO. LI:EOB:28/89/EO 164(SU)-IL DATED 3 RD MARCH, 1989, WHEREBY IT WAS GRANTED PERMISSION TO SET UP A HUNDRED PERCENT EXPO RT UNIT FOR THE MANUFACTURE OF PLAIN AND STUDDED JEWELLERY IN THE E XPORT ORIENTED GOLD JEWELLERY COMPLEX AT JHANDEWALAN, NEW DELHI. THE AS SESSEE, HOWEVER, FAIRLY AGREED THAT THE ASSESSING OFFICER HAS NOT EX AMINED THE ISSUE FROM THAT ANGLE. ACCORDING TO HIM, THE ASSESSING OFFICER HAS ONLY RELIED UPON THE PROVISIONS OF SECTION 10B(7) OF THE INCOME-TAX ACT, WHICH IS NOT APPLICABLE. 6. THE LEARNED D.R., ON THE OTHER HAND, STRONGLY OP POSED THE CONTENTIONS OF THE ASSESSEE IN THE LIGHT OF THE DISCUSSIONS MAD E IN THE ASSESSMENT ORDER, AS WELL AS IN THE ORDER OF THE CIT(APPEALS). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND GONE THROUGH THE RECORDS. THE PROVISIONS OF SEC. 10B(7) ENABLES THE ASSESSEE NOT TO OPT FOR EXEMPTION U/S 10B BY FURNISHING A DECLARATION TO TH AT EFFECT. IN HAT EVEN THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO HIM F OR ANY OF THE RELEVANT ITA NO.5583/DEL/96 & ORS 4 ASSESSMENT YEAR. HERE THE ASSESSEE IS MAKING A CLAI M FOR APPLYING PROVISIONS OF SECTION 10B AS AGAINST THE PROVISIONS OF SECTION 80HHC OF THE ACT. THE A.O HAS CLEARLY APPLIED WRONG PROVISIONS TO DENY TH E RELIEF TO THE ASSESSEE. WE, THEREFORE, DO NOT APPROVE THE ACTION OF THE DEP ARTMENT IN THAT REGARD. HOWEVER, THE CLAIM OF THE ASSESSEE FOR RELIEF U/S 1 0B STILL REQUIRES TO BE EXAMINED BY THE A.O. WE, THEREFORE, SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE TH E ASSESSEES CLAIM FOR RELIEF U/S 10B DE NOVO IN THE LIGHT OF THE MATERIAL THAT MAY BE PRODUCED IN SUPPORT OF THE CLAIM. THE A.O SHALL GIVE PROPER REA SONS FOR NOT ALLOWING RELIEF U/S 10B OF THE ACT. THE A.O IN CASE IF HE CO MES TO THE CONCLUSION THAT THE ASSESSEE IS ENTITLED TO RELIEF U/S 10B OF THE A CT, THE DEDUCTION GRANTED U/S 80HHC IS LIABLE TO BE WITHDRAWN. 8. IN THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 1993-94, ONE OF THE ISSUE RELATES TO THE DISALLOWANCE OF RS 1,34,394/- BEING A PENALTY IMPOSED BY MMTC WHICH THE ASSESSEE CLAIMED AS A BUSINESS EXPEN DITURE. IN THE LIGHT OF OUR ORDER IN RELATION TO THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR EXEMPTION U/S 10B OF THE ACT, THE ISSUE RELATING TO THE DISALLOWANCE OF PENALTY MAY NOT EVENTUALLY ARISE. WE, THEREFORE, RE STORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO P ROCESS IN ACCORDANCE WITH LAW, AFTER GIVING THE ASSESSEE A FAIR AND REASONABL E OPPORTUNITY OF BEING HEARD IN THE MATTER. 9. IN THE DEPARTMENTAL APPEAL, THE FIRST GROUND REL ATES TO THE DISALLOWANCE OF FABRICATION CHARGES ON THE GROUND THAT THE SAME REMAINED UNVERIFIABLE. WE HAVE HEARD THE D.R WHO STRONGLY SUPPORTED THE FI NDINGS OF THE A.O. ITA NO.5583/DEL/96 & ORS 5 ACCORDING TO HIM THE PAYMENT FOR FABRICATION CHARGE S REMAINED TO BE VERIFIED. 10. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, DREW OUR ATTENTION TO THE DISCUSSIONS IN THE ORDER OF THE CI T(APPEALS) AND ARGUED THAT THE GOLD JEWELLARY WAS MANUFACTURED FROM THE GOLD S UPPLIED BY MMTC AND THE SAME WAS EXPORTED OUT OF INDIA THROUGH CUSTOM & BANKING CHANNELS. THE JEWELLARY COMPLEX IS A CUSTOMS BOUND AREA AND N O GOLD CAN BE TAKEN OUTSIDE THE PREMISES. THE GOLD WAS SUPPLIED TO THE FABRICATORS AND AT THE CLOSE OF THE DAY THE SAME WAS CHECKED AND THEIR SMA LL BOXES CONTAINING THE JEWELLARY WERE KEPT UNDER LOCK AND KEY. THE FABRICA TORS WERE SEARCHED DAILY BEFORE THEY LEAVE THE COMPLEX. THE FABRICATORS WERE ISSUED IDENTITY CARDS WITH THEIR PHOTOGRAPHS. THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNT CONSISTING OF CASH BOOK, LEDGER, VOUCHERS AND STOCK CARDS SHOWING THE OPENING STOCK, JEWELLARY SOLD. THESE STOCK CARD STA TEMENTS WERE BEING SUBMITTED TO MMTC MONTHLY AS PRESCRIBED BY MMTC WHO CONTROLS ALL THE ACTIVITIES OF THE ASSESSEE. THE INVOICES RAISED ON THE FOREIGN BUYERS WERE REALIZED THROUGH BANK BY THE MMTC AND THE MMTC WAS MAKING THE PAYMENTS TO THE APPELLANT AFTER DEDUCTING THE PRICE OF THE GOLD SUPPLIED BY THE MMTC AND OTHER OVERHEAD CHARGES. 11. THE CIT(APPEALS) HAS PROPERLY APPRECIATED THE C ONDITIONS UNDER WHICH THE ASSESSEE HAS INCURRED THESE EXPENDITURE A ND WAS OF THE OPINION THAT THE FABRICATION CHARGES PAID FOR MANUFACTURING THE JEWELLERY WERE FAIR AND REASONABLE. 12. WE HAVE GONE THROUGH THE DISCUSSIONS IN THE ORD ER INCLUDING THE FIRE ACCIDENT THAT DESTROYED SOME OF THE RECORDS MAINTAI NED BY THE ASSESSEE. THE ASSESSEE IS OPERATING IN A CUSTOMS BOUND AREA. THER E WAS NO REASON WHY FABRICATION CHARGES PAID IN SUCH CIRCUMSTANCES SHOU LD BE DISALLOWED. WE DO ITA NO.5583/DEL/96 & ORS 6 NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) O N THIS ISSUE. THE SAME IS CONFIRMED. 13. THE NEXT GROUND IN THE REVENUES APPEAL FOR THE ASSESSMENT YEAR 1992- 93 RELATES TO TRAVELING EXPENSES OF RS 57,980/- AND IN THE OTHER ORDER AN ADDITION OF RS 28,322/- ON ACCOUNT OF CONSUMPTION C HARGES. 14. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE D ETAILS INCLUDING THE ORDER OF THE CIT(A). IN OUR VIEW THE TRAVELING EXPE NSES INCURRED IN THE COURSE OF BUSINESS ARE CORRECTLY ALLOWED BY THE CIT (APPEALS) SINCE THE ASSESSEE WAS ENGAGED IN THE EXPORT BUSINESS AND THE RE IS NO REASON TO CONCLUDE ONLY 50% OF IT AS RELATING TO THE ASSESSEE S BUSINESS. 15. AS REGARDS THE CONSUMPTION CHARGES, WE FIND THA T THE DISALLOWANCE IS PURELY MADE BY THE A.O ON ARBITRARY BASIS AND THE S AME HAS CORRECTLY BEEN DELETED AND WE DECLINE TO INTERFERE AS THE CIT(A) H AS GIVEN A SPECIFIC FINDING THAT ALL THE EXPENSES WERE INCURRED IN CONNECTION W ITH THE ASSESSEES BUSINESS. WE DECLINE TO INTERFERE. 16. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED F OR STATISTICAL PURPOSES AND THE REVENUES APPEALS DISMISSED. THE ASSESSEES CROSS OBJECTIONS ARE DISMISSED AS TIME-BARRED. PRONOUNCED IN OPEN COURT ON 29.04.2011. SD/- SD/- (A.D.JAIN) (G.E.VEERABHADRAPPA) JUDICIAL MEMBER VICE PRESIDENT DATED: APRIL 29 ,2011 DRS ITA NO.5583/DEL/96 & ORS 7 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT, 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT.REGISTRAR, ITAT