Smt. Veenu Kapoor, Prop., New Delhi V. DCIT, New Delhi

CO 15/DEL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7408 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-07-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 02-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Assessee Lawyers: ASHWANI TANEJA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI D.K. TYAGI AND SHRI B.C. MEENA ITA NO. 4841/DEL/11 A.Y. 2001-02 DCIT CIR. 26(1), VS. SMT. VENU KAPOOR, NEW DELHI. PROP. M/S SHIRDI EXPORTS, J-114, RAJOURI GARDEN, NEW DELHI-110027. PAN/ GIR NO. AAOPK0213F C.O. NO. 15/DEL/2012 ( IN ITA NO. 4841/DEL/11) A.Y. 2001-02 SMT. VENU KAPOOR, VS. DCIT CIR. 26(1), PROP. M/S SHIRDI EXPORTS, NEW DELHI. J-114, RAJOURI GARDEN, NEW DELHI-110027. ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : MS. VEENA JOSHI DR ASSESSEE BY : SHRI ASHWANI TANEJA ADV. O R D E R PER D.K. TYAGI, J.M: : THESE ARE REVENUES APPEAL AND ASSESSEES CROSS OB JECTIONS ASSAILING CIT(A)S ORDER DATED 29-8-2011, RELATING TO A.Y. 20 01-02. 2. AT THE HEARING LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS CROSS OBJECTIONS FILED BY THE ASSESSEE. ACCORDINGLY, ASSE SSEES CROSS OBJECTIONS STAND DISMISSED, BEING NOT PRESSED. 3. EFFECTIVE GROUND RAISED BY THE REVENUES IN ITS APPEAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE 2 ASSESSING OFFICER ON ACCOUNT OF LOCAL SALES MADE T O M/S AIM CONCEPTS AMOUNTING TO RS. 22,14,385/-. 4. FACTS, IN BRIEF, ARE: THE ASSESSEE IS A PROPRIET OR OF AN EXPORT ORIENTED CONCERN NAMED M/S SHIRDI EXPORTS. FOR A.Y. 2001-02 SHE FILED HER RETURN DISCLOSING INCOME OF RS. 6,84,885/-. DURING ASSESSM ENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT ONE M/S AIM CONCEPT S IN ITS P&L A/C HAD DEBITED RS. 22,14,385/- IN THE NAME OF M/S SHIRDI E XPORTS, WHEREAS THIS AMOUNT WAS NOT DISCLOSED IN SALES BY M/S SHIRDI EXP ORTS IN ITS P&L A/C. ON BEING CONFRONTED, THE ASSESSEE SUBMITTED REVISED P& L A/C DISCLOSING SALES OF RS. 22,14,835/- TO M/S AIM CONCEPTS AND DEBITED CORRESPONDING AMOUNTING IN THE PURCHASE ASSESSING OFFICER. THE AS SESSING OFFICER DID NOT ACCEPT THE CONTENTION AND MADE AN ADDITION OF RS. 2 2,14,835/- TO THE INCOME OF THE ASSESSEE. IN FIRST APPEAL THE CIT(A) CONFIR MED THE ACTION OF ASSESSING OFFICER. IN SECOND APPEAL, THE ITAT SET ASIDE THE MATER TO THE FILE OF ASSESSING OFFICER TO EXAMINE THE MATTER AFRESH. 4. IN SET ASIDE PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD NOT SHOWN SALES OF RS. 22,14,385/- IN HER BOOKS OF A/CS AND ADDED THE SAME TO HER INCOME. IN APPEAL BEFORE CIT(A) THE AS SESSEE EXPLAINED THAT M/S SHIRDI EXPORTS HAD RECEIVED ORDER OF EXPORT OF A PARTICULAR CATEGORY OF GARMENTS FROM M/S BUBBLES INC.; ASSESSEE DID NOT HA VE REQUISITE QUOTA ALLOTTED BY AEPC FOR THAT PARTICULAR CATEGORY OF GA RMENTS, THEREFORE, TO COMPLETE THE EXPORT ORDER, THEY HAD TO BUY THE QU OTA FROM OPEN MARKET. ON INQUIRY, IT REVEALED THAT M/S AIM CONCEPTS WAS HAVI NG QUOTA ALLOTTED BY AEPC FOR THAT PARTICULAR CATEGORY. HOWEVER, SUCH QUOTA AVAILABLE WAS NON- TRANSFERABLE, THEREFORE, M/S SHIRDI EXPORTS, AS PER STANDARD COMMERCIAL PRACTICE IN THE GARMNENT EXPORT INDUSTRY, PREPAED T HE DOCUMENT OF EXPORT IN 3 THE NAME OF M/S AIM CONCEPTS AND SHIFT THE GOODS TO THE IMPORTER M/S BUBBLES INC. IN THE NAME OF M/S AIM CONCEPTS. LD. C OUNSEL SUBMITTED THAT M/S SHIRDI EXPORTS HAD NOT GIVEN ANY DELIVERY OF GO ODS TO M/S AIM CONCEPTS AND THE GOODS WERE DIRECTLY EXPORTED TO M/ S BUBBLES INC. FROM THE FACTORY OF M/S SHIRDI EXPORTS. ALL PURCHASES OF FA BRIC AND OTHER ITEMS WERE MADE BY M/S SHIRDI EXPORT AND THE AMOUNT WAS DEBITE D TO PURCHASE A/C. AND THE REVENUE RECEIVED ON A/C OF ABOVE EXPORT ORDER W AS CREDITED TO THE PURCHASE AND RESPECTIVE EXPENSES A/CS. THE REVENUE RECEIVED WAS RS. 22,14,385/- BY RAISING A DEBIT NOTE ON M/S AIM CONC EPTS AND THIS INCLUDED THE PROFIT ELEMENT. ACCORDING TO LD. COUNSEL EVEN B Y THIS METHOD OF ACCOUNTING THERE WAS NO LOSS OF REVENUE TO THE EX-C HEQUER AND THERE WAS NO DOUBLE CLAIM OF PURCHASES OR EXPENSES. 6. CIT(A) DELETED THE ADDITION, INTER ALIA, OBSERV ING AS UNDER: 4.2. IT IS COMMON KNOWLEDGE IN THE EXPORT MARKET T HAT QUOTA FOR EXPORT OF GARMENTS ALLOCATED BY AEPC, BASED ON THE PAST PERFORMANCE OF THE EXPORTER, IS AVAILABLE OPENLY A ND ALSO THAT THERE AE SPECIALIZED BROKERS WHO DEL EXCLUSIVELY IN AEPC QUOTA. THEREFORE, THE STATEMENT OF FACTS MADE BY TH E APPELLANT IS NEITHER AN UNBELIEVABLE STORE, NOR A COLOURABLE DEVICE. THE AO MADE THE ADDITION OF RS. 22,14,885/- TO THE INCO ME OF THE APPELLANT IN THE FIRST PLACE BECAUSE HE COULD NOT F IND THIS AMOUNT IN THE NAME OF M/S AIM CONCEPTS IN THE SALES LIST OF THE APPELLANT. THIS WS PRIMARILY BECAUSE OF THE ACCOUNT ING METHOD ADOPTED BY THE APPELLANT. EVEN THIS METHOD OF ACCOU NTING FOLLOWED BY THE APPELLANT WAS REVNUE NEUTRAL. THE A PPELLANT HAAS SUBMITTED BOTH THE ORIGINAL P&L A/C. (WHERE PU RCHASES AND EXPENES WERE ADJUSTED) AND THE REVISED P&L A/C. (WHER THE SALES HAVE BEEN SHOWN AND THE CORRESPONDING PURCHAE S AND EXPENSES HAVE ALSO BEEN SHOWN). BY BOOTH THE ABOVE MEHOD, THE GROSS PROFIT REMAINS THE SAME. THE ONLY DIFFERE NCE THAT OCCURS IS IN THE CALCULATION OF DEDUCTION U/S 88HHC OF THE ACT, AFTER TAKING INTO CONSIDERATION THE SALES MADE THRO UGH M/S AIM CONCEPTS. THE APPELLANT HAS SUBMITTED THE ORIGINAL CALCULATION 4 U/S 80-HHC, A PER WHICH THE DEDUCTION CLAIMED CAME TO RS. 24,07,957/-. SHE HAS EVEN SUBMITTED THE REVISED CAL CULATION OF 80HHC AFTER TAKING INTO ACCOUNT THE SALE MADE THROU G M/S AIM CONCEPTS, AS PER WHICH THE DEDUCTION CLAIMED COMES TO RS. 23,07,499/-. THE DIFFERENCE BETWEEN THE TWO IS RS. 1,00,458/-, WHICH IS REQUIRED TO BE DISALLOWED AND ADDED BACK T O THE INCOME OF THE APPELLANT. AFTER HAVING CAREFULLY PER USED THE LEDGER EXTRACTS OF EXPORTS THROUGH M/S AIM CONCEPTS AND THE COPIES OF THE DEBIT NOTES AND THEIR ACCOUNTING AND THE BOOKS BY THE APPELLANT, IT IS CLEAR THAT DOUBLE CLAIM OF EXP ENSES HAS BEEN MADE. THUS, THE ADDITION OF RS. 22,14,385/- IS NOT JUSTIFIED IN MY OPINION AND, THEREFORE, DELETED. THE ONLY DISALL OWANCE REQUIRED TO BE MADE AMOUNTS TO RS. 1,00,458/- OUT O F THE CLAIM OF DEDUCTION U/S 80HHC MADE BY THE APPELLANT. 7. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 8. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER . 9. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, CONTENDED THAT ASSESSING OFFICER MADE THE ADDITION TO THE INCOME OF THE ASSESSEE BECAUSE IN FIRST PLACE HE COULD NOT FIND THE IMPUGNED AMOUN T IN THE NAME OF M/S AIM CONCEPTS IN THE SALES LIST OF THE ASSESSEE. THIS WA S BECAUSE OF THE ACCOUNTING METHOD ADOPTED BY THE ASSESSEE. MORE OVER BY ADOPTI NG THIS METHOD THERE WAS NO LOSS TO THE REVENUE. THE ONLY DIFFERENCE IN CALCULATION OF DEDUCTION U/S 80-HHC AMOUNTING TO RS. 1,00,458/- HAS BEEN RET AINED BY THE CIT(A). HE RELIED ON THE ORDER OF CIT(A), DELETING THE ADD ITION IN QUESTION. 10. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE RELEVANT MATERIAL AVAILABLE ON RECORD. CIT(A) WHILE DELETIN G THE ADDITION IN QUESTION HAS OBSERVED THAT ASSESSEE HAD NOT CLAIMED DOUBLE E XPENSES AND THERE WAS NO LOSS TO THE REVENUE BY THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE ADDITION ON ACCOUNT OF DIFFERENCE IN CALCULATI ON OF DEDUCTION U/S 80- HHC HAS BEEN RETAINED BY THE CIT(A). THUS WE SEE N O FLAW OR INFIRMITY IN 5 THE ORDER OF CIT(A) TO TAKE A DIFFERENT VIEW IN TH E MATTER. ACCORDINGLY, ORDER OF CIT(A) ON THE ISSUE IN QUESTION IS UPHELD . 11. IN THE RESULT, REVENUES APPEAL AS WELL AS ASSE SSEES CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27-7-2012. SD/- SD/- ( B.C. MEENA ) ( D.K. TYAGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27-7-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR