M/s. K.K. Accessories, New Delhi V. ITO, New Delhi

CO 29/DEL/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9840 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Section: 80HHC; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. S. V. MEHROTRA, AM AND SH. JOGINDER SIN GH, JM ITA NO. 6352/DEL/2012 : ASS TT. YEAR : 2009-10 INCOME TAX OFFICER, WARD-32(3), NEW DELHI VS M/S K. K. ACCESSORIES, H-9, LAJPAT NAGAR-1, NEW DELHI-110024 (APPELLANT) (RESPONDENT) C.O NO. 29/DEL/2013 : ASSTT. YEAR : 2009-10 M/S K. K. ACCESSORIES, H-9, LAJPAT NAGAR-1, NEW DELHI-110024 VS INCOME TAX OFFICER, WARD-32(3), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAFFK4131R ASSESSEE BY : PREMLATA BANSAL, ADV. REVENUE BY : SH. S. N. BHATIA, DR DATE OF HEARING : 6.8.2014 DATE OF PRONOUNCEMENT :7.8.2014 ORDER PER JOGINDER SINGH, JM: THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 31.10.2012 PASSED BY THE LD. CIT(A), NEW DELHI. THE ASSESSEE H AS ALSO PREFERRED CROSS OBJECTION. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE WHEREIN THE FIRST GROUND RAISED PERTAINS TO INCLUSION OF DUTY DRAWBAC K IN EXPORT SALE OF THE ASSESSEE WHILE CALCULATING DEDUCTION U/S 10B OF THE ACT. DURING ITA NO. 6352/DEL/2012 & CO NO. 29/DEL/2013 K. K. ACCESSORIES 2 HEARING THE LD. SENIOR DR SHRI S. N. BHATIA CONTEND ED THAT IN SPITE OF THE FACT THAT THE AUDITOR OF THE ASSESSEE HIMSELF HAS C ERTIFIED THE EXPORT SALE, WITHOUT INCLUSION OF DUTY DRAWBACK IN REPORT U/S 10B IN FORM NO. 56G, SUBMITTED DURING ASSESSMENT PROCEEDINGS, RELIE F HAS BEEN GRANTED BY THE LD. CIT(A). BROADLY THE ASSESSMENT ORDER WAS DEFENDED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE M/S PR EMLATA BANSAL DEFENDED THE CONCLUSION DRAWN BY THE LD. CIT(A). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT TH E ASSESSEE DECLARED INCOME FROM BUSINESS OF MANUFACTURING AND EXPORT OF GARMENTS. THE ASSESSEE CLAIMED EXEMPTION U/S 10B OF THE ACT TO TH E TUNE OF RS. 1,18,56,646/-. THE ASSESSEE WAS ASKED BY THE ASSESS ING OFFICER TO FURNISH THE AUDIT REPORT AND ALSO CERTIFICATE FROM AUDITOR FOR CLAIMING OF EXEMPTION U/S 10B. THE ASSESSEE FILED THE AUDIT REPORT DULY CERTIFIED BY THE AUDITOR. ON PERUSAL OF DETAILS, THE LD. ASSE SSING OFFICER OBSERVED THAT THE AMOUNT OF RS. 91,70,681/-, PERTAINING TO 1 6 INVOICES WAS NOT RECEIVED WITHIN A PERIOD OF 6 MONTHS FROM THE END O F THE RELEVANT PREVIOUS YEAR. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THIS PAYMENT BE TREATED AS EXPORT SALE FOR THE YEAR UNDER CONSID ERATION. IT WAS CLAIMED BY THE ASSESSEE THAT 100% EOU ARE ALLOWED T O BRING EXPORT PAYMENTS WITHIN 12 MONTHS FORM THE DATE OF EXPORT A S PER RBI CIRCULAR. UNCONVINCED BY THIS CLAIM THE LD. ASSESSING OFFICER REDUCED DEDUCTION U/S 10B BY THE AMOUNT OF RS. 19,12,743/-. THE ASSES SEE PREFERRED APPEAL ITA NO. 6352/DEL/2012 & CO NO. 29/DEL/2013 K. K. ACCESSORIES 3 BEFORE THE LD. CIT(A) WHEREIN BY IMPUGNED ORDER IT WAS HELD THAT DUTY DRAWBACK IS AN INCENTIVE AND DO NOT HAVE ANY ELEMEN T OF TURNOVER, MEANING-THEREBY, THE AMOUNT OF DUTY DRAWBACK IS TO BE INCLUDED IN BOTH TOTAL TURNOVER AS WELL AS EXPORT TURNOVER OR FROM B OTH AND GRANTED RELIEF TO THE ASSESSEE. THE REVENUE IS AGGRIEVED AND IS AN APPEAL BEFORE THIS TRIBUNAL. 4. UNCONTROVERTEDLY THE ASSESSEE IS A 100% EXPORT O RIENTED UNDERTAKINGS, CLAIMED EXEMPTION U/S 10B OF THE ACT AT RS. 118,56,546/-. THE DENIAL OF EXEMPTION BY THE ASSESSING OFFICER WA S THAT THE AMOUNT OF RS. 91,70,681/- RECEIVED IN THE FORM FOREIGN REM ITTANCE WAS NOT REALIZED WITHIN A PERIOD OF 6 MONTHS FROM THE END O F THE RELEVANT PREVIOUS YEAR AND ALSO THE ASSESSEE DID NOT APPLY F OR EXTENSION OF TIME BEYOND 30.9.2009 AS PER CIRCULAR NO. 25/2004. THE A SSESSEE WAS PERMITTED TO BRING EXPORT PAYMENT WITHIN 12 MONTHS. WE NOTE THAT SEC. 10B WAS INTRODUCED BY THE FINANCE ACT, 1988 W.E.F 1 .4.1989. AS STATED IN CIRCULAR NO. 528 DATED 16.12.1988 (176 ITR ST. 1 54), TAX HOLIDAY U/S 10A WAS NOT AVAILABLE TO 100% EOU AND THUS, SUCH UN DERTAKINGS WERE ELIGIBLE ONLY FOR DEDUCTION U/S 80HHC OUT OF THEIR EXPORT PROFIT. THE GOVERNMENT WITH A VIEW TO PROVIDE FURTHER INCENTIVE S FOR EARNING FOREIGN EXCHANGE, BY THE FINANCE ACT, 1988, A NEW S ECTION IN FORM OF 10B WAS INSERTED SO AS TO ENSURE THAT INCOME OF 100 % EOU SHALL BE EXEMPTED FROM TAX FOR A PERIOD OF 5 CONSECUTIVE ASS ESSMENT YEARS. DUTY DRAWBACK IS AN INCENTIVE. IN VIEW OF THE AFOREMENTI ONED CIRCULAR THE ITA NO. 6352/DEL/2012 & CO NO. 29/DEL/2013 K. K. ACCESSORIES 4 ASSESSEE IS ALLOWED TO REALIZE AND REPATRIATE FULL VALUE OF EXPORT PROCEEDS WITHIN A PERIOD OF 12 MONTHS FROM THE DATE OF EXPOR T. SINCE, THE ASSESSEE RECEIVED A SUM OF RS. 14,31,796/- OUT OF RS. 31,84, 755/- WITHIN ONE YEAR FROM THE DATE OF EXPORTS, THUS, THE DEDUCTION RELAT ING TO THE AMOUNT OF RS. 14,31,796/- CANNOT BE DISALLOWED. THE AMOUNT OF DUTY DRAWBACK EITHER IS TO BE INCLUDED IN BOTH TOTAL TURNOVER AS WELL AS EXPORT TURNOVER OR TO BE EXCLUDED FROM BOTH. IF THE FIGURES OF EXPO RT TURNOVER AND TOTAL TURNOVER ARE ANALYZE THE DEDUCTION U/S 10B WOULD CO ME TO RS. 1,18,56,646/-. THUS, WE FIND NO INFIRMITY IN THE CO NCLUSION DRAWN BY THE LD. CIT(A). IT IS UPHELD, RESULTING INTO DISMISSAL OF APPEAL OF THE REVENUE. 5. NOW WE SHALL TAKE UP THE CROSS OBJECTION RAISED BY THE ASSESSEE WHEREIN THE FOREIGN REMITTANCE OF RS. 14,31,796/- O NLY WAS ALLOWED AND NOT ALLOWING THE AMOUNT OF RS. 17,52,959/-. WHILE D ISPOSING OF THE APPEAL OF THE REVENUE WE HAVE ALREADY UPHELD THE ST AND OF THE LD. CIT(A). ON CONSIDERATION OF ARGUMENT FROM BOTH SIDE S WE DO NOT FIND MERIT IN THE ASSERTION OF THE ASSESSEE, THEREFORE, THIS CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. 6. FINALLY APPEALS OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ITA NO. 6352/DEL/2012 & CO NO. 29/DEL/2013 K. K. ACCESSORIES 5 7. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN T HE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 6.8.2014. SD/- SD/- (S. V. MEHROTRA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7/8/2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 6.8.2014 PS 2. DRAFT PLACED BEFORE AUTHOR 6.8.2014 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.