Anand Exports, Bhubaneswar V. DCIT, Circle-1(1), Bhubaneswar, Bhubaneswar

CO 38/CTK/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5656 (ITAT-CUTTACK)
• Duration Of Justice: 6 year(s) 2 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 23-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Keywords: Set aside
• Section: 40A(3); 10B; 201; 44AB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 253 /CTK/20 1 4 ( / A SSESSMENT Y EAR : 20 09 - 201 0 ) DCIT, CIRCLE - 1(1), BHUBANESWAR VS M/S ANAND EXPORTS, PLOT NO.428/3818, JAYADEV NAGAR, BHUBANESWAR - 751002 PAN NO. : A ALFA 4275 A AND CROSS OBJECTION NO. 38 /CTK/20 14 (ARISING OUT OF ITA NO.253/CTK/2014) ( / A SSESSMENT YEAR :20 09 - 2010 ) M/S ANAND EXPORTS, PLOT NO.428/3818, JAYADEV NAGAR, BHUBANESWAR - 751002 VS DCIT, CIRCLE - 1(1), BHUBANESWAR PAN NO. : A ALFA 4275 A ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI M.K.GAUTAM, CIT DR /ASSESSEE BY : SHRI SUNIL MISHRA , ADVOCATE / DATE OF HEARING : 2 4 / 0 9 /20 20 / DATE OF PRONOUNCEMENT : 05 / 10 /20 20 / O R D E R PER L.P.SAHU, AM : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 12.03.2014 , PASSED BY THE CIT (A) - I , B HUBANESWAR FOR THE ASSESSMENT YEAR 20 09 - 20 10 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTION. 2. THE GROUNDS TAKEN BY THE REVENUE IN ITS APPEAL ARE AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AS WELL AS ON LAW IN ALLOWING EXEMPTION U/S 10B AMOUNTING TO RS. 10,02,17,979/ - TO THE ASSESSEE WHEN ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 2 THE ASSESSEE WAS NOT ENGAGED IN MANUFACTURING ANY ARTICLE OR THING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIE D HAS ERRED BOTH ON FACTS AS WELL AS ON LAW IN ALLOWING EXEMPTION U/S 10B WHEN THE ASSESSEE WAS ENGAGED ONLY IN THE BUSINESS PROCESS OF REMOVING IMPURITIES FROM LOWER GRADE CHROME ORES THROUGH AND BENEFICATION PROCESS WHICH DID NOT BRING OUT ANY NEW ARTICL E OR THING WITH A DIFFERENT CHEMICAL COMPOSITION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING EXEMPTION U/S 10B TO THE ASSESSEE RELYING ON THE ITAT'S DECISION IN THE CASE OF ANOTHER ASSESSEE BISWA JIT DAS, WHEN THE DECISION IN THAT CASE HAS BEEN CHALLENGED BY THE DEPTT. BEFORE THE HON'BLE HIGH COURT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING DISALLOWANCE U/S 40A(3) ON ESTIMATE @ 10% ONLY OF PAYMENT MADE TO TRANSPORTERS AFTER HOLDING THAT SUCH PAYMENTS WERE HIT BY PROVISION OF THAT S E CTION. 5. THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDING. 3 . THE BRIEF F ACTS WHICH HAS BEEN BROUGHT ON RECORD AND HAVE BEEN CONSIDERED THE BY THE AUTHORITIES BELOW ON THE SUBMISSIONS OF THE ASSESSEE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 DECLARING TOTAL INCOME AT RS.NIL AFTER CLAIM ING EXEMPTION U/S. 10B OF THE INCOME - TAX ACT, 1961 ON THE GROUND THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING ACTIVITY. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSING OFFICER HAS DISPUTED THAT BENEFICIATION OF CHROME ORE IS NOT A MANUFACTURING A CTIVITY IGNORING THE FACT THAT ON THE BASIS OF SUCH MANUFACTURING ACTIVITY THE ASSESSEE HAS BEEN ISSUED 100% ECU CERTIFICATE FROM THE MINISTRY OF ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 3 COMMERCE AND INDUSTRIES, GOVERNMENT OF INDIA AND THE ASSESSING OFFICER WITHOUT APPRECIATING THE CERTIFICATE A ND THE ACTIVITY IN THE PROPER PROSPECTIVE HAS RELIED UPON THE HIGH SCHOOL CHEMISTRY WHICH IS NOT ONLY ABSURD BUT ALSO IRRELEVANT TO CONCLUDE THE ASSESSEES CASE AS MANUFACTURING ACTIVITY OR NOT AND FOR THAT MATTER THERE IS A COMPLETE BUSINESS BY THE ASSESSING OFFICER IN DEALING HIGH SCHOOL CHEMISTRY WITH THE CASE OF THE ASSESSEE WHICH IS NOTHING BUT AN ARBITRARY ACT AND DOES NOT HAVE ANY RELEVANCE WITH THE PROVISIONS OF THE ACT VIS - A - VIS THE DECISION PRONOUNCED BY THE VARIOUS COURTS AND TRIBUNALS. AC CORDINGLY, THE AO MADE VARIOUS DISALLOWANCES AFTER ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.12,41,38,110/ - . 4. FEELING AGGRIEVED THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. NOW, THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. LD. CIT - DR BEFORE US RELIED ON THE ORDER OF AO AND SUBMITTED THAT WHEN THE ASSESSEE WAS NOT E NGAGED IN MANU FACTURING ANY ARTICLE OR THING AND THE ASSESSEE WAS ENGAGED ONLY IN THE BUSINESS PROCESS OF REMOVING IMPURITIES FROM LOWER GRADE CHROME ORES THROUGH AND BENEFICIATION PROCESS WHICH DID NOT BRING OUT ANY NEW ARTICLE OR THING ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 4 WITH A DIFFERENT C HEMICAL COMPOSITION. T HEREFORE, LD. DR SUBMITTED THAT NO EXEMPTION U/S.10B OF THE ACT CAN BE ALLOWED TO THE ASSESSEE. FURTHER, IT WAS SUBMITTED BY THE LD. CIT - DR THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING EXEMPTION U/S 10B OF THE ACT TO THE ASSESSEE REL YING ON THE ITAT'S DECISION IN THE CASE OF ANOTHER ASSESSEE BISWAJIT DAS, WHEN THE DECISION IN THAT CASE HAS BEEN CHALLENGED BY THE DEPTT. B EFORE THE HON'BLE HIGH COURT. ACCORDINGLY, LD. CIT DR SUBMITTED THAT THE APPEAL OF THE REVENUE DESERVES TO BE ALLOWE D AND THAT OF THE ORDER OF AO DESERVES TO BE RESTORED. 7 . ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT(A) AND SUBMITTED THAT THE CIT(A) HAS RIGHTLY ALLOWED THE EXEMPTION U/S.10B OF THE ACT RELYING ON THE DECISION OF THE COORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF BISWAJIT DAS, ITA NOS.157&158/CTK/2013 AND ITA NOS.257&258/CTK/2013, ORDER DATED 31.12.2013 ALONG WITH THE DECISION IN ASSESSEES OWN CASE FOR A.Y.2008 - 2009 IN ITA NO.125/CTK/2012, ORDER DATED 14.02.2013 AND OTHER DECISIONS PLACED ON RE CORD . IT WAS ALSO SUBMITTED BY THE LD. AR THAT THE DECISION IN THE CASE OF BISWAJIT DAS (SUPRA) IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE ON THE SUBJECT FAVOURING THE CLAIM OF THE ASSESSEE THAT THE PRODUCTION OF CHROME CONCENTRATE IS A MANUFACTURI NG ACTIVITY AND, THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.10B OF THE ACT. ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 5 8. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT CASE OF THE ASSES SEE HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR IMMEDIATELY PRECEDING ASSESSMENT I.E. A.Y.2008 - 2009 IN ITA NO.125/CTK/2012, ORDER DATED 14.02.2013, WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - 7. WE HAVE HEA RD THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF CASE AS BROUGHT ON RECORD BY THE AUTHORITIES BELOW, WE ARE INCLINED TO HOLD THAT THE DEFINITION OF MANUFACTURING HAS BEEN DEAL T WITH BY THE APPELLATE AUTHORITIES IN AS MANY PAGES INSOFAR AS THE ACTIVITIES SOUGHT TO BE CARRIED OUT BY THE ASSESSEE IN AS MANY WAYS WAS HELD AGAINST THE ASSESSEE. WE ARE TO CONSIDER THE CASE OF THE ASSESSEE TO ESTABLISH THAT THE MANUFACTURING HAS ACTUA LLY TAKEN PLACE AND IT IS NOT AN UNDISPUTED FACT THAT WHAT HAS BEEN MANUFACTURED IS THE NATURE'S BOUNTY WHICH HAS BEEN EXTRACTED IN A CONCENTRATED MANNER IN ORDER TO FETCH A BETTER PRICE. IT IS NORMAL FOR ANY TRADER TO DISPLAY AND SALE THE SAME NATURE'S BO UNTY BUT CHARGE HIGHER PRICE FOR A PRODUCT WHICH LOOKS/APPEARS BETTER AND ALSO NOT BECAUSE THE LAB ANALYSIS HAS TO BE DONE PRIOR TO PURCHASE. HE WILL KNOW THAT HE IS SELLING A PRODUCT BETTER THAN THE REMAINING AT A HIGHER PRICE. IN THIS VIEW OF THE MATER, THE LEARNED COUNSEL OF THE ASSESSEE HAS TRIED TO EMPHASIZE THAT IT WILL BE FATAL TO THE PROVISIONS OF THE EXCISE DUTY ACT WHO HAS REGISTERED THE ASSESSEE AS A MANUFACTURER OF CHROMIUM CONCENTRATE INSOFAR AS NO REPRODUCTION COSTS ARE LEVIED. IN OTHER WORDS, THE LEARNED COUNSEL OF THE ASSESSEE SUGGESTED THAT THE PURCHASE AND SALES ARE A MATTER OF RECORD WITH THE EXCISE DEPARTMENT WHICH WOULD CLEARLY INDICATE THAT WHETHER THE ASSESSEE HAS UNTAKEN MANUFACTURING AS SUBMITTED BY IT INSOFAR AS THE EXCISE DUTY A UTHORITIES ARE MORE VIGILANT INSOFAR AS THE MANUFACTURING FROM THE EXEMPTED PRODUCTION OF GOODS DEALT WITH BY THE ASSESSEE HAS TO BE SCRUPULOUSLY FOLLOWED. ON A SPECIFIC QUERY BY THE BENCH WHETHER THE ASSESSEE HAS EXCISE DUTY RECORD WHICH IDENTIFY THE AMOU NT OF STOCK HELD AND THE AMOUNT OF STOCK AFTER THE MANUFACTURING IS DULY ACKNOWLEDGED BY THE EXCISE DEPARTMENT AUTHORITIES, THE LEARNED COUNSEL OF THE ASSESSEE PRAYED FOR A REMAND TO THE ASSESSING OFFICER BEFORE WHOM SUCH RECORDS WILL BE PRODUCED TO ESTABL ISH THAT THE MANUFACTURING DID OCCUR AS PER THE PROCESS SUBMITTED BEFORE THE ASSESSING AUTHORITIES INSOFAR AS NOT A SINGLE GRAIN OF CHROME HAS BEEN SOLD WITHOUT MANUFACTURING NOT IN THE KNOWLEDGE OF THE EXCISE DEPARTMENT. THEREFORE, WE ARE OF THE CONSIDERE D VIEW THAT THE ISSUE REQUIRES RECONSIDERATION BY THE ASSESSING ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 6 OFFICER IN THE LIGHT OF THE FACTUAL MATRIX TO BE BROUGHT ON RECORD INSOFAR AS JUDICIAL DECISIONS ARE FOR AND AGAINST THE ASSESSEE AND IT WILL BE A ENDEAVOR OF THE ASSESSING OFFICER TO CONSIDER THE INTENTION OF THE ASSESSEE TO EXPORT MINERAL WHICH IS ABUNDANTLY AVAILABLE IN THE PARTICULAR AREA INSOFAR AS AN EFFORT IN MANUFACTURING THE SAME WHETHER COULD ENTITLE IT TO CLAIM DEDUCTION U/S.10B IS TO BE RECONSIDERED. IN VIEW OF THE ABOVE, WE SET ASI DE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION OF THE ISSUE AFRESH IN THE LIGHT OF WHAT HAS BEEN MENTIONED ABOVE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. 9. FROM THE ABOVE OBSERVATIONS OF THE TRIBUNAL, IT IS FOUND THAT THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF AO FOR RECONSIDERATION OF THE INTENTION OF THE ASSESSEE TO EXPORT MINERAL WHICH IS ABUNDANTLY AVAILABLE IN THE PARTICULAR AREA INSO FAR AS AN EFFORT IN MANUFACTURING THE SAME WHETHER COULD ENTITLE IT TO CLAIM DEDUCTION U/S.10B OF THE ACT OR NOT. SIMILAR IS THE POSITION IN THE ASSESSMENT YEAR UNDER CONSIDERATION. RESPECTFULLY, FOLLOWING THE DECISION OF THE TRIBUNAL, WE SET ASIDE THE ORD ER OF THE CIT(A) AND RESTORE THE ISSUE TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE OBSERVATIONS MADE BY THE TRIBUNAL IN THE PRECEDING ASSESSMENT YEAR I.E.A.Y.2008 - 2009. THUS, THE GROUNDS NO. 1 TO 3, CONSISTING OF ONE ISSUE, ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE CROSS OBJECTION THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS : - 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS RIGHTLY HELD THAT THE PRODUCTION OF CHROME CONCENTRATE BY THE APPEL LANT IS A MANUFACTURING ACTIVITY, HENCE, THE APPELLANT IS ENTITLED FOR DEDUCTION U/S.10B OF THE ACT. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED THE ENTIRE CLAIM OF ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 7 RS.1,36,61,510/ - UNDER TRAN SPORT EXPENSES WHILE NO EXPENDITURE IN VIOLATION OF SECTION 40A(3) OF THE INCOME TAX ACT,1961 WAS MADE. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED ENTIRE CLAIM OF RS.1,36,61,510/ - UNDER TRANS PORT EXPENSES INSTEAD OF DISALLOWING 10% OF THE TRANSPORT EXPENSES AMOUNTING TO RS. 13,66,151/ - TO MEET THE END OF JUSTICE WITHOUT APPRECIATING THAT THE BOOKS OF ACCOUNT WAS DULY AUDITED U/S 44AB OF THE INCOME TAX ACT,1961 AND NO ADVERSE WAS FINDING ON CAS H PAYMENT EXCEEDING RS.20,000/ - WAS REPORTED IN THE FORM - 3CD AS ANNEXURE TO THE AUDIT REPORT IN FORM - 3CB. 11. IN GROUND NO.1, THE ASSESSEE HAS SUPPORTED THE ORDER OF THE CIT(A) IN ALLOWING THE EXEMPTION U/S.10B OF THE ACT TO THE ASSESSEE. WE HAVE ALREADY RESTORED THIS ISSUE TO THE FILE OF AO FOR RECONSIDERATION OF THE SAME. THUS, THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE HAS BECOME INFRUCTUOUS. 12. WITH REGARD TO GROUND NO.4 RAISED BY THE REVENUE IN ITS APPEAL AND GROUNDS NO.2 & 3 RAISED BY THE ASSES SEE IN ITS CROSS OBJECTION , THE LD.AR SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS DULY AUDITED U/S.44AB OF THE ACT AND NO ADVERSE FINDING ON CASH PAYMENT EXCEEDING RS.20,000/ - WAS REPORTED IN THE FORM 3CD, THEREFORE, THE ENTIRE CLAIM OF THE ASSESSEE REGARDING TRANSPORT EXPENSES DESERVES TO BE ALLOWED. 13. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF AO AND SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH VOUCHER FOR CASH PAYMENT ON ACCOUNT OF TRANSPOR T INWARDS. IT WAS FOUND BY THE AO THAT THE ASSESSEE HAS MADE RS.20,000/ - ABOVE ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 8 CASH PAYMENT TO ONE TRUCK IN A SINGLE DAY. THEREFORE, THE AO HAS RIGHTLY DISALLOWED THE SAME U/S.40A(3) OF THE ACT. 14. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES AND PERUS ING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT CASE HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2009 - 2010 IN ITA NO.214/CTK/2014, VIDE ORDER DATED 29.05.20 15, WHEREIN THE TRIBUNAL HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THEREFORE, THE GROUND NOS.2&3 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION, HA VE BECOME INFRUCTUOUS AS HAS ALREADY BEEN SETTLED. THUS, GROUND NO.4 RAISED BY THE REVENUE IN ITS A PPEAL AND GROUNDS NO.2 & 3 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE DISMISSED. 1 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE O PEN COURT ON 05 / 10 / 20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 05 / 10 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - DCIT, CIRCLE - 1(1), BHUBANESWAR 2. / THE RESPONDENT - M/S ANAND EXPORTS, PLOT NO.428/3818, JAYADEV NAGAR, ITA NO. 253 /CTK/201 4 & CO NO.38/CTK/2014 9 / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK BHUBANESWAR - 751002 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//