M/s. Arts & Crafts Valley, New Delhi V. DCIT, New Delhi

CO 391/DEL/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6858 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-01-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: B S CHAUHAN; P K RUSTOGI
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.4842/DEL/2011 ASSESSMENT YEAR : 2008-09 DCIT, CIRCLE 30(1), DRUM SHAPE BUILDING, NEW DELHI. VS. ARTS & CRAFTS VALLEY, 272, GARHIYA STREET, MATIA MAHAL, JAMA MASJID, NEW DELHI. PAN : AAGFA4438G C.O. NO.391/DEL/2011 (ITA NO.4842/DEL/2011) ASSESSMENT YEAR : 2008-09 ARTS & CRAFTS VALLEY, 272, GARHIYA STREET, MATIA MAHAL, JAMA MASJID, NEW DELHI. PAN : AAGFA4438G VS. DCIT, CIRCLE 30(1), DRUM SHAPE BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.S. CHAUHAN & SHRI P.K. RUSTOGI, REVENUE BY : MRS. ANUSHA KHURANA, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THE APPEAL IS FILED BY THE DEPARTMENT AND THE CROSS O BJECTIONS BY THE ASSESSEE. BOTH OF THEM ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 30 TH AUGUST, 2011 FOR ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL BY THE REVENUE READ AS UNDER:- ITA NO.4842/DEL/2011 C.O. NO.391/DEL/2011 2 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, LD. CIT (A) XXV, NEW DELHI HAS ERRED IN ALLOWING EXEMPTION U/S 1 0B OF THE IT ACT. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND (S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 1.1 THE GROUNDS OF CROSS OBJECTIONS BY THE ASSESSEE READ AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A)-XXV, NEW DELHI ALLOWED THE DEDUCTION U/S 10B OF THE INCOME TAX ACT, 1961. THE RESPONDENT HAS FOLLOWED ALL THE REQUIREMEN T AS MENTIONED IN THE SECTION 10B OF THE INCOME TAX ACT, 1961 . 1. THE RESPONDENT HAS GOT LOP (LETTER OF PERMISSION) DA TE 07.07.2006 WHICH WAS VALID TILL 06.07.2009 (COPY ENC LOSED AS PER PAGE 1 TO 2) 2. WHEN THE INCOME TAX DEPARTMENT HAVE ENQUIRED FROM N SEZ (NOIDA SPECIAL ECONOMIC ZONE) THEY HAVE MENTIONED WRO NGLY IN ITS LETTER DATED 03.12.2010 THE LOP WAS ISSUED ON 07.07 .206 WAS VALID TILL 06.07.2006. THERE WAS TYPING ERROR IN THE ABOVE LETTER WHICH WAS IS SUED ON 07.07.2006 FOR A PERIOD OF THREE YEARS AND WAS VALID TILL 06.07.2009 INSTEAD OF 06.07.2006. 3. THE RESPONDENT HAS WRITTEN A LETTER TO THE DEVELOPMENT COMMISSIONER OF NSEZ ON 09.12.2010 REGARDING FURNIS HING WRONG INFORMATION TO INCOME TAX DEPARTMENT (COPY OF THAT L ETTER ENCLOSED ON PAGE 3) THEN MR. A.K. SINGH, ASSISTANT DEV ELOPMENT COMMISSIONER, NSEZ, NOIDA HAS WRITTEN A LETTER TO RESPON DENT DATED 14.12.2010 MENTIONING THAT I AM DIRECTED TO REFER TO YOUR LETTER DATED 09.12.2010 ON THE ABOVE MENTIONED SUBJ ECT AND TO SAY THAT DUE TO TYPING ERROR, THE VALIDITY OF LOP W AS MENTIONED AS 06.07.2006 INSTEAD OF 06.07.2009 IN THIS OFFICE LETTER DATED 03.12.2010 ADDRESSED TO ASSISTANT COMMISSION ER, INCOME TAX DEPARTMENT. IT IS ONCE AGAIN CLARIFIED THAT TH E LOP ISSUED TO THE UNIT WAS VALID UPTO 06.07.2009. (COPY EN CLOSED ON PAGE 4). AS PER ABOVE LETTER IT IS CLEAR THAT LOP (LETTER OF PERMIS SION) WAS VALID FOR THREE YEARS AND A.Y. 2008-09 RESPONDENT WAS ENTITLED TO GET DEDUCTION AND RELIEF U/S 10B OF THE INCOME TAX A CT, 1961. YOUR HONOUR THIS IS COVERED MATTER AS PER THE LAST YEAR I.E., ASSESSMENT YEAR 2007-08 DEPARTMENT RAISED THE SAME ISSU E AND FILED AN APPEAL BEFORE HONBLE ITAT. THE HONB LE ITAT ITA NO.4842/DEL/2011 C.O. NO.391/DEL/2011 3 ALLOWED DEDUCTION U/S 10B AND DECIDED THE CASE IN FAV OUR OF ASSESSEE A COPY OF THE ORDER ENCLOSED HEREWITH AS PER PAGE 5 TO 9. IN THE ITAT ORDER ON PAGE 4 POINT NO.4 IT IS MENTIONED THAT THE REVENUE IS IN NOW APPEAL BEFORE US AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT (A). THE LEARNED DR SUP PORTED THE ORDER OF THE A.O. ON THE OTHER HAND, THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO CIRCULAR NO. 68 DATED 14 TH MAY, 2009 OF THE EXPORT PROMOTION COUNCIL FOR EOUS AN D SEZS CONTENDED THAT APPROVAL GRANTED BY DEVELOPMENT COMMISSIONER UNDER DELEGATED POWERS OF BOARD OF APPR OVAL, IS VALID FOR GRANTING THE EXEMPTION U/S 10BOF THE ACT. A COPY OF THIS CIRCULAR IS ENCLOSED AS PER PAGE 10. NOW YOUR HONOUR HEREBY REQUESTED TO GIVE THE RELIEF TO THE RESPONDENT AND ALLOW THE DEDUCTION U/S 10B OF THE INCOM E TAX ACT, 1961 AND CONFIRM THE ORDER PASSED BY CIT (A)-XXV , NEW DELHI. 2. AT THE OUTSET, IT WAS POINTED OUT BY THE LEARNED A R OF THE ASSESSEE THAT THE ISSUE RAISED BY THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN THE CASE OF THE A SSESSEE FOR ASSESSMENT YEAR 2007-08 WHEREBY IT WAS HELD THAT EXEMPTI ON HAS RIGHTLY BEEN GRANTED TO THE ASSESSEE U/S 10B OF THE ACT. THE LEARNED AR SUBMITTED THAT COPY OF THE SAID ORDER OF THE TRIBU NAL IS FILED AT PAGES 5-9 OF THE PAPER BOOK FILED WITH CROSS OBJECTION S. IT IS AN ORDER DATED 5 TH OCTOBER, 2011 PASSED IN ITA NO.3782/DEL/2011 AND CO NO.321/DEL/2011, THE APPEAL BEING FILED BY THE REVE NUE. IN THAT APPEAL THE REVENUE HAD AGITATED THE DECISION OF THE CIT (A) VIDE WHICH THE ASSESSEE WAS HELD TO BE ENTITLED FOR EXEMPTION U/S 10-B. HE SUBMITTED THAT THE LETTER OF APPROVAL WHICH WAS ISSUED TO THE ASSE SSEE WAS VALID UPTO 6 TH JULY, 2009 WHICH COVER THE PRESENT YEAR AS WELL. HE, THEREFORE, SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSE SSEE. 3. ON THE OTHER HAND, IT WAS VEHEMENTLY PLEADED BY T HE LEARNED DR THAT THE FACTS OF THE PRESENT CASE ARE DIFFERENT. FOR THIS PURPOSE, SHE INVITED OUR ATTENTION TOWARDS THE OBSERVATIONS OF THE ASSESSING OFFICER ITA NO.4842/DEL/2011 C.O. NO.391/DEL/2011 4 IN THE ASSESSMENT ORDER AT PAGE 2 WHERE HE HAS MENTIONED THAT THE NEW PLANT AND MACHINERY WHICH HAS BEEN ADDED IN THE YEAR UNDER CONSIDERATION IS ONLY 1.5% AND, THUS, SHE PLEADED THAT THE ASSESSEE DOES NOT QUALIFY FOR THE EXEMPTION TO BE GRANTED TO THE ASSESSEE U/S 10B OF THE ACT. THUS, SHE PLEADED THAT THE FACTS OF T HE PRESENT CASE ARE DIFFERENT FROM THE FACTS OF EARLIER YEAR. HENCE , THE EARLIER ORDER OF THE TRIBUNAL SHOULD NOT BE FOLLOWED. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT WILL BE RELEVANT TO REPRODUCE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL FROM THE AFOREM ENTIONED ORDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE ONLY ISSUE RAISED IN THE GROUN D BEFORE US BY THE REVENUE IS THAT DEPUTY DEVELOPMENT COMMISSIONER, NOIDA (SEZ) IN THEIR LETTER DATED 3 RD DECEMBER, 2010 MENTIONED THAT THE ASSESSEE DID NOT APPLY FOR EXTENSION OF VALIDITY OF LETTER OF PERMISSION, WHICH EXPIRED ON 06.07.2006. HOWEVE R, A MERE GLANCE AT THE LETTER DATED 07.07.2006 ISSUED BY NOIDA (S EZ) PLACED ON PAGE 4 AND 5 OF THE PAPER BOOK, REVEALS THA T APPROVAL WAS FOR THREE YEARS. SUBSEQUENTLY, VIDE LETTER DATED 14 TH DECEMBER, 2010 IT WAS CLARIFIED BY THE ASSTT. DEVELOPME NT COMMISSIONER, NOIDA, SEZ THAT APPROVAL WAS VALID UPTO 6 TH JULY, 2009 AND NOT 6 TH JULY, 2006 AS MENTIONED IN THEIR EARLIER LETTER ADDRESSED TO THE A.O. IN THE LIGHT OF THESE UNDISPUTED F ACTS, ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL, CONTROVERTING THE AFORESAID FINDINGS OF THE LE ARNED CIT (A), WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GRO UND RAISED BY THE REVENUE IS DISMISSED. SINCE GROUND RAISED IN THE CROSS OBJECTION IS MERELY SUPPORTIVE, ACCORDINGLY, CROSS OB JECTIVE BECOMES INFRUCTUOUS. 6. IN RESULT, BOTH THE APPEAL OF THE REVENUE AND THE CORRESPONDING CO BY THE ASSESSEE ARE DISMISSED. 5. NOW, THE ONLY OBJECTION OF THE REVENUE IS THAT DU RING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ONLY ADDED NEW PLANT AND MACHINERY TO THE EXTENT OF 1.5%. SECTION 10B IS A SP ECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED 100% EXPORT ORIENTED UNDE RTAKING WHEREBY SUBJECT TO PROVISIONS OF THAT SECTION A DEDUCT ION OF SUCH ITA NO.4842/DEL/2011 C.O. NO.391/DEL/2011 5 PROFITS AND GAINS AS ARE DERIVED BY A 100% EXPORT ORIE NTED UNDERTAKINGS FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH T HE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLE OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. THEREFORE, FOR EXAMINING THE A LLOWABILITY OR OTHERWISE OF EXEMPTION U/S 10B, IT HAS TO BE EXAMINED IN THE INITIAL YEAR THAT WHETHER OR NOT THE ASSESSEE IS FULFILLING THE CONDITIONS LAID DOWN IN SECTION 10B AND IF THE ASSESSEE IS FOUND TO BE E LIGIBLE IN THE INITIAL YEAR, THEN, PARTICULAR CRITERIA OF ADDING N EW PLANT AND MACHINERY WILL NOT BE APPLICABLE FOR SUBSEQUENT YEARS. THEREFOR E, THE GROUND ON WHICH THE LEARNED DR IS AGITATING THE ALLOWABILITY O F EXEMPTION U/S10B IS NOT MATERIAL FOR THE YEAR UNDER CONSIDERATION. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND WE FIND THAT THE MAIN GROUND ON WHICH THE EXEMPTION HAS BEEN DENIED TO THE ASSESSEE HAS B EEN SPELT OUT BY THE ASSESSING OFFICER IN THE FOLLOWING PARA:- IN ITS SUBMISSION DATED 09.12.2010, THE A.R. SUBMITTED THAT THEY HAVE ASKED CLARIFICATION FROM THE DY. DEVELOPM ENT COMMISSIONER AND FURTHER THAT THERE HAS BEEN A TYPING ER ROR IN THE LETTER SINCE THE LOP ISSUED ON 07.07.2006 WAS VALID UPTO 06.07.2009 AND HOW IT CAN EXPIRE BEFORE ISSUE. THE ARGUMENTS PUT FORWARD BY THE A.R. HAVE BEEN EXAMINED IN THE LIGH T OF THE ABOVE. THE FACTS ARE THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS LAID IN THE I.T. ACT, 1961FOR CLAIMING EXEM PTION UNDER SEC.10B. IT IS ALSO EVIDENT THAT THE ASSESSEE HAS NOT CO MPLIED WITH THE CONDITIONS AS MENTIONED IN THE LETTER OF PERMISSI ON DATED 07.07.2006 ISSUED BY THE ASSTT. DEVELOPMENT COMMISSIONER. THEREFORE, THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SEC.10B IS NOT ALLOWED. 6. IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT THE M ATTER IS COVERED IN FAVOUR OF THE ASSESSEE SO AS IT RELATES TO THE ALLOWABILITY OF EXEMPTION U/S 10B. SINCE WE HAVE HELD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10B, THE CROSS OBJECTIONS WHICH ARE O NLY SUPPORTING ITA NO.4842/DEL/2011 C.O. NO.391/DEL/2011 6 THE ORDER OF THE CIT (A) HAVE BECOME INFRUCTUOUS AND THE SAME ARE ALSO DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED IN THE MANNE R AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.01.20 12. SD/- SD/- [G.D. AGRAWAL] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED, 13.01.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES