Mrs. Kusum B. Patel, New Delhi V. ACIT, New Delhi

CO 40/DEL/2010

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3970 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 5 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 18-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT JAIN SENIOR
• Keywords: Additional evidence
• Section: 80HHC; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2070/DEL./2009 (ASSESSMENT YEAR : 2004-05) ACIT, CIRCLE 22 (1), VS. MRS. KUSUM B. PATEL, NEW DELHI. PROP. M/S. K.B. ASSOCIATES, B 331, 1 ST FLOOR, NEW FRIENDS COLONY NEW DELHI 110 065. (PAN : AECPB8567P) CO NO.40/DEL/2010 (IN ITA NO.2070/DEL./2009) (ASSESSMENT YEAR : 2004-05) MRS. KUSUM B. PATEL, VS. ACIT, CIRCLE 22 (1), B 331, 1 ST FLOOR, NEW DELHI. NEW FRIENDS COLONY NEW DELHI 110 065. (PAN : AECPB8567P) ITA NO.5873/DEL./2011 (ASSESSMENT YEAR : 2007-08) ITO, WARD 22 (2), VS. MRS. KUSUM B. PATEL, NEW DELHI. PROP. M/S. K.B. ASSOCIATES D 85, FIRST FLOOR, KHIZRABAD, NEW FRIENDS COLONY, NEW DELHI 110 065. (PAN : AECPB8567P) ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 2 ITA NO.2635/DEL./2013 (ASSESSMENT YEAR : 2008-09) ITO, WARD 22 (2), VS. MRS. KUSUM B. PATEL, NEW DELHI. PROP. M/S. K.B. ASSOCIATES 227, 1 ST FLOOR, MAIN MARKET, PATPARGANJ, MAYUR VIHAR PHASE-1, NEW DELHI 110 091. (PAN : AECPB8567P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANAT KAPOOR, ADVOCATE SHRI KISLAYA PARASHAR, ADVOCATE REVENUE BY : SHRI AMIT JAIN, SENIOR DR DATE OF HEARING : 10.07.2018 DATE OF ORDER : 19.07.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE AFORESAID APPEALS FILED BY THE REVENUE AND CROS S OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. THE APPELLANT, ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE 22 (1), NEW DELHI (HEREINAFTER REFERRED TO A S THE REVENUE) IN ITA NO.2070/DEL/2009 BY FILING THE PRESENT APPEA L, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.03.2009 PASS ED BY LD. CIT (APPEALS)-XXIII, NEW DELHI QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUNDS INTER ALIA THAT :- ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 3 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING THE A.O. TO ALLOW DEDUCTION AMOUNTING TO RS.55,73,209/- U/S 10B OF THE ACT IGNORING THE FACT THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF TIN SLAG WHICH IS NOT MANUFACTURE OR PRODUCTION OF ANY ARTICLES OR THING 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS RESTRI CTING THE DISALLOWANCES TO RS.1,11,827/- OUT OF BUSINESS DEVELOPMENT EXPENSES AMOUNTING TO RS.8.08,631/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT ) HAS ERRED IN LAW AND ON FACTS RESTRIC TING THE DISALLOWANCES TO RS.75,000/- OUT OF TRAVELING EXPENSES AMOUNTING TO RS.3,75,037/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT( ) HAS ERRED IN LAW AND ON FACTS RESTRI CTING THE DISALLOWANCES TO RS.46,270/- OUT OF PROFESSIONA L CHARGES AMOUNTING TO RS.2,79,150/-. 3. THE OBJECTOR, MRS. KUSUM B. PATEL, BY FILING THE PRESENT CROSS OBJECTIONS CHALLENGING THE IMPUGNED ORDER DAT ED 25.03.2009 PASSED BY THE LD. CIT (APPEALS)-XXIII, NEW DELHI QU A THE ASSESSMENT YEAR 2004-05 ON THE GROUNDS INTER ALIA T HAT :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW I N SUSTAINING THE DISALLOWANCE OF RS.1,11,000/- ON ACC OUNT OF RENT PAID BY APPELLANT ON THE GROUND THAT THE DEDUCTION WAS COVERED BY EXPLANATION TO SEC 37(1). 2. THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE PARTIAL DISALLOWANCE OF RS.L,11,827/- BEING 10% OF THE BUSINESS DEVELOPMENT EXPENSES. ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 4 3. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING THE DISALLOWANCE OF RS.41.565/- ON ACCOU NT OF ELECTRICITY AND WATER CHARGES ON THE GROUND THAT THE DEDUCTION WAS COVERED BY EXPLANATION TO SEE 37(1). 4. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING THE DISALLOWANCE OF RS.3,26.686/- ON ACC OUNT OF REPAIR AND MAINTENANCE ON THE GROUND THAT THE DEDUCTION WAS COVERED BY EXPLANATION TO SEC 37(1). 5. THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE PARTIAL DISALLOWANCE OF RS.75,007/- O N ACCOUNT OF TRAVELING EXPENSE. 6. THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE PARTIAL DISALLOWANCE OF RS.46,720/- O N ACCOUNT OF PROFESSIONAL CHARGES. 7. THAT THE DISALLOWANCE/ADDITION HAVE BEEN WRONGLY & ILLEGALLY UPHELD BY THE CIT(A). THE DISALLOWANCE/ADDITION ARE UNJUST AND ARE HIGHLY EXCESSIVE. 8. THAT THE EXPLANATIONS GIVEN, EVIDENCE PRODUCED, MATERIAL PLACED AND MADE AVAILABLE ON RECORD HAS NO T BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE UPHOLDING OF PARTIAL AD DITION AND DISALLOWANCES MADE. 9. THAT THE ADDITIONS AND DISALLOWANCES MADE ARE BASED ON MERE SURMISES AND CONJUNCTURES AND THE SAM E CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD. 4. THE APPELLANT, INCOME TAX OFFICER, CIRCLE 22 (2) , NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) IN ITA NOS.5875/DEL/2011 AND 2635/DEL/2013 BY FILING THE P RESENT APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DAT ED 11.10.2011 ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 5 AND 28.02.2013 PASSED BY LD. CIT (APPEALS)-XXIII, NEW DELHI QUA THE ASSESSMENT YEARS 2007-08 AND 2008-09 RESPEC TIVELY ON THE SIMILAR WORDED GROUND THAT :- ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 10B OF THE INCOME TAX ACT AMOUNTING TO RS.68,29,701/-. 5. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE BEING PROPRIETOR OF K.B. ASSOCIATES HAS SHOWN TWO BUSINESS UNITS, VIZ., ONE OPERATING AT DELHI AND ANOTHER OPERATING AT CHENNAI. ASSESSEE C LAIMED DEDUCTION UNDER SECTION 80HHC OF THE INCOME-TAX ACT , 1961 (FOR SHORT THE ACT) QUA UNITS SITUATED AT DELHI OFFICE AND CLAIMED DEDUCTION U/S 10B OF THE ACT OF THE UNIT SITUATED A T CHENNAI BEING A 100% EXPORT ORIENTED UNIT (EOU). ASSESSEE CLAIMED DEDUCTION OF RS.55,73,209/-, RS.67,68,521/- AND RS.68,29,701/ - U/S 10B OF THE ACT FOR AYS 2004-05, 2007-08 & 2008-09 RESPECTI VELY. AO DISALLOWED THE INCOME-TAX DEDUCTION CLAIMED BY THE ASSESSEE U/S 10B BEING THE PROFIT FROM 100% EOU FROM A NEW UNDER TAKING AT CHENNAI RATHER ALLOWED DEDUCTION U/S 80HHC OF THE A CT ON THE GROUND THAT THE ASSESSEE WAS NOT IN A MANUFACTURING OR PRODUCTION ACTIVITY BUT WAS INTO BUSINESS AND TRADING OF TIN S LAG. ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 6 6. FOR AY 2004-05, AO RESTRICTED BUSINESS DEVELOPME NT EXPENSES OF RS.8,08,631/- TO RS.1,11,827/- BY TREAT ING THE SAME BEING PERSONAL IN NATURE. AO FURTHER RESTRICTED TH E TRAVELLING EXPENSES OF RS.75,000/- OUT OF TRAVELLING EXPENSES OF RS.3,75,037/- CLAIMED BY THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS NOT FURNISHED EVEN A SINGLE BILL TO SUPPORT ITS CLAIM. AO FURTHER RESTRICTED THE EXPENSES ON ACCOUNT OF PROFESSIONAL CHARGES TO RS.46,270/- OUT OF PROFESSIONAL CHARGES OF RS.2,79, 150/- CLAIMED BY THE ASSESSEE ON THE GROUND THAT SPECIFIC DETAILS HAVE NOT BEEN FURNISHED BY THE ASSESSEE. 7. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL FOR AY 20 04-05 AND ALLOWED THE APPEALS FOR AYS 2007-08 & 2008-09. FEE LING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEALS FOR AYS 2004-05, 2007-08 & 2008-09. ASSESSEE ALSO FILED CROSS OBJECTION (CO NO.40/DEL/2 010) QUA AY 2004-05. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 7 GROUND NO.1 OF ITA NO.2070,/DEL./2009 (AY 2004-05) ITA NO.5873,/DEL./2011 (AY 2007-08) ITA NO.2635,/DEL./2013 (AY 2008-09) 9. UNDISPUTEDLY, THE ASSESSEE WAS RUNNING TWO BUSIN ESS UNITS, VIZ., ONE AT DELHI AND ANOTHER AT CHENNAI. IT IS A LSO NOT IN DISPUTE THAT THE CHENNAI UNIT IS A 100% EOU AND THE ASSESSE E HAS CLAIMED DEDUCTION U/S 10B OF THE ACT. IT IS ALSO NOT IN DI SPUTE THAT SEARCH PROCEEDINGS U/S 132A OF THE ACT WAS CONDUCTED IN TH E CASE OF THE ASSESSEE ON 11.02.2003. 10. AO DENIED THE BENEFIT OF SECTION 10B OF THE ACT TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT IN TO ANY MANUFACTURING OR PRODUCTION ACTIVITY BUT WAS INTO T HE BUSINESS OF TRADING OF TIN SLAG AND THERE WAS ONLY ONE BUSINESS UNIT AT CHENNAI FROM WHERE ALL EXPORT ACTIVITIES WERE CONTR OLLED. 11. HOWEVER, WHEN WE EXAMINED PARA 9 AND 10 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), IT GO TO PROVE THA T THE ASSESSEE INITIALLY MOVED AN APPLICATION BEFORE MEPZ SPECIAL ECONOMIC ZONE AND HEOUZ IN TAMIL NADU, PONDICHERRY, ANDAMAN & NICOBAR ISLANDS AND ASSESSEE WAS GIVEN PERMISSION T O ESTABLISH NEW UNDERTAKINGS AT 4/C-5, MUGAPPAIR INDUSTRIAL EST ATE, MUGAPPAIR (WEST), CHENNAI FOR PROCESSING OF NON-FE RROUS METALLIC ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 8 SLAG POWDER WITH AN ANNUAL CAPACITY OF 1000 TON PER ANNUM. FURTHERMORE, THE COMMISSIONER OF CUSTOMS, CHENNAI A LSO ACCORDED SANCTION TO MANUFACTURING PROCESS OF NON-F ERROUS METALLIC LIKE POWDER AND EXPORT FROM THE WAREHOUSE SITUATED AT 43/C-5, MUGAPPAIR INDUSTRIAL ESTATE, MUGAPPAIR (WES T), CHENNAI AND THE ASSESSEE UNIT WAS ALSO RECOGNISED 100% EOU VIDE LETTER DATED 06.02.2004. THE LD. CIT (A) MADE A REQUISITI ON U/S 250(4) OF THE ACT AND PURSUANT THEREOF, THE ASSESSEE HAS E XPLAINED MANUFACTURING PROCESS. 12. THE LD. CIT (A) HAS ALSO EXAMINED COPY OF INVOI CE OF EXPORT TO M/S. BTHS, HAMBURG FOR WHICH THE GOODS WERE LOAD ED AT CHENNAI PORT VIDE PURCHASE ORDER DATED 12.01.2004, THE CLEARANCE OF WHICH WAS MADE BY THE BOND OFFICER, CUSTOM HOUSE , CHENNAI AFTER INSPECTION. BILL OF LADING WAS ALSO SUBMITTE D ALONG WITH OTHER DOCUMENTS FROM THE CUSTOMS AND CERTIFICATE RELAYING TO REGISTRATION BY THE STATE GOVERNMENT UNDER THE SALES-TAX ACT WAS ALSO SUBMITTED WHICH SHOWS THAT THE MANUFACTURING OF PRO CESS OF GOODS FOR SALE HAVE BEEN CARRIED OUT IN THE UNIT AT CHENN AI. MOREOVER, THE ASSESSEE HAS ESTABLISHED ITS 100% EOU PURSUANT TO THE APPROVAL ACCORDED BY THE MINISTRY OF COMMERCE U/S 1 4 OF THE INDUSTRIAL DEVELOPMENT ACT AND THEREAFTER, THE ASSE SSEE HAS ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 9 BROUGHT ON RECORD EVIDENCE WHICH WAS PERUSED AND AD MITTED BY LD. CIT (A) THAT THE ASSESSEE HAS MANUFACTURED THE GOOD S AND MADE EXPORT THEREOF AS PER CLEARANCE GIVEN BY THE CUSTOM S HOUSE. SO, IN THESE CIRCUMSTANCES, WE FIND NO ILLEGALITY IN TH E FINDINGS RETURNED BY THE LD. CIT (A) ALLOWING DEDUCTION TO T HE ASSESSEE U/S 10B OF THE ACT. CONSEQUENTLY, GROUND NO.1 OF ITA NO.2070,/DEL./2009 (AY 2004-05), ITA NO.5873,/DEL./ 2011 (AY 2007-08) AND ITA NO.2635,/DEL./2013 (AY 2008-09) IS DISMISSED. GROUND NO.2, 3 & 4 OF ITA NO.2070,/DEL./2009 (AY 2004-05) GROUNDS NO. 1, 2, 3, 4, 5 & 6 OF CO NO.40/DEL/2010 13. UNDISPUTEDLY, THE AO HAS DISALLOWED THE EXPENSE S CLAIMED BY THE ASSESSEE ON ACCOUNT OF BUSINESS DEVELOPMENT EXPENSES, TRAVELLING EXPENSES AND PROFESSIONAL CHARGES FOR WA NT OF SUFFICIENT EVIDENCE ADDUCED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. IT IS ALSO NOT IN DISPUTE THAT DURING APPELLATE PRO CEEDINGS, THE ASSESSEE HAS MOVED APPLICATION U/S 46A OF THE ACT T O LEAD ADDITIONAL EVIDENCE WHICH HAS BEEN DISMISSED BY THE LD. CIT (A) ON THE GROUND THAT THE ASSESSEE WAS GIVEN ADEQUATE OPPORTUNITY BY THE AO TO SUBSTANTIATE ITS CLAIM. ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 10 14. WHEN WE EXAMINE THE FACTUM OF DISMISSING THE AP PLICATION MOVED BY THE ASSESSEE UNDER RULE 46A FOR LEADING AD DITIONAL EVIDENCE BEFORE LD. CIT (A) IN THE LIGHT OF THE FAC T THAT INCURRENCE OF EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF B USINESS DEVELOPMENT EXPENSES, TRAVELLING EXPENSES AND PROFE SSIONAL CHARGES HAVE NOT BEEN DISPUTED BY THE AO AS WELL AS BY THE LD. CIT (A) WHO HAVE RESTRICTED THE CLAIM OF THE ASSESSEE T O 25% PURELY ON THE BASIS OF GUESS WORK, WHICH IS NOT PERMISSIBLE U NDER LAW, PARTICULARLY WHEN THE ASSESSEE HAS APPROACHED THE L D. CIT (A) TO SUBSTANTIATE ITS CLAIM BY LEADING ADDITIONAL EVIDEN CE. 15. SO, WE ARE OF THE CONSIDERED VIEW THAT IN CASE, THE ASSESSEE WAS AT FAULT DURING ASSESSMENT PROCEEDINGS IN NOT B RINGING ON RECORD THE EVIDENCE IN SUPPORT OF ITS CLAIM, IT CAN NOT BE PENALIZED UNDER THE GARB OF PROCEDURAL INTRICACIES WHICH ARE HANDMAID OF JUSTICE. SO, IN THESE CIRCUMSTANCES, WE DEEM IT NE CESSARY TO ALLOW THE ADDITIONAL EVIDENCE SOUGHT TO BE ADDUCED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS. CONSEQUENTLY, GROUND S NO.2, 3 & 4 OF ITA NO.2070/DEL./2009 (AY 2004-05) ARE SET ASIDE TO THE FILE OF THE AO WHO SHALL DECIDE AFRESH AFTER PROVIDING AN O PPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PRODUCE ADDITIONAL E VIDENCE TO SUBSTANTIATE ITS CLAIM AND AS SUCH ARE DETERMINED I N FAVOUR OF THE ITA NO.2070,/DEL./2009 ITA NO.5873,/DEL./2011 ITA NO.2635,/DEL./2013 CO NO.70/DEL/2010 11 REVENUE FOR STATISTICAL PURPOSES. SO, GROUNDS NO. 1, 2, 3, 4, 5 & 6 OF CO NO.40/DEL/2010 ARE DETERMINED IN FAVOUR OF TH E ASSESSEE FOR STATISTICAL PURPOSES. 16. RESULTANTLY, THE APPEAL FILED BY REVENUE IN ITA NO.2070/DEL./2009 (AY 2004-05) IS PARTLY ALLOWED FO R STATISTICAL PURPOSES, APPEALS FILED BY THE REVENUE IN ITA NO.58 73,/DEL./2011 (AY 2007-08) AND ITA NO.2635,/DEL./2013 (AY 2008-09 ) ARE DISMISSED AND THE CO NO.40/DEL/2010 FILED BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF JULY, 2018. SD/- SD/- (N.K. BILLAIYA) (KULDIP SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19 TH DAY OF JULY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.