Shri Dushyant R Patel, GANDHIDHAM V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 1088/RJT/2010

• Counselvise Citation: 108824914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 10-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA, JM AND SHRI D.K. SRIVASTAV A, AM. ITA NO. 1088/RJT/2010. (ASSESSMENT YEAR 2004-05) SHRI DUSHYANT R. PATEL, V. ACIT PLOT NO.36, SECTOR-1A, GANDHIDHAM CIRCLE, MANALI CHAMBERS.GANDHIDHAM, GANDHIDHAM. PAN: ADEPP0279P DATE OF HEARING : 27-03-2012. DATE OF PRONOUNCEMENT : 30-03-2012. ASSESSEE BY: SHRI VIMAL DESAI, C.A. REVENUE BY: SHRI YOGESH PANDEY, D.R. . O R D E R D K SRIVASTAVA: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APP EALS)-II, RAJKOT ON 21-05- 2010, ON THE FOLLOWING GROUNDS:- 1. THE ORDER U/S 143(3) R.W.S. 147 IS BAD IN LAW. 2. THE REOPENING OF THE ASSESSMENT IS BAD IN LAW. 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW A S WELL AS ON FACTS MAKING DISALLOWANCE CLAIM OF DEDUCTION U/S.80HHC OF RS.3,45,609/-. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME . 2. THE FACTS OF THE CASE ARE THAT ONE OF THE BUSINE SSES OF THE ASSESSEE DURING THE YEAR UNDER APPEAL RELATED TO SUPPLY OF BUNKERS (I.E., FURNACE OIL, HSD, ETC.) TO SHIPS. THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80HHC IN THE ORIGINAL RETURN OF INCOME WHICH WAS ACCEPTED BY THE ASSESSEE WITHOUT A NY EXAMINATION OR DISCUSSION IN THE BODY OF THE ORIGINAL ASSESSMENT ORDER. PROC EEDINGS U/S.147/148 WERE SUBSEQUENTLY INITIATED AND RE-ASSESSMENT U/S.147/14 3(3) WAS COMPLETED ON 19-12- 2008 DISALLOWING THE CLAIM OF THE ASSESSEE AMOUNTIN G TO RS.3,45,609/- U/S.80HHC. 3. THE ACTION OF THE AO WAS CHALLENGED IN APPEAL BE FORE THE LD. CIT(A). THE LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF THE AO WITH THE FOLLOWING OBSERVATIONS:- (CA) THE AO REJECTED THE ABOVE CONTENTION OF THE A PPELLANT BY GIVING FOLLOWING REMARKS:- ONE OF THE BUSINESSES OF THE ASSESSEE IS SUPPLY OF BUNKERS (I.E. FURNACE OIL, HSD ETC.) TO SHIPS, WHICH IS NOT A MAN UFACTURING EXPORT ACTIVITY. AS PER SECTION 80HHC(1) WHERE AN ASSESSE E, BEING AN INDIAN COMPANY OR A PERSON (OTHER THAN A COMPANY) R ESIDENT IN INDIA, IS ENGAGE IN BUSINESS OF EXPORT OUT OF INDIA OF ANY GOODS OR MERCHANDISE TO WHICH THIS SECTION APPLIES, THERE SH ALL BE IN ACCORDANCE WITH AND SUBJECT TO THE PROVISION OF THI S SECTION ALLOWED, IN COMPUTING THE TOTAL INCOME OF ASSESSEE A DEDUCTION TO THE EXTENT OF PROFITS REFERRED TO IN SUB SECTION (1B) DERIVED BY THE ASSESSEE FROM THE EXPORT OF SUCH GOODS OR MERCHANDISE. ITA NO 1088/RJT/2010. 2 THE ASSESSEE IS NOT A MANUFACTURER AND SUPPLY OIL TO SH IPS ONLY. AS CONDITIONS LAID DOWN IN SECTION 80HHC ARE NOT FULFILLED CLAIM OF DEDUCTION UNDER SECTION 80HHC IS NOT ALLOWABLE. AS DISCUSSED ABOVE, THE CLAIM OF DEDUCTION U/S. 80H HC HEREBY REJECTED AND DISALLOWED. (CB) IN THE CASE OF TRIBHOVANDAS BHIMJI ZAVERI (DEL HI) P. LTD. VS. CIT 119 TTJ 495, THE MUMBAI ITAT HELD THAT COUNTER-SALES TO FOREIGN TOURIST IS IN CONVERTIBLE FOREIGN EXCHANGE DO NOT QUALIFY FOR DED UCTION U/S.80HHC, UNLESS CLEARANCE OF SUCH GOODS FROM ANY CUSTOMS STATION IN INDIA IS PROVED. THATS WHAT THE SUPREME COURT IN THE CASE OF SILVER & ART PALACE (SUPRA) SAID. THE APPELLANT NEITHER BEFORE ME NOR BEFORE AO PRODUCED ANY EVIDENCES TO PROVE THAT IT OBTAINED CUSTOMS CLEARANCE FOR SUPPLY THE G OODS TO THE SHIPS BERTHED IN SEA. THOUGHT THE APPELLANTS ARGUMENT THAT TRAD ING OF GOODS RESULTING IN THE RECEIPT OF CONVERTIBLE FOREIGN EXCHANGE WILL CE CONSIDERED AS EXPORT ACTIVITY IS ACCEPTABLE, IT HAS TO BE PROVED WITH RE LEVANT DOCUMENTARY EVIDENCES. NOTHING WAS BROUGHT ON RECORD FOR MY PE RUSAL INDICATING THAT THE APPELLANT DID NOT POSSESS ANY OF SUCH DOCUMENTS, MA INLY AUTHORIZATION FROM CUSTOMS AUTHORITIES. (CC) FURTHER, THE APPELLANT HAS BEEN SUPPLYING FURN ACE OIL, HSD ETC. TO THE SHOPS IN BUNKERS. EVERYONE KNOWS THAT THE OIL IS S OURCED FROM MINERALS. AS THE APPELLANT HAS BEEN DEALING WITH A KIND OF MINER AL OIL, ONE CAN SAFELY CONCLUDE THAT THE SECTION 80HHC IS NOT APPLICABLE I N THE APPELLANTS CASE AND IT IS NOT ELIGIBLE TO CLAIM THE SAID DEDUCTION, EVEN IF IT FULFILS AND SATISFIES THE OTHER CONDITIONS REQUIRED. 4. AGGRIEVED BY ORDER PASSED BY THE LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OBTAINED C USTOMS CLEARANCE FOR SUPPLYING THE GOODS TO THE SHIPS BERTHED IN SEA. AC CORDING TO HIM, THE ASSESSEE ALSO POSSESSES DOCUMENTARY EVIDENCE TO ESTABLISH TH AT HE HAD RECEIVED SALE CONSIDERATION IN CONVERTIBLE FOREIGN EXCHANGE. IN V IEW OF THE AFORESAID, HE CONTENDED THAT THE OBSERVATIONS MADE BY THE LD. CIT (A) AT PAGE-6 OF HIS APPELLATE ORDER IN THIS BEHALF WERE FACTUALLY INCORRECT AND T HEREFORE HIS ORDER SHOULD BE REVERSED. 5. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. ACCORDING TO THE LD. CIT(A), THE ASSESSEE HAS NOT P LACED ANY EVIDENCE TO ESTABLISH THAT HE HAD OBTAINED CUSTOMS CLEARANCE FOR SUPPLYIN G THE GOODS TO THE SHIPS BERTHED IN SEA. IT IS ALSO HIS CASE THAT THE ASSES SEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE TO SHOW RECEIPT OF CONVERTIBLE FOREIGN EXC HANGE IN CONSIDERATION FOR SALE OF ITA NO 1088/RJT/2010. 3 HIS GOODS. THE ASSESSEE HOWEVER REFUTES THE AFORES AID OBSERVATIONS. HE CLAIMS THAT HE HAS REQUISITE EVIDENCE TO ESTABLISH THAT HE HAD OBTAINED CUSTOMS CLEARANCE FOR SUPPLY OF GOODS AND ALSO THAT HE HAD RECEIVED S ALE CONSIDERATION IN CONVERTIBLE FOREIGN EXCHANGE. THE AFORESAID FACTS GO TO THE ROO T OF THE MATTER. IT AFFECTS NOT ONLY THE VALIDITY OF REOPENING OF ASSESSMENT BUT ALSO TH E CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80HHC. IT IS THEREFORE, CONSIDERED AP PROPRIATE TO SET ASIDE THE ORDER PASSED BY LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR A FRESH DECISION IN CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO BOTH THE SIDES. WE ORDER ACCORDINGLY. THE APPEAL FILED BY THE ASSES SEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30-03-2012 SD/- SD/- (T K SHARMA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT M EMBER RAJKOT, DT: 30-3-2012. NVA/- COPY TO: 1. SHRI DUSHYANT R. PATEL, GANDHIDHAM. 2. THE ASSTT. C. I.T., GANDHIDHAM CIRCLE, GANDHIDHA M. 3. THE CIT., RAJKOT-I, RAJKOT. 4. THE CIT (A)-II, RAJKOT. 5. THE DR, I.T.A.T., RAJKOT 6. THE GUARD FILE. (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT