TMX Precision Tooling (India) Pvt Ltd., Vellore V. ACIT, Vellore

ITA 1289/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8327 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: A MAHESH
• Section: 143(3); 142(1); 115JB

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1 289 /MDS/201 6 / ASSESSMENT YEAR :20 09 - 1 0 M/S. TMX PRECISION TOOLING (INDIA) PVT. LTD., 565, VIVEKANANDA STREET, GANDHI NAGAR, VELLORE 632 006. [PAN:A A B C T3556C ] VS. THE ASSISTANT COMMISSIO NER OF INCOME TAX , CIRCLE 1 , VELLORE . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A. MAHESH , C.A. / RESPONDENT BY : SHRI S UPRIYO PAL, JCIT / DATE OF HEARING : 28 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 07 . 1 0 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 3 , CHENNAI , DATED 05 . 0 2 .20 1 6 RELEVANT TO THE ASSESSMENT YEAR 20 09 - 1 0 . THE MAIN ISSUED RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE COMPUTATION OF INCOME UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AT . 8,39,289/ - . I.T.A. NO . 1289 /M/ 16 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE, SALE AND EXPORT OF PRECISION COMPONENTS AND PARTS. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ADMITTING THE TOTAL INCO ME AT .34,020/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON THE ASSESSEE ON 27.09.2010 AND SERVED ON 30. 09.2010. SUBSEQUENTLY, NOTICE UNDER SECTION 142(1) OF THE ACT WAS ALSO ISSUED TO THE ASSESSEE CALLING FOR CERTAIN DETAILS, BOOKS OF ACCOUNTS AND OTHER DOCUMENTS. IN RESPONSE THERETO, THE ASSESSEE FILED THE DETAILS AND ON VERIFICATION OF THE RECORDS, THE AS SESSING OFFICER HAS NOTICED THAT THE ASSESSEE HA COMPUTED THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT AT .2,85,790/ - . IN ARRIVING AT THE BOOK PROFIT, THE ASSESSEE HAS INCREASED THE NET PROFIT BY THE EXPENDITURE INCURRED ON INCOME EXEMPTED UNDER SECTION 10A OF THE ACT, AS PER CLAUSE (F) OF EXPLANATION TO SUB - SECTION 2 AND HAS DEDUCTED THE EXPORT SALES TO WHIC H PROVISIONS OF SECTION 10A APPLIES. HOWEVER, CLAUSE (F) AND CLAUSE (II) MENTIONED ABOVE ARE AMENDED W.E.F. 01.04.2008 BY THE FINANCE ACT, 2007. HENCE, BY HOLDING THAT THE ADDITION AND DEDUCTION TO AND FROM THE NET PROFIT MADE BY THE ASSESSEE ARE NOT WARRA NTED, THE ASSESSING OFFICER HAS TAKEN THE NET PROFIT A PER THE PROFIT AND LOSS ACCOUNT FOR THE PURPOSE OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. I.T.A. NO . 1289 /M/ 16 3 3. THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED A DETAILED WRITTEN SUBMISSIONS AND AFTER CONSIDERING THE SAME AND ALSO BY CONSIDERING VARIOUS CASE LAW RELIED ON BY THE ASSESSEE, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESS EE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY CONTENDED THAT THE LD. CIT(A) HAS NOT ADJUDICATED THE ISSUED RAISED BEFORE HIM WITH REGARD TO EXEMPTION UNDER SECTION 115JB(6) OF TH E ACT AND PLEADED THAT SUITABLE DIRECTIONS MAY BE GIVEN TO THE LD. CIT(A). ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORD ERS OF AUTHORITIES BELOW. IT IS NOT UNDER DISPUTE THAT THE ASSESSEE COMPANY IS A SPECIAL ECONOMIC ZONE UNIT AND BY ACCEPTING THE SAME, THE ASSESSING OFFICER HAS ALSO ALLOWED EXEMPTION UNDER SECTION 10A OF THE ACT TO THE ASSESSEE. IN THE RETURN FILED BY THE ASSESSEE, THE ASSESSEE HAS OMITTED TO CLAIM EXEMPTION UNDER SECTION 115JB(6) OF THE ACT. BEING A SEZ UNIT, THE ASSESSEE IS EXEMPT FROM 115JB BY VIRTUE OF SUB - SECTION (6). THE PROVISION OF SECTION 115JB(6) OF THE ACT READS AS UNDER: (6) THE PROVISIONS OF T HIS SECTION SHALL NOT APPLY TO THE INCOME ACCRUED OR ARISING ON OR AFTER THE 1 ST DAY OF APRIL, 2005 FROM ANY I.T.A. NO . 1289 /M/ 16 4 BUSINESS CARRIED ON, OR SERVICE RENDERED, BY AN ENTREPRENEUR OR A DEVELOPER, IN A UNIT OR SPECIAL ECONOMIC ZONE, AS THE CASE MAY BE:] 6. THE ABO VE PROVISION OF SUB - SECTION (6) TO SECTION 115JB OF THE ACT HAS BEEN INSERTED BY THE SPECIAL ECONOMIC ZONES ACT, 2005, W.E.F. 10.02.2006. IN THE CASE OF THE ASSESSEE, THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2009 - 10 AND THEREFORE, SECTION 115JB OF THE AC T WOULD NOT APPLY TO THE CASE OF THE ASSESSEE. WITH REGARD TO THE ABOVE, THE ASSESSEE HAS RAISED SPECIFIC GROUNDS BEFORE THE LD. CIT(A), THOUGH THE LD. CIT(A) HAS REPRODUCED THE GROUNDS RAISED BY THE ASSESSEE IN HIS APPELLATE O RDER, BUT NOT CONSIDERED THE SAME. IN VIEW OF THE PROVISIONS OF SUB - SECTION (6) TO SECTION 115JB OF THE ACT, SINCE THE ASSESSEE , BEING SEZ UNIT, NO SUB - SECTION UNDER SECTION 115JB OF THE ACT SHALL APPLY TO ASSESS BOOK PROFITS UNDER SECTION 115JB OF THE ACT . BY CIRCULAR NO. 14[XL - 35] DATED 11.04.1955, THE CBDT HAS GIVEN CLEAR INSTRUCTIONS TO THE DEPARTMENT THAT THE DEPARTMENT SHOULD NOT TAKE ADVANTAGE OF AN ASSESSEE S IGNORANCE TO COLLECT MORE TAX OUT OF HIM THAN IS LEGITIMATELY DUE FROM HIM. IT I ONE OF THE IR DUTIES TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD, THE OFFICERS SHOULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICAT E THAT SOME REFUND OR RELIEF IS DUE TO HIM. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO CONSIDER THE GROUNDS RAISED BY THE ASSESSEE BEFORE HIM I.T.A. NO . 1289 /M/ 16 5 DURING APPELLATE PROCEEDINGS AND PASS AN APPROPRIATE ORDER IN ACCORDANCE WITH LAW BY KEEPING IN MIND THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF LILY JEWELLERY PVT. LTD. V. ITO IN I.T.A. NO. 5469/MUM/2012 DATED 05.11.2014. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 07 TH OCTOBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 07 . 1 0 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.