ACIT, CHENNAI V. Touchenglee Stationery Mfg. Co. Pvt. Limited, Thiruvallur

ITA 1363/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96155 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Reasonable cause; Condonation of delay
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1363/MDS/2015 ( / ASSESSMENT YEAR: 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-3(1) NEW BLOCK,4 TH FLOOR, CHENNAI-34. VS M/S. TOCHEUNGLEE STATIONERY MFG. CO. PVT. LTD. 104, THIRUVALLUR- SRIPERUMBUDUR ROAD, POLIVAKKAM-602 002. THIRUVALLUR DIST. PAN: AAACT4112B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : DR.B.NISCHAL, JCIT /RESPONDENT BY : MR. V.S.JAYAKUMAR, ADVOCATE /DATE OF HEARING : 19 TH AUGUST, 2015 /DATE OF PRONOUNCEMENT : 23 RD SEPTEMBER, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNA I DATED 26.02.2015 FOR THE ASSESSMENT YEAR 2008-09. 2. THE APPEAL OF THE REVENUE IS BARRED BY LIMITATIO N OF THREE DAYS. THE REVENUE FILED A PETITION EXPLAININ G THE REASON THAT THE RECORDS OF THIS CASE INADVERTENTLY GOT MIXED UP WITH OTHER FILES AND AS SOON AS RECORDS PERTAINI NG TO THIS CASE WAS TRACED, APPEAL PAPERS WERE PREPARED FOR 2 ITA NO.1363/MDS/2015 SUBMISSION AND DELAY IN FILING OF APPEAL IS NEITHER WANTON NOR WILLFUL AND THEREFORE PRAYS FOR CONDONATION OF DEL AY. WE HAVE PERUSED THE REASONS AND ARE SATISFIED THAT THERE IS A REASONABLE CAUSE FOR THE SHORT DELAY IN FILING OF THE APPEAL. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY IN FI LING OF THE APPEAL. THE PETITION FOR CONDONATION OF DELAY IS AL LOWED AND THE APPEAL IS ADMITTED. 3. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS T HAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIREC TING THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION UNDER SECTION 10B OF THE ACT IN ACCORDANCE WITH THE DECISION OF T RIBUNAL IN THE CASE OF ITO VS. SAK SOFT LTD. (313 ITR 353) (SB ). 4. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT EXCLUDED THE EXPENDITURE INCURRED TOWARDS RAW MATER IALS AND COMPONENTS, CAPITAL GOODS, STORES AND SPARES FROM E XPORT TURNOVER AND COMPUTED THE ELIGIBLE EXEMPTION UNDER SECTION 10B OF THE ACT. ON APPEAL, COMMISSIONER OF INCOME T AX (APPEALS) DIRECTED THE ASSESSING OFFICER TO RECOMPU TE THE EXEMPTION ALLOWABLE UNDER SECTION 10B OF THE ACT KE EPING IN VIEW THE DECISION OF CHENNAI SPECIAL BENCH OF THE T RIBUNAL IN 3 ITA NO.1363/MDS/2015 THE CASE OF SAK SOFT LTD. (SUPRA), AGAINST WHICH T HE REVENUE IS IN APPEAL BEFORE US. 5. DEPARTMENTAL REPRESENTATIVE PLACES RELIANCE ON T HE ORDER OF THE ASSESSING OFFICER AND THE COUNSEL FO R THE ASSESSEE SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SAK SO FT LTD. (SUPRA) DIRECTED THE ASSESSING OFFICER TO RECOMPUT E THE ELIGIBLE DEDUCTION UNDER SECTION 10B OF THE ACT OBS ERVING AS UNDER:- 7.3 THE AR SUBMITTED THAT THOUGH THE EXPENDITURES ARE INCURRED IN FOREIGN CURRENCY BUT THAT EXPENDITURE WAS INCURRED IN INDIA AND NOT OUTSIDE INDIA AND WAS INCURRED TO IMPORT BASIC RAW MATERIALS WITHOUT WHICH THE APPELLANT WOULD NOT BE ABLE TO UNDERTAKE ITS MANUFACTURING ACTIVITY BUSINESS. AS PER THE PROVISIONS OF THE ACT, EXPENSES INCURRED IN FOREIGN CURRENCY IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA ONLY CAN BE DISALLOWED AND NOT FOR THE BASIC COST OF IMPORT OF MATERIALS FOR MANUFACTURING PURPOSES. 7.5 THEREFORE, THE AO IS DIRECTED TO EXAMINE THE CLAIM OF THE APPELLANT THAT THE EXPENDITURE INCURRE D ARE TOWARDS COST OF IMPORT OF BASIC ITEMS REQUIRED FOR MANUFACTURING ACTIVITY OF THE APPELLANT AND IS 4 ITA NO.1363/MDS/2015 NOT TOWARDS PROVIDING TECHNICAL SERVICES OUTSIDE INDIA AND PASS A SUITABLE ORDER IN ACCORDANCE WITH LAW, IF ANY OF THE EXPENDITURE INCURRED IN FOREIGN CURRENCY IS FOR PROVIDING TECHNICAL SERVICES OUTSID E INDIA, THE SAME SHALL BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER AS PER THE DECISION OF THE HON'BLE ITAT (SPECIAL BENCH) IN THE CASE OF SAK SOFT LTD. 7. ON GOING THROUGH THE ABOVE ORDER, WE DO NOT FIND ANY VALID REASON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THEREFORE REJECT THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAG ENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 23 RD SEPTEMBER, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .