ACIT, Cir-2(2), Kolkata, Kolkata V. M/s Suman Jewellery (Delhi) P. Ltd., Kolkata

ITA 1372/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1272 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTAHARJEE
• Assessee Lawyers: S S GUPTA; KISHOR DATT ANI
• Keywords: Reasonable cause
• Section: 10AA

Judgement Text

1 ITA NO.1372/KOL/2016 SUMAN JEWELLERY (DELHI) P. LTD., AY- 2011-12 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1372/KOL/2016 ASSESSMENT YEAR: 2011-12 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(2), KOLKATA. VS. M/S. SUMAN JEWELLERY (DELHI) PVT. LTD. (PAN: AAICS9709B) APPELLANT RESPONDENT DATE OF HEARING 18.01.2018 DATE OF PRONOUNCEMENT 21.03.2018 FOR THE APPELLANT SHRI ARINDAM BHATTAHARJEE, ADDL. CIT, DR FOR THE RESPONDENT S/SHRI S. S. GUPTA & KISHOR DATT ANI, FCAS ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF LD. CIT(A)-3, KOLKATA DATED 06.04.2016 FOR AY 2011-12. 2. THIS APPEAL OF REVENUE IS TIME BARRED BY 17 DAYS AND CONDONATION PETITION HAS BEEN FILED. AFTER CONSIDERING THE CONDONATION PETITION IT SEEMS THAT THERE IS REASONABLE CAUSE FOR FILING THIS APPEAL BELATEDLY BY 17 DAYS AND SINCE T HE LD. AR HAS GOT NO OBJECTION TO CONDONE THE DELAY, WE CONDONE THE DELAY AND ADMIT T HE APPEAL FOR HEARING. 3. THE SOLE GROUND OF APPEAL OF REVENUE IS AGAINST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF INTEREST RECEIVED ON FD/ KDR. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURI NG AND EXPORT OF GOLD ORNAMENTS FROM AN SEZ UNIT AND THE ASSESSEE HAS BEEN CLAIMING EXEM PTION U/S. 10AA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R THE LAST SUCCESSIVE YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FROM THE M ATERIAL ON RECORD FOUND THAT THE ASSESSEE HAD EARNED INTEREST TO THE TUNE OF RS.53,6 2,327/- ON FIXED DEPOSIT DURING THE YEAR UNDER CONSIDERATION AND CREDITED THE P&L ACCOUNT WI TH THE SAID INCOME AND THE SAID INCOME WAS CONSIDERED FOR COMPUTING THE EXEMPTION U /S. 10AA OF THE ACT. ACCORDING TO 2 ITA NO.1372/KOL/2016 SUMAN JEWELLERY (DELHI) P. LTD., AY- 2011-12 AO, SINCE THE SAID INCOME EARNED FROM THE FD WAS I N THE NATURE OF OTHER SOURCES INCOME, HAVING NO DIRECT NEXUS WITH THE BUSINESS ACTIVITY O F THE ASSESSEE CARRIED OUT FROM SEZ, THE SAID COMPONENT OF INCOME DOES NOT COME UNDER THE SC OPE OF EXEMPTION UNDER SECTION 10AA OF THE ACT AS CLAIMED BY THE ASSESSEE. AS SUC H, THE ABOVE INCOME OF INTEREST ON FIXED DEPOSIT WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE SOLE GROUND OF APPEAL O F REVENUE IS AGAINST THE DELETION OF ADDITION ON ACCOUNT OF INTEREST RECEIVED ON FD/KDR. WE NOTE THAT DURING THE ASSESSMENT YEAR, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF M ANUFACTURING AND EXPORT OF GOLD ORNAMENTS FROM AN SEZ UNIT AND THE ASSESSEE HAD CLA IMED EXEMPTION U/S. 10AA OF THE ACT FOR THE LAST SUCCESSIVE YEARS. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE AO FROM THE MATERIAL ON RECORD FOUND THAT THE ASSESSEE HAD EARNED INTEREST TO THE TUNE OF RS.53,62,327/- ON FIXED DEPOSIT AND CREDITED THE P& L ACCOUNT WITH THE SAID INCOME AND THE SAID INCOME WAS CONSIDERED FOR COMPUTING THE EX EMPTION U/S. 10AA OF THE ACT. ACCORDING TO AO, SINCE THE SAID INCOME EARNED FROM THE FD WAS IN THE NATURE OF OTHER SOURCES INCOME, HAVING NO DIRECT NEXUS WITH THE BUS INESS ACTIVITY OF THE ASSESSEE CARRIED OUT FROM SEZ, THE SAID COMPONENT OF INCOME DOES NOT COME UNDER THE SCOPE OF EXEMPTION UNDER SECTION 10AA OF THE ACT AS CLAIMED BY THE ASS ESSEE. ACCORDINGLY, THE ABOVE INCOME OF INTEREST ON FIXED DEPOSIT WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE AOS REASONING FOR ADDITION AND THE APPELLANTS SUBMISSION IN THIS REGARD. THE JURISDICTIONAL ITAT IS OF THE OPINION IN THE CASE SUPRA THAT THE ASSESSEE COMPANY IS ENTITLES TO CLAIM OF DEDUCTION U/S. 10A A OF THE ACT .. AND AGREE WITH THE SUBMISSION OF THE ASSESSEE THAT BOTH RECEIPTS AND P AYMENTS OF INTEREST IN THIS CASE ARE OF THE SAME GENESIS. IF THE PROFITS OF THE BUSINESS INCLU DE CERTAIN RECEIPTS, WHICH HAVE CORRESPONDING COSTS OR IF THE PROFITS INCLUDE CERTAIN CREDIT AND THE BUSINESS HAS ALSO DEBITS OF THE SAME NATURE AND IF THESE ARE NOT NETTED OUT AGAINST EACH OTHER, THE PROFIT OF BUSINESS WILL PRESENT A DISTORTED FIGURE. CREDIT AND THE BUSINESS HAS ALSO DEBITS OF THE SAME NATURE AND IF THESE ARE NOT NETTED OUT AGAINST EACH OTHER, THE PROFIT OF BUSINESS WILL PRESENT A DISTORTED FIGURE IT IS ALSO SEEN THAT THE DEPARTMENT IN THE AY 2012- 13 HAS ALLOWED THE DEDUCTION U/S. 10AA. FOLLOWING THE JURISDICTIONAL ITATS DECISION IN THE CASE OF M/S. ROHIT EXPORT (JEWELLERY) PVT. LTD. (A SISTER CONCERN OF THE APPE LLANT COMPANY IN RESPECT OF THE AY 2011-12 IN APPEAL NO. 966/CIT(A)-1/W-2(1)/2013-14 143(3). I ALLOW THIS GROUND OF APPEAL. THE ADDITION ON THIS GROUND THEREFORE IS DELETED. 3 ITA NO.1372/KOL/2016 SUMAN JEWELLERY (DELHI) P. LTD., AY- 2011-12 5. SINCE THE LD. CIT(A) DELETED THE ADDITION BY FOL LOWING THE DECISION OF ITAT IN THE CASE OF A SISTER CONCERN OF ASSESSEE NAMELY, M/S. R OHIT EXPORT (JEWELLERY) PVT. LTD. FOR AY 2011-12 IN SIMILAR FACTS AND IN THE ABSENCE OF ANY CONTROVERTING MATERIAL BROUGHT BEFORE US BY THE LD. DR, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) TO DELETE THE ADDITION AND THE SAME IS HEREBY UPHELD. THEREFORE, THIS GROUND OF A PPEAL OF REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21ST MARCH , 2018 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21ST MARCH, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIRCLE-2(2), KOLKATA. 2 RESPONDENT M/S. SUMAN JEWELLERY (DELHI) PVT. LTD. , SECTOR-V, SALT LAKE CITY, KOLKATA-700 091. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .