DCIT, Bangalore V. M/s Suzlon Wind International Ltd., Bangalore

ITA 1454/BANG/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9228 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMALADHAR HEARD ON P
• Section: 10AA; 10

Judgement Text

IT(TP)A.1454/B/2013 & CO.25/B/2016 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T (TP).A NO.1454/BANG/2013 (ASSESSMENT YEAR : 2009-10) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -12(3), BENGALURU .. APPELLANT V. M/S. SUZLON WIND INTERNATIONAL LTD, 201, 2 ND FLOOR, GOD TOWERS RESIDENCY ROAD, BENGALURU 560 025 .. RESPONDENT PAN : AAKCS4713M CROSS OBJECTION NO.25/BANG/2016 I.T(TP).A NO.1454/BANG/2013 (ASSESSMENT YEAR : 2009-10) ASSESSEE BY : SHRI. TATA KRISHNA, ADVOCATE REVENUE BY : SHRI. KAMALADHAR, STANDING COUNSEL HEARD ON : 19.10.2016 PRONOUNCED ON : 23.12.2016 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THESE APPEAL AND CROSS OBJECTION ARE FILED BY THE REVENUE AND THE ASSESSEE , RESPECTIVELY, AGAINST THE ORDER OF THE C IT (A)-III, BENGALURU, DT.08.08.2013, FOR THE ASSESSMENT YEAR 2009-10. IT(TP)A.1454/B/2013 & CO.25/B/2016 PAGE - 2 02. FACTS IN BRIEF ARE THAT THE ASSESSEE , A MANUFA CTURER AND EXPORTER OF PARTS OF WIND TURBINE GENERATOR , SET UP ITS UNIT I N PADUBIDRI IN UDUPI DISTRICT HAS BEEN GRANTED APPROVAL BY THE DEVELOPMENT COMMIS SIONER CSEZ DT 21.9.2007. WHILE COMPUTING THE DEDUCTION U/S 10AA, IT HAS EXCLUDED THE EXPENDITURE INCURRED IN FOREIGN CURRENCY FROM BOTH THE EXPORT TURNOVER AND TOTAL TURNOVER & ADDED THE AMOUNT OF SCRAP SALE S MADE BY IT TO THE TOTAL TURNOVER. IN THE ASSESSMENT MADE, THE AO WHIL E COMPUTING THE DEDUCTION U/S 10AA HAS INCLUDED THE EXPENDITURE INC URRED IN FOREIGN CURRENCY TOWARDS FREIGHT, INSURANCE ETC AT RS. 35 ,46,86,421/- IN THE TOTAL TURNOVER ALONE AND EXCLUDED SCRAP SALES MADE AT RS.130,90,51,434/- FROM THE TOTAL TURNOVER. ON AN A PPEAL, THE CIT (A) RELYING ON THE RATIO OF THE JURISDICTIONAL HIGH COU RT, REPORTED IN CIT V. TATA ELXSI LTD 349 ITR 198, DIRECTED THE AO TO REWO RK THE DEDUCTION ALLOWABLE U/S. 10AA AFTER REDUCING THE EXPENDITURE INCURRED IN FOREIGN CURRENCY FROM BOTH EXPORT TURNOVER AND INCLUDE SCRA P SALES IN TOTAL TURNOVER. AGGRIEVED BY THE ORDER OF THE COMMISSIONE R (APPEALS), THE DEPARTMENT HAS FILED AN APPEAL WHICH IS IN ITA NO. 1454/BANG-2013 WITH THE FOLLOWING GROUNDS OF APPEAL. IT(TP)A.1454/B/2013 & CO.25/B/2016 PAGE - 3 03. THE ASSESSEE IS ALSO AGGRIEVED BY THE IMPUGNED ORDER OF THE COMMISSIONER (APPEALS) AND HENCE FILED ITS MEMORAND UM OF CROSS-OBJECTIONS IN NO.25/BANG/2016, AS UNDER: 1). THE ORDER TO THE EXTENT IT IS AGAINST THE ASSES SEE OF THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE . II) THE LEARNED COMMISSIONER (APPEALS) HAS FAILED T O APPRECIATE THAT SCRAP SALES CANNOT BE INCLUDED IN THE TOTAL TU RNOVER FOR THE REASON THAT THE ASSESSEE IS NOT ENGAGED IN TRADING OF SCRAP AND HIS DIRECTION IS CONTRARY TO THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF CIT V. PUNJAB STAINLESS STEEL INDUSTRIES(2014) 364 ITR 144 (SC). 04. WE HEARD THE RIVAL SUBMISSIONS. THE CIT(A) HELD THAT WHILE COMPUTING DEDUCTION U/S 10 AA, IF THE EXPORT TURNOV ER IS CALCULATED AFTER EXCLUDING CERTAIN EXPENSES, THEN SUCH EXPENSES SHOU LD ALSO BE EXCLUDED IT(TP)A.1454/B/2013 & CO.25/B/2016 PAGE - 4 FROM THE TOTAL TURNOVER FOLLOWING THE RATIO LAID BY THE JURISDICTIONAL HIGH COURT IN CIT V TATA ELXSI 349 ITR 98 WITH WHICH W E ARE IN AGREEMENT. HENCE, THE GROUNDS OF APPEAL FILED BY THE REVENUE A RE TREATED AS DISMISSED. THE ASSESSEE MAKES OUT A CASE IN ITS FAVOUR. FOLLOW ING THE RATIO LAID BY THE SUPREME COURT IN CIT V. PUNJAB STAINLESS STEEL IND USTRIES (2014) 364 ITR 144 (SC), THE AO IS DIRECTED TO EXCLUDE THE AMOUNT OF SCRAP SALES MADE BY THE ASSESSEE FROM THE TOTAL TURNOVER WHEN DETERMINI NG DEDUCTION U/S.10AA . THUS, THE GROUNDS OF CROSS OBJECTION FILED BY THE ASSESSEE ARE TREATED AS ALLOWED. 05. IN THE RESULT, REVENUES APPEAL IS DISMISSED AN D THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2016. SD/- SD/- (SUNIL KUMAR YADAV) (S. JAYARAMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR.