DCIT CIR-8, KOLKATA, Kolkata V. M/s Natural Products Export Corpn. Ltd., Kolkata

ITA 1512/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99824 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMITABH CHOWDHURY
• Assessee Lawyers: I BAN ERJEE; S JOSHI
• Section: 143(3); 14A; 115JB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRIMAHAVIR SINGH, JUDICIAL MEMBER AND SHRIWASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1512 / KOL / 2012 ASSESSMENT YEAR :2009-10 DCIT, CIRCLE-, AAYAKARBHAVAN, 5 TH FLOOR, ROM NO.8, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . M/S NATURAL PRODUCTS EXPORT CORPORATION LTD., 53A, MIRZAGHALLIB STREET, KOLKATA-700 016 [ PAN NO.AABCN 0454B ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI AMITABH CHOWDHURY, ADDL.CIT-DR /BY RESPONDENT SHRI I. BANERJEE, FCA & SRI S. JOSHI, ADVOCATE /DATE OF HEARING 22-09-2015 /DATE OF PRONOUNCEMENT 28-09-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANTMEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)VIII, KOLKATA IN APPEAL NO.159/ CIT(A)-VIII/KOL/2011-12 DATED 31.07.2012. ASSESSMENT WAS FRAMED BY JCIT(OSD ), CIRCLE-8, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.11.2011 FOR ASSESSMENT YEAR 2009-10. 2. AT THE TIME OF HEARING LD. DR DREW OUR ATTENTION THAT THE APPEAL IS BARRED BY 5 DAYS AND HE PRAYED FOR CONDONATION OF D ELAY AND LD. AR OF THE ITA NO.1512/KOL/2012 A.Y. 2009-10 DCIT CIR-8, KOL. V. M/S NATURAL PRODUCTS EXPORT CORPN, LT D. PAGE 2 ASSESSEE CONCEDED THAT HE HAS NO OBJECTION IF THE D ELAY IS CONDONED. HENCE, WE CONDONE THE DELAY OF APPEAL AND PROCEED TO HEARI NG THE APPEAL. 3. THE FIRST ISSUE RAISED BY THE REVENUE IN THIS AP PEAL IS THAT THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION UNDER SE CTION 10B OF THE ACT FOR THE ASSESSMENT YEAR 2009-10 WHEREAS THE ASSESSMENT YEAR 2008-09 WAS THE LAST ELIGIBLE ASSESSMENT YEAR OF THE TEN CONSECUTIVE ASS ESSMENTS YEARS FOR THE CLAIM OF DEDUCTION UNDER SECTION 10B. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY AND IS INTO THE BUSINESS OF EXPORT OF DRY FLOWERS AND DRIE D PARTS OF PLANTS. THE ASSESSEE IS A 100% EXPORT UNIT DULY REGISTERED BY M INISTRY OF INDUSTRY, GOVERNMENT OF INDIA. THE ASSESSEE CLAIMED A DEDUCTI ON FOR AN AMOUNT OF RS. 5,79,51,627/- UNDER SECTION 10B OF THE ACT. THE AS SESSEE IS ENTITLED TO CLAIM DEDUCTION IN TERMS OF SECTION 10B OF THE ACT FOR 10 CONSECUTIVE ASSESSMENT YEARS, BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PROD UCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE. IN THE PRESE NT CASE, IT WAS FOUND BY THE AO FROM THE FORM NO. 56G WHERE THE CERTIFICATE FOR DEDUCTION U/S 10B OF THE ACT WAS ISSUED BY THE CHARTERED ACCOUNTANT, THA T THE DATE OF COMMENCEMENT OF MANUFACTURE OR PRODUCTION IS 1997. SO IN THE PRESENT CASE THE LAST ASSESSMENT YEAR I.E. 10 TH ASSESSMENT YEAR FOR CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT WAS THE ASSESSMENT YEA R 2008-09. SO THE AO HAS DISREGARDED THE CLAIM OF DEDUCTION UNDER SECTIO N 10B OF THE ACT OF THE ASSESSEE AND THE DISALLOWANCE WAS ADDED TO THE TOTA L INCOME OF THE ASSESSEE. THE AO HAS ALSO RELIED UPON THE CBDT CIRC ULAR NO. 1/2005 DATED 06.01.2005 (F. NO. 149/194/2004-TPL). AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD.CI T(A) WHO HAS DISMISSED THE ORDER OF THE AO AND ALLOWED THE APPEAL IN FAVO UR OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE GOT APPROVAL FROM THE D EVELOPMENT COMMISSIONER ON DATE 21-03-2000 AND THE PRODUCTION IN THE NEW UNIT LOCATED ITA NO.1512/KOL/2012 A.Y. 2009-10 DCIT CIR-8, KOL. V. M/S NATURAL PRODUCTS EXPORT CORPN, LT D. PAGE 3 IN MADRAS EXPORT PROCESSING ZONE (MEPZ FOR SHORT) I S SHOWN TO HAVE STARTED IN THE FINANCIAL YEAR 2000-01 RELEVANT TO THE ASSES SMENT YEAR 2001- 02.AGGRIEVED REVENUE IS IN APPEAL BEFORE THE TRIBUN AL ON THE FOLLOWING GROUND OF APPEAL:- 1. THAT, IN THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE C OMPANY WAS ELIGIBLE FOR DEDUCTION U/S. 10B OF IT ACT, 1961, FOR THIS AS SESSMENT YEAR 2009-10, WHEREAS, ELIGIBILITY FOR DEDUCTION FOR TEN CONSECUT IVE ASSESSMENT YEARS ENDED WITH AY 2008-09 AND THEREFORE, ALLOWANCE OF D EDUCTION TO THE ASSESSEE COMPANY FOR A.Y 2009-10 WAS IN CONTRAVENTI ON OF THE PROVISIONS OF SECTION IN 10B OF THE IT ACT, 1961. MR. AMITABH CHOWDHURY, ADDITIONAL CIT APPEARING ON BEHALF OF REVENUE AND MR. I. BANERJEE AND MR. S. JOSHI, LD. AUTHORIZED RE PRESENTATIVE BOTH ARE APPEARING ON BEHALF OF ASSESSEE. THE LDDR SUBMITTED THAT THE PRODUCTION GOT BEGUN IN THE YEAR 1997 AND ACCORDINGLY THE ASSESSMENT YEAR 2008-09 WAS THE LAS T ASSESSMENT YEAR TO CLAIM THE DEDUCTION UNDER SECTION 10B OF THE ACT AN D HE ALSO SUPPORTED THE ORDER OF THE AO. THE LD AR SUPPORTED THE ORDER OF THE CIT(A) AND SUB MITTED THAT THE COMMERCIAL PRODUCTION COMMENCED ONLY ON DATED 21-3- 2000. THE AR SUBMITTED A PAPER BOOK RUNNING FROM PAGES NO. 1 TO 53 AND ACTUAL DATE OFREGISTRATION FOR 100% EOU IS 21-03-2000 VIDE REGI STRATION NO. 697/MEPZ. BEFORE US,LD. AR HAS ALSO SUBMITTED THAT THE LETTER WRITTEN TO THE DEVELOPMENT COMMISSIONER- MADRAS EXPORT PROCESSING ZONE FOR INF ORMING THE DATE OF COMMERCIAL PRODUCTION WHICH IS PLACED ON PA GE NO. 15 OF THE PAPER BOOK WHEREIN THE DATE FOR COMMERCIAL PRODUCTION W AS MENTIONED I.E. ON 21- 03-2000. 5. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO HAS DISALLOWED THE CLAI M OF THE ASSESSEE UNDER SECTION 10B OF THE ACT. THE REASON FOR THE DISALLOW ANCE OF THE CLAIM WAS THAT ITA NO.1512/KOL/2012 A.Y. 2009-10 DCIT CIR-8, KOL. V. M/S NATURAL PRODUCTS EXPORT CORPN, LT D. PAGE 4 AS PER FORM NO.56G THE COMMERCIAL PRODUCTION BEGAN IN THE YEAR 1997 SO THE DEDUCTION UNDER SECTION 10B FOR THE ASSESSMENT YEAR 2009-10 WAS TIME BARRED. THE SOURCE OF THE INFORMATION FOR THE AO FO R ASCERTAINING THE DATE OF COMMERCIAL PRODUCTION I.E. YEAR 1997 WAS FORM 56G W HICH IS CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT FOR CLAIMING THE DEDUCT ION UNDER SECTION 10B OF THE ACT. THERE WAS A LETTER ISSUED BY THE MINISTRY OF INDUSTRY, GOVERNMENT OF INDIA IN THE YEAR 1997 FOR REGISTERING THE ASSESSEE WITH SECRETARIAT FOR INDUSTRIAL ASSISTANCE(SIA FOR SHORT) FOR AVAILING T HESE FACILITIES AND PRIVILEGES ADMISSIBLE UNDER THE 100% EXPORT ORIENTED SCHEME, P ROBABLY, THAT DATE HAS BEEN RECORDED BY THE CHARTERED ACCOUNTANT AS THE YE AR OF PRODUCTION. HOWEVER, THE DATE OF REGISTRATION AS SIA AND THE DA TE OF COMMENCEMENT OF THE COMMERCIAL PRODUCTION FOR THE DEDUCTION U/S 10B OF THE ACT ARE TWO DIFFERENT THINGS AND HAS NO NEXUS OF WHATSOEVER. S O ON THIS BASIS WE CONCLUDE THAT THE YEAR OF PRODUCTION IS 2000-01 AS PER THE LETTER SUBMITTED TO THE DEVELOPMENT COMMISSIONER MEPZ AND THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 10B OF THE ACT FOR THE PRES ENT ASSESSMENT YEAR I.E., 2009-10 UNDER CONSIDERATION. HENCE, THIS GROUND OR REVENUES APPEAL IS DISMISSED. 6. THE SECOND ISSUE RAISED BY THE REVENUE IN THIS A PPEAL IS THAT LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF TO THE ASSE SSEE UNDER SECTION 14A OF THE ACT FOR THE EXEMPTED INCOME OF THE ASSESSEE. 7. THE ASSESSEE HAS EARNED DIVIDEND OF RS. 241810/- BUT FAILED TO MAKE ANY DISALLOWANCE OF THE EXPENDITURE ACCORDINGLY UND ER SECTION 14A OF THE ACT. THE ASSESSEE HAS GIVEN THE PLEA THAT THE MAT PROVIS IONS ARE APPLICABLE TO THE ASSESSEE-COMPANY HENCE NO SUCH EXPENSES WAS COMPUTE D. LATER THE ASSESSEE SUBMITTED THE DIRECT EXPENSES IN RELATION TO THE EXEMPTED INCOME FOR AN AMOUNT OF RS. 24,527/-AND THE AO WORKED OUT THE INDIRECT EXPENSES BY APPLYING THE RULE 8D(2)III OF THE ACT @ OF 50% OF T HE AVERAGE INVESTMENT I.E. RS. 2,29,097/-. SO THE AO DISALLOWED THE EXPENSES FOR AN AMOUNT OF RS. ITA NO.1512/KOL/2012 A.Y. 2009-10 DCIT CIR-8, KOL. V. M/S NATURAL PRODUCTS EXPORT CORPN, LT D. PAGE 5 2,53,624/- (229097+24527). THE AO ALSO RECORDED IN HIS ORDER THE DISALLOWANCE UNDER SECTION 14A OF THE ACT WILL ALSO BE ADDED BACK IN COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF TH E ACT. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD. CIT(A) WHO DELETED THE A DDITION MADE BY THE AO BY OBSERVING THAT THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT IS M UCH MORE THAN THE ACTUAL INCOME EARNED BY THE ASSESSEE- COMPANY. FURTHER, THIS IS NOT A CASE THAT THE AO COULD NOT ASCERTAIN THE A CTUAL EXPENDITURE INCURRED FROM THE BOOKS OF ACCOUNT. MORE SO, I HAVE ALREADY HELD THAT THE INCOME OF THE MEPZ UNIT AT CHENNAI IS EXEMPT UNDER SECTION 10 B OF THE INCOME-TAX ACT. IN THIS BACKGROUND, THERE IS NO WARRANT FOR ANY DIS ALLOWANCE UNDER SEC. 14A OF THE ACT. THEREFORE, THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER IS HEREBY DELETED . 8. AGGRIEVED REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND OF APPEAL. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING RELIEF TO THE ASSESSEE U/S . 14A OF THE IT ACT WHEREAS AO WAS CORRECT IN COMPUTING DISALLOWANCE U/ S. 14A OF IT ACT, 1961. 9. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE AO HAS INVOKED THE RULE 8D OF THE ACT B ECAUSE HE DISALLOWED THE CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT. S O THE ASSESSEE WAS TO PAY THE TAXES UNDER THE NORMAL PROVISIONS OF THE ACT RA THER THAN UNDER THE PROVISIONS OF MAT UNDER SECTION 115JB OF THE ACT. HOWEVER LD.CIT(A) HAS RESTORED THE CLAIM OF ASSESSEE FOR THE DEDUCTION U/ S 10B OF THE ACT, SO EVEN OTHERWISE, THE DEDUCTION CLAIM BY THE ASSESSEE IS D ISALLOWED BY THE LD. CIT(A) THEN THE ASSESSEE WILL BE ENTITLED TO CLAIM THE DEDUCTION U/S 10B OF THE ACT. ACCORDINGLY LD. CIT(A) HAS DELETED THE ADDITIO N MADE BY AO. FROM THE AFORESAID DISCUSSION IT IS REVEALED THAT THE ASSESS EE IS ENTITLED FOR THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT WHICH WILL I NCLUDE THE DISALLOWANCE, IF ANY, MADE UNDER SECTION 14A OF THE ACT. THEREFORE W E ARE OF THE VIEW THAT ITA NO.1512/KOL/2012 A.Y. 2009-10 DCIT CIR-8, KOL. V. M/S NATURAL PRODUCTS EXPORT CORPN, LT D. PAGE 6 THERE IS NO INFIRMITY IN THE ORDER OF CIT(A). HENCE WE DISMISS THE GROUND OF APPEAL OF THE REVENUE. 9. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT 28/0 9/2015 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP - 28/09/2015 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-DCIT, CIRCLE-8, AAYAKAR BHAVAN, 5 TH FLOOR, ROOM NO.8 P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069 2. / RESPONDENT- M/S NATURAL PRODUCTS EXPORT CORPORAT ION LTD., 53A MIRZA GHALLIB STREET, KOLKATA 700 016 3. - 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5. 2 55-, -, / DR, ITAT, KOLKATA 6. 9 / GUARD FILE. BY ORDER/ , /TRUE COPY/ / -,