Inox India Ltd., Baroda V. The Dy.CIT.,Circle-1(2), Baroda

ITA 1521/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85562 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Competent authority
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFOR E SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 1521 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2008 - 09) INOX INDIA LTD. ABS TOWERS, 4 TH FLOOR, OLD PADRA ROAD, BARODA - 390007 V/S THE D.C.I.T CIRCLE - 1(2), BARODA (APPELLANT) (R ESPONDENT) PAN: AAACI4416P APPELLANT BY : NONE RESPONDENT BY : SHRI M.K. SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 03 - 02 - 2015 DATE OF PRONOUNCEMENT : 06 - 02 - 2015 PER SHR I ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - I , BARODA DATED 27.04.2011 FOR A.Y. 2008 - 09. 2. NONE APPEARED ON BEHALF OF ASSESSEE BUT HOWEVER WRITTEN SUBMISSIONS WERE FILED VIDE LETTER DATED 31.03.2015 WHEREIN IT WA S SUBMITTED THAT WRITTEN SUBMISSIONS WERE MADE IN VIEW OF THE FACT THAT THE ISSUES INVOLVED ARE COVERED ISSUES. W E THEREFORE PROCEED TO DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL ON RECORD EX - PARTE QUA THE ASSESSEE. ITA NO 1521/AHD/2011 . A.Y. 2008 - 08 2 3. THE RELEVANT FACTS AS CULLED OUT F ROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF MANUFACTURING OF VACUUM INSULATED TANKS , C O LD CONVERTER S YSTEMS ETC. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 08 - 09 ON 23.09.2008 DE CLARING TOTAL INCOME OF RS. 24,87,78,090/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 12.05.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 29,11,96,120/ - . AGGRIEVED BY THE ORDER OF A .O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 27.04.2011 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AF ORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS; - 1. THE LEARN ED AO ERRED IN FACT AND IN LAW IN DISALLOWING DEDUCTION U/S 10B IN RESPECT OF EOU INCOME OF RS. 3,53,93,099/ - 2. THE LEARNED AO ERRED IN FACT AND IN LAW IN APPLYING THE AMENDED PROVISION OF SECTION 10B OF THE ACT, DESPITE THE FACT THAT THE APPELLANT WAS ENTIT LED TO EXEMPTION U/S 10B FOR AY 2000 - 01, THE AY IN WHICH THE AMENDED PROVISIONS WERE MADE EFFECTIVE. 3. THE LEARNED AO ERRED IN FACT AND IN LAW IN REJECTING THE CLAIM OF 100% EOU U/S 1 OB OF THE ACT, ON THE GROUND THAT NO EXEMPTION U/S 1 OB IS AVAILABLE TO TH E APPELLANT AS THE ENTIRE SALES ARE IN DOMESTIC MARKET AND ALSO THE APPELLANT HAS NOT RECEIVED ANY SALES PROCEEDS IN CONVERTIBLE FOREIGN EXCHANGE. 4. THE LEARNED ASSESSING OFFICER ERRED IN FACT AND IN LAW IN NOT ALLOWING PROPORTIONATE DEDUCTION U/S 10B AMOUNT ING TO RS.70,24,923/ - ON ACTUAL EXPORT MADE BY THE 100% EOU FOR WHICH CONSIDERATION IS RECEIVED IN FOREIGN CURRENCY. GROUND NO. 1 TO 3 ARE WITH RESPECT TO DISALLOWANCE OF DEDUCTION U/S. 10B OF THE ACT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAS MADE A CLAIM U/S. 10B OF THE ACT OF AN AMOUNT OF RS. 4,24,18,022/ - IN RESPECT OF SALES MADE BY ITS 10 0% EXPORT ORIENT UNITS ( EOU ) TO OTHER DTA UNITS. A.O NOTED THAT THE TRANSACTION OF SALE BETWEEN THE EOU UNIT AND THE DTA UNIT CANNO T BE STATED TO BE A TRANSACTION RELATING TO EXPORTS OUT OF ITA NO 1521/AHD/2011 . A.Y. 2008 - 08 3 INDIA. HE ALSO NOTED THAT IDENTICAL ISSUE IN THE CASE OF ASSESSEE FOR A.Y. 2000 - 01 TO 2007 - 08 WAS REJECTED BY LD. CIT(A). HE THEREFORE FOR THE REASONS STATED BY THE A.O WHILE DISALLOWING THE CLAIM OF DEDUCTION IN EARLIER YEARS , DENIED THE CLAIM OF DEDUCTION U/S. 10B FOR THE YEAR UNDER CONSIDERATION . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) DECIDED THE ISSUE BY HOLDING AS UNDER: - 2 2 I HAVE CONSIDERED THE MATTER. ITAT, AHMEDABAD FOR AYS 2000 - 01 TO 2007 - 08' IN APPELLANT'S CASE HELD THAT IN ORDER TO' CLAIM DEDUCTION U/S 10B, ASSESSEE HAS TO BRING CONVERTIBLE FOREIGN EXCHANGE IN INDIA OUT OF ITS OWN EXPORT. IN VIEW OF THIS, SALE OF RS.11,79,01,400/ - MADE T O OTHER DTA UNIT AGAINST ADVANCE LICENCE AND TO OTHER EOU DOES NOT AMOUNT TO ACTUAL EXPORTS AND IS HENCE NOT ELIGIBLE FOR DEDUCTION U/S 10B. AO WOULD HOWEVER, VERIFY APPELLANT S CONTENTION THAT ITS 100% EOU MADE DIRECT EXPORT OF RS. 2,35,30,034/ - DURING TH E YEAR WHICH ALSO RESULTED IN REALIZATION OF FOREIGN EXCHANGE. SUBJECT TO SUCH VERIFICATION, DEDUCTION U/S.10B MAY BE ALLOWED IN RESPECT OF DIRECT EXPORT SALE, PROCEEDS OF WHICH WERE REALIZED IN CONVERTIBLE FOREIGN EXCHANGE AS PER CONDITIONS LAID DOWN IN S ECTION 10B. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, IN THE WRITTEN SUBMISSIONS IT IS SUBMITTED THAT IDENTICAL ISSUE WAS INVOLVED IN A.Y. 2000 - 01 TO 2007 - 08 BEFORE HON BLE TRIBUNAL AND THE HON BLE ITAT VIDE O RDER DATED 13.08.2010 HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. THE AFORESAID ORDER OF HON BLE ITAT WAS ALSO PLACED ON RECORD. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IDENTICAL ISSUE WITH RESPECT TO SECTION 10B IN THE CASE OF ASSESSEE FOR EARLIER YEARS WAS BEFORE TH E CO - ORDINATE BENCH OF TRIBUNAL. T HE CO - O RDINATE BENCH OF TRIBUNAL VIDE COMBINED ORDER DATED 13.08.2010 FOR ASSESSMENT YEAR 2000 - 01 AND OTHER ASSESSMENT YEARS (IN ITA NO. 2765/AHD/2006 AND ORS.) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER: - 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE INTERPRETATION ADVANCED BY ID. A.R. IS NOT CORRECT. INCOME OF EVERY ASST. YEAR HAS TO BE COMPUTED IN ITA NO 1521/AHD/2011 . A.Y. 2008 - 08 4 ACCORDANCE WITH THE PROVISIONS OF THE ACT AS EXI STING FOR THAT ASST. YEAR. THE APPLICABILITY OF THE AMENDED PROVISIONS HAS TO BE LOOKED INTO AND IS TO BE SEEN WHETHER AS SESSEE SATISFIES THOSE CONDITIONS OR NOT AND WHETHER IT FALLS INTO CHARGING SECTION RELEVANT TO THAT ASST. YEAR. IN OUR CONSIDERED VIEW THE AO IS DUTY BOUND TO SEE WHETHER ASSESSEE IS SATISFYING THE CONDITIONS LAID DOWN IN THE RELEVANT PROVISIONS OF THE AC T FOR THAT PARTICULAR ASST. YEAR BEFORE ALLOWING DEDUCTIONS OF THE EXEMPTION OR THE ALLOWANCE CLAIMED BY THE ASSESSEE. THE ONLY MEANING THAT CAN BE ATTACHED TO THE PROVISO TO SECTION 10B(1) AS SUBSTITUTED BY FINANCE ACT 2000 IS THAT ASSESSEE WILL BE ENTITL ED TO EXEMPTION ONLY FOR THE UNEXPIRED PERIOD AND THAT ITS INNING CANNOT BE STARTED AFRESH FROM SUBSEQUENT YEAR/YEARS IF THERE IS AN IS AN AMENDMENT IN THE ACT. THUS IN RESPECT OF THOSE ASSESSEE WHO ARE GIVEN EXEMPTION FOR CERTAIN NUMBER OF YEARS PRIOR TO AMENDMENT IN SECTION 10B BY FINANCE ACT, 2000 THEN SUCH ASSESSEE WILL BE ENTITLED TO EXEMPTION AFTER THE AMENDMENT BY FINANCE ACT 2000 IN RESPECT OF THOSE YEARS ONLY WHICH ARE STILL LEFT UNEXPIRED AS BALANCE OUT OF 10 YEARS. THUS THIS PROVISO IN FACT RESTR ICTS THE ALLOW ABILITY OF EXEMPTION FOR ONLY UNEXPIRED PERIOD OUT OF 10 YEARS AND THUS DISABLES THE - ASSESSEE TO START A FRESH INNING OF 10 YEARS AFTER THIS AMENDMENT BY FINANCE ACT 2000, BUT THAT DOES NOT MEAN THAT CONDITIONS LAID DOWN IN SECTION 10B AS BR OUGHT IN BY FINANCE ACT 2000 OR BY SUBSEQUENT AMENDMENT IN THAT SECTION ARE NOT REQUIRED TO BE SATISFIED BY THE ASSESSEE. THE RESTRICTION IMPOSED BY THE PROVISO IS ONLY ON NUMBER OF YEARS FOR WHICH EXEMPTION IS ALLOWABLE AND DOES NOT PROVIDE EXEMPTION FROM CONDITION IMPOSED FOR ALLOWANCE OF EXEMPTION IN SUBSEQUENT YEARS BY SUBSEQUENT AMENDMENTS IN THE LAW. IN OTHER WORDS ASSESSEE HAS TO SATISFY THAT IT FULFILLS THE CONDITIONS LAID DOWN IN THE RELEVANT ASST. YEAR BEFORE IT CLAIMS EXEMPTION UNDER SECTION 10B. WE REJECT THIS ARGUMENT OF ASSESSEE THAT CONDITIONS IMPOSED BY SUBSEQUENT AMENDMENT ARE NOT REQUIRED TO BE EXAMINED BY THE AO AND ASSESSEE HAS 10 BE ALLOWED EXEMPTION IN SUBSEQUENT YEARS ONLY ON THE BASIS OF ITS SATISFYING CONDITIONS LAID DOWN PRIOR TO AM ENDM ENT BY FINANCE ACT 2000. NOW COM ING TO THE QUESTION AS TO WHAT CONDITION ASSESSEE HAS TO SATISFY, IN SUBSEQUENT YEARS. WE NOTE THAT SUB - SECTION (3) OF SECTION 10B AS AMENDED BY FINANCE ACT, 2000 HAS BROUGHT IN FOLLOWING NEW CONDITIONS: - THIS SECTION AP PLIES TO THE UNDERTAKING, IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOU S YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF EXPLANATION - 1 FOR THE PURPOSES OF THIS SUB - SECTION THE EXPRESSION COMPETENT AUTHORITY MEANS THE RESERVE BANK OF INDIA OR SUCH OTHER AUTHORITY AS IS AUTHORIZED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR REG ARDING PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE. EXPLANATION - 2 - THE SALE PROCE EDS REFERRED TO IN THIS SUB - SECTION S HALL HE DEEMED TO HAVE BEEN RECEIVED IN INDIA WHERE SUCH SALE PROCEEDS ARE CREDITED TO A SEPAR ATE ACCOUNT MAINTAINED FOR THE PURPOSE BY THE ASSESSEE WITH ANY BANK OUT S IDE INDIA WITH THE APPROVAL OF THE RESERVE BANK OJ INDIA. THUS IT HAS TO BE SEEN THAT ASSESSEE IS BRINGING FOREIGN EXCHANGE INTO INDIA AS A RESULT OF ITS EXPORT. THE ARGUMENT OF THE A SSESSEE IS THAT OTHER CONCERNS TO WHOM ASSESSEE HAS SOLD ITS PRODUCT IN INDIA ARE BRINGING CONVERTIBLE FOREIGN EXCHANGE IN INDIA THROUGH EXPORT OF THEIR PRODUCT CONTAINED IN THE CONTAINERS MANUFACTURED BY THE ASSESSEE. THUS PRODUCTS OF THE ASSESSEE IN FACT ARE EXPORTED BY THE OTHER CONCERNS AND CONVERTIBLE FOREIGN EXCHANGES ARE BROUGHT BY THEM INTO INDIA. WE ARE UNABLE TO SUBSCRIBE TO THIS VIEW. IT IS BECAUSE PHRASE MENTIONED IN SUB - SECTION (3) IS '.....ARE RECEIVED IN........ OR BROUGHT INTO INDIA BY THE A SSESSEE IN CONVERTIBLE FOREIGN EXCHANGE...' THUS IT IS THE ASSESSEE WHO HAS TO BRING CONVERTIBLE FOREIGN EXCHANGE IN INDIA OUT OF ITS OWN EXPORT. IF OTHER PARTIES ARE BRINGING CONVERTIBLE FOREIGN EXCHANGE IN INDIA THEN IT WILL NOT BE THE FULFILLMENT OF THE CONDITIONS IMPOS ED BY SUBJECTION (3). IT IS ADMITTED POSITION OF FACTS THAT ASSESSEE IS NOT IN FACT BRINGING CONVERTIBLE FOREIGN EXCHANGE AND ENTIRE OF ITS PRODUCTS ARE SOLD IN INDIA IN INDIAN RUPEES. THEREFORE, THE ASSESSEE WILL NOT BE ENTITLE D TO EXEMP TION UNDER SECTION 10 B. ACCORDINGLY THIS GROUND OF ASSESSEE IS REJECTED. 9. SINCE IT H AS BEEN ADMITTED BY THE LD. A.R. IN THE WRITTEN SUBMISSION THAT THE ISSUE IN THE YEAR UNDER APPEAL IS SIMILAR TO THAT OF A.Y. 2000 - 01 TO 2007 - 08, W E RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TRIBUNAL FIND NO REASON TO TAKE A DIFFERENT VIEW. THUS THIS GROUND OF ASSESSEE IS DISMISSED. ITA NO 1521/AHD/2011 . A.Y. 2008 - 08 5 GROUND NO. 4 IS WITH RESPECT TO NOT ALLOWING PROPORTION DEDUCTION OF RS. 70,24,923/ - U/S 10B OF THE ACT. 10. WITH RESPECT TO GROUND NO. 4 IT WAS SUBMITTED IN THE WRITTEN SUBMISSION BY A.R. THAT A.O HAS VERIFIED THE CLAIM AND HAS ALLOWED THE DEDUC TION U/S. 10B ON ACTUAL EXPORTS AND S INCE THE CLAIM WAS ALLOWED BY THE A.O IN OR DER GIVING EFFECT TO LD. CIT(A), T HIS GROUND IS NOT PRESSED. 11. I N VIEW OF THE SUBMISSION OF LD. A.R. THE GROUND IS DISMISSED AS NOT PRESSED. 12. IN T HE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06 - 02 - 201 5 . SD/ - SD/ - (SHILENDRA KR. YADAV ) (ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD