Venture Power Systems India Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1523/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8166 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: A S SRIRAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1523/MDS/2014 / ASSESSMENT YEAR : 2006-07 M/S VENTURE POWER SYSTEMS INDIA LTD C/O B SIVARAMAN & ASSOCIATES CHARTERED ACCOUNTANTS 10, E BLOCK, KARTHIK APARTMENTS, 46, VIJAYARAGAVA ROAD CHENNAI 600 017 VS. THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) CHENNAI [PAN AABCV 2686 B ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI A S SRIRAMAN, ADVOCATE /RESPONDENT BY : DR B NISCHAL, JCIT / DATE OF HEARING : 30 - 12 - 2015 ! / DATE OF PRONOUNCEMENT : 22 - 01 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, CHEN NAI, DATED 28.1.2014 AND PERTAINS TO ASSESSMENT YEAR 2006-07. ITA NO.1523/14 :- 2 -: 2. SHRI A S SRIRAMAN, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS EXE MPTION U/S 10A OF THE ACT. 3. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF ELECTRI CAL BALLASTS AND COMPONENTS. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE RECEIVED INSURANCE CLAIM OF ` 18,33,950/- FOR DAMAGE CAUSED TO THE RAW MATERIAL. THE INSURANCE CLAIM WAS TAKEN AS E LIGIBLE PROFIT FOR CLAIMING EXEMPTION U/S 10A OF THE ACT. THE ASSESS ING OFFICER, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE. TH E CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND TH AT THE CLAIM RECEIVED FROM INSURANCE COMPANY FOR LOSS OF RAW MAT ERIAL CANNOT BE REGARDED AS EXPORT TURNOVER FOR THE PURPOSE OF EXEM PTION U/S 10A OF THE ACT. PLACING RELIANCE ON THE JUDGMENT OF THE G UJARAT HIGH COURT IN THE CASE OF CIT VS SHREE RAMA MULTI TECH LTD, [2013 ] 33 TAXMANN.COM 194, THE LD. COUNSEL SUBMITTED THAT INSURANCE CLAIM ON ACCOUNT OF LOSS OF RAW MATERIAL AND FINISHED GOODS IN FIRE WOULD BE ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. IN VIEW OF THIS JU DGMENT OF THE GUJARAT HIGH COURT, ACCORDING TO THE LD. COUNSEL, T HE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 10A OF THE ACT. ITA NO.1523/14 :- 3 -: 4. ON THE CONTRARY, DR B NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SEC. 10A IS FOR PROVI DING EXEMPTION IN RESPECT OF INCOME EARNED IN FOREIGN EXCHANGE. IN T HE PRESENT CASE, WHAT WAS DAMAGED IS RAW MATERIAL AND NOT THE FINISH ED GOODS, THEREFORE, INSURANCE CLAIM FOR LOSS OF RAW MATERIAL CANNOT BE REGARDED AS EXPORT TURNOVER FOR THE PURPOSE OF EXEMPTION U/ S 10A OF THE ACT. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADD ITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 10A OF THE ACT. SEC. 10A CLEARLY SAYS FOR DEDUCTION OF PROFITS AND GAINS AS DERIVED BY AN UNDERTAKING FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTW ARE FOR TEN CONSECUTIVE ASSESSMENT YEAR. IN THE CASE BEFORE US , WHAT WAS RECEIVED BY THE ASSESSEE IS REIMBURSEMENT OF INSUR ANCE CLAIM FOR LOSS OF RAW MATERIAL. THE INSURANCE CLAIM RECEIVED BY T HE ASSESSEE IS NOT DERIVED FROM EXPORT OF AN ARTICLE OR THING. IT MAY BE A BUSINESS PROFIT SINCE THE CLAIM WAS LOSS OF RAW MATERIAL. BUT AT AN Y STRETCH OF IMAGINATION, IT CANNOT BE CONSTRUED AS DERIVED FROM EXPORT OF AN ARTICLE OR THING SINCE THE CLAIM WAS FOR LOSS OF RA W MATERIAL. ITA NO.1523/14 :- 4 -: 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF SHREE RAMA MULTI TECH LTD. (SUPRA). IN THE CASE BEFORE THE GUJARAT HIGH COURT, THE CLAI M WAS MADE U/S 80IA OF THE ACT. SEC. 80IA IS FOR THE PROFIT DERIV ED BY AN ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, OPERATING A ND MAINTAINING ANY INFRASTRUCTURE FACILITY. THEREFORE, THE PROFIT EAR NED BY THE ASSESSEE IN THE DOMESTIC TRANSACTION IS ELIGIBLE FOR EXEMPTION U/S 80IA PROVIDED THE ACTIVITY IS FOR CREATING INFRASTRUCTURE FACILIT Y. THIS JUDGMENT OF THE GUJARAT HIGH COURT CANNOT BE APPLIED FOR GRANTING E XEMPTION U/S 10A SINCE SEC. 10A IS SPECIFICALLY FOR PROFIT FROM EXPO RT OF ARTICLE OR THING. IN THIS CASE, IT IS NOBODYS CASE THAT THE ASSESSE E HAS EXPORTED THE GOODS AND SUFFERED LOSS. THE LOSS WAS IN RESPECT O F RAW MATERIAL BEFORE MANUFACTURING THE FINISHED GOODS, THEREFORE, THE INSURANCE CLAIM RECEIVED IN INDIAN CURRENCY CANNOT FORM PART OF TOTAL TURNOVER AS FOUND BY THE CIT(A). THEREFORE, THIS TRIBUNAL DO N OT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORD INGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS D ISMISSED. ITA NO.1523/14 :- 5 -: ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 22 ND JANUARY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF