Brindix Apparel India Pvt. Ltd., Visakhapatnam V. The JCIT, Visakhapatnam

ITA 153/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6531 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Keywords: Business income; Revision of order
• Section: 143(3); 10AA; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 153 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 1 0 - 1 1 ) BRANDIX APPAREL INDIA PVT. LTD. PLOT NO.18, PUDIMADAKA ROAD ATCHUTAPURAM VISAKHAPATNAM [ PAN : A ACCB6569L ] THE JCIT RANGE 5 VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , A R / RESPONDENT BY : S MT V . MADHUVANI, DR / DATE OF HEARING : 07 . 1 1 .2017 / DATE OF PRONOUNCEMENT : 10 . 1 1 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR. COMMISSIONER OF INCOME TAX [PR.CIT] - 2 , VISAKHAPATNAM VIDE F.NO.CIT - 2 ITA NO .153 /VIZ/201 6 M/S BRANDIX APPAREL INDIA PVT, LTD . , VISAKHAPATNAM 2/VSP/263/17(14 - 15)/2015 - 16 DATED 27 .0 1 .201 6 FOR THE ASSESSMENT YEAR 20 1 0 - 1 1 . 2. IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 DECLARING TOTAL INCOME OF RS.20,42,908/ - AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS.1,04,41,150/ - . LD.PR.CIT - 2, VISAKHAPATNAM HAS TAKEN UP THE CA SE FO R REVISION AND FOUND THAT THAT THE ASSESSEE HAD RECEIVED A SUM OF RS.48,50,000/ - TOWARDS TRAINING SUBSIDY FROM GOVT . OF ANDHRA PRADESH UNDER THE N EW TEXTILE AND APPAREL PROMOTION POLICY AND OFFERED THE SAME AS OTHER INCOME AND CLAIMED AND WAS ALLOWED THE DEDUCTION U/S 10AA OF THE ACT. A S PER SUB - CLAUSE(I) OF SUB - SECTION(1) OF 10AA, THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF ARTICLE OR THING OR FROM SERVICES IS ELIGIBLE FOR CLAIMING DE DUCTION U/S 10AA OF THE I.T.ACT. THE LD.PR. CIT FOUND THAT THERE WAS NO DOCUMENTARY EVIDENCE AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE COMPANY IS ELIGIBLE FOR DEDUCTION U/S 10AA OF THE ACT ON THE SUBSIDY RECEIVED . F URTHER T HE ASSESSEE ALSO HAS NOT FURNISHED THE DETAILS OF TRAINING IMPARTED TO THE EMPLOYEES, HENCE THE COMMISSIONER WAS OF THE VIEW THAT THE SAID RECEIPT TAKES THE CHARACTER OF INCOME FROM OTHER SOURCES AND NOT ELIGIBLE FOR DEDUCTION U/S 10AA. THE ASSESSING OFFICER (AO) HAS NOT EXAMINED THE ABOVE 3 ITA NO .153 /VIZ/201 6 M/S BRANDIX APPAREL INDIA PVT, LTD . , VISAKHAPATNAM ISSUE . HENCE THE LD.PR.CIT HAS TAKEN UP THE CASE FOR RE VISION AND ISSUED THE SHOW CAUSE NOTICE U/S 263 CALLING FOR THE ASSESSEES EXPLANATION AND THE ASSESSEE FURNISHED THE EXPLANATION . N OT BEING CONVINCED WITH THE EXPLANATION , THE LD. PR.CIT HELD THAT THE ASSESSMENT MADE U/S 143(3) WA S ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE AND SET ASIDE THE ORDER PASSED U/S 143(3) WITH A DIRECTION TO REDO THE SAME. AGAINST THE ORDER OF THE LD. PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 3. DURING THE APPEAL HEARING, LD.AR ARGUED THAT THE TRAINING SUBSIDY RECEIVED FROM THE GOVT. OF ANDHRA PRADESH UNDER THE NEW TEXTILE AND APPAREL PROMOTION POLICY IS DIRECTLY RELATED TO THE BUSINESS OF THE ASSESSEE AND REQUIRED TO BE ASSESSED AS BUSINESS INCOME AND ELIGIBLE FOR DEDUCTION U/S 10AA OF THE I.T.ACT. THE LD.AR FURTHER SUBMITTED THAT THOUGH THE PR. CIT HAS SET ASIDE THE ORDER WITH A DIRECTION TO REDO THE SAME, THE PR. CIT HAS GIVEN A FINDING THAT THE RECEIPT WOULD TAKE THE CHARACTER OF INCOME FROM OT HER SOURCES GIV ING INDICATION TO THE AO TO MAKE THE ADDITION WITHOUT VERIFYING THE MERITS OF THE CASE. THEREFORE, THE LD.AR ARGUED THAT THE FACTS AND THE LEGAL ASPECTS REQUIRE FURTHER VERIFICATION TO DECIDE THE ISSUE, HENCE REQUESTED TO MODIFY THE ORDE R OF THE LD.PR.CIT TO ENABLE THE AO TO VERIFY 4 ITA NO .153 /VIZ/201 6 M/S BRANDIX APPAREL INDIA PVT, LTD . , VISAKHAPATNAM THE FACTUAL AND LEGAL ASPECTS REGARDING THE ELIGIBILITY AND T AKE APPROPRIATE DECISION AS PER LAW. 4. ON THE OTHER HAND, LD.DR DID NOT OBJECT FOR REMITTING THE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE F ACTS AND LAW AND TO DECIDE THE ISSU E ON MERITS. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSEE HAD RECEIVED SUBSIDY FROM GOVT. OF ANDHRA PRADESH UNDER THE NEW TEXTILE AND APPAREL PROMOTION POLICY FOR AN AMOUNT OF RS.48,50,000/ - . THE ASSESSEE HAS OFFERED THE SAME AS BUSINESS INCOME AND CLAIMED THE DEDUCTION U/S 10AA WHICH WAS ALLOWED BY THE AO. THE PR.CIT ON REVISION FOUND THAT THERE WAS NO EVIDENCE AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE COMPANY IS ELIGIBLE FOR DEDUCTION U/S 10AA OF THE ACT. FURTHER, THERE WAS NO IN FORMATION AVAILABLE BEFORE THE PR. CIT AS TO WHETHER THE ASSESSEE HAS IMPARTED TRAINING TO THE EMPLOYEES OR NOT. THEREFORE THE ISSUE NEEDS FURTHER VERIFICATION WITH REGARD TO THE IMPARTING OF TRAINING TO THE EMPLOYEES AND ALSO ELIGIBILITY CONDITIONS FOR CLAIMING THE DEDUCTION U/S 10AA. THE AO NEED TO VERIFY WHETHER THE SUBSIDY RECEIVED FROM GOVT. OF ANDHRA PRADESH TAKES THE 5 ITA NO .153 /VIZ/201 6 M/S BRANDIX APPAREL INDIA PVT, LTD . , VISAKHAPATNAM CHARACTER OF BUSINESS INCOME AND ELIGIBLE FOR DEDUCT ION U/S 10AA OR NOT. THEREFORE, WE SET ASIDE THE ORDER OF THE LD.PR.CIT AND REMIT THE ISSUE BACK TO THE FILE OF THE AO AND KEEP THE ISSUE OPEN TO VERIFY THE FACTS AND THE LEGAL POSITION AND DECIDE THE ISSUE AFRESH ON MERITS. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10 TH NOV 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 10 . 1 1 .2017 L. RAMA, SPS 6 ITA NO .153 /VIZ/201 6 M/S BRANDIX APPAREL INDIA PVT, LTD . , VISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - BRANDIX APPAREL INDIA PVT. LTD., PLOT NO.18, PUDIMADAKA ROAD, ATCHUTAPURAM, VISAKHAPATNAM 2 . / THE RESPONDENT THE JCIT, RANGE 5, VISAKHAPATNAM 3 . THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 5(1), VISAKHAPATNAM 4. THE PR. COMMISSIONER OF INCOME TAX (APPEALS) - 2 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM