M/s Gemco Technologies Ltd., Faridabad V. ITO, New Delhi

ITA 1551/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52798 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 05-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H L DIHANA
• Assessee Lawyers: SSH K C SINGHAL
• Keywords: Competent authority
• Section: 143(3); 10B; 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T. A. NO.1551/DEL/2011 ASSESSMENT YEAR : 2006-07 M/S GEMCO TECHNOLOGIES PVT. LTD., INCOME-TAX OFF ICER, S-83, FIEE, OKHLA INDL AREA PHASE-II, VS. WARD 12(1), NEW DELHI. NEW DELHI. PAN: AABCG4537G (APPELLANT) (RESPONDENT) APPELLANT BY : S/SH. K.C. SINGHAL, ADVOCATE & AKAS H DEEPAK, CA. RESPONDENT BY : SHRI H.L. DIHANA, CIT-DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 8 .03.2011 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX UNDER SEC.26 3 OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2006-07 . 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- THAT ON FACTS AS WELL AS IN LAW, THE ORDER OF CIT U/S 263 IS BAD & ILLEGAL BECAUSE:- 1. THE ORDER OF AO CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE MERELY BECAU SE A RIGHTFUL CLAIM HAS BEEN MADE UNDER WRONG SECTION PARTICULARLY WHEN THERE IS NO ALLEGATION REGARDING NON FULFILLMENT OF ANY OF THE CONDITIONS SPECIFIED U/S 10A. 2 (DECISION OF ITAT, DELHI BENCH IN THE CASE OF STYLE SOLUTION PVT LTD-VS-ITO DATED 26.10.2010). 2. THE POWERS OF THE CIT U/S 263 AS WELL AS OF THE TRI BUNAL U/S 254 ARE SIMILARLY WORDED AND THEREFORE, THE CIT OUG HT NOT TO HAVE DIRECTED THE AO TO WITHDRAW THE CLAIM OF AS SESSEE INSTEAD OF DIRECTING THE AO TO ALLOW THE CLAIM U/S 10A SINCE DUTY OF THE TAX AUTHORITIES IS (I) TO DETERMINE THE CORRECT TAX LIABILITY (NTPC-VS-CIT 229 ITR 383 SC) AND (II) TO ASSIST THE ASSESSEE IN MAKING A RIGHTFUL CLAIM INSTEAD OF TAKING ADVANTAGE OF ASSESSEES IGNORANCE (CIRCULAR NO SL-3 5 DATED 11.4.55 TAKEN NOTE OF BY THE SC IN CASE OF MAHENDRA MILLS 143 ITR 56) 3. THE DECISION OF THE APEX COURT IN THE CASE OF GOETZ E (INDIA) LTD. 284 ITR 323 CANNOT BE APPLIED TO MAKING OF AN ALTERNATE CLAIM AND THAT TO WHEN RAISED BEFORE THE APPELLATE/REVISING AUTHORITY. 4. WITHOUT PREJUDICE TO ABOVE, THE CIT OUGHT TO HAVE D IRECTED TO CONSIDER THE CLAIM OF ASSESSEE U/S 10A. 3. IN THIS CASE, ORIGINAL ASSESSMENT WAS MADE UNDER SEC. 143(3) ON 24.12.2008 DETERMINING THE TOTAL INCOME AT RS.22,8 2,843/-. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED DEDUCTION OF RS.20,81, 888/- UNDER SEC. 10B OF THE ACT, WHICH WAS ALLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT. THEREAFTER, ON AN EXAMINATION OF THE A SSESSMENT RECORDS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT WAS TRANSPI RED TO THE LEARNED COMMISSIONER OF INCOME-TAX THAT THE ASSESSEE HAS CL AIMED DEDUCTION U/S 10B ON THE BASIS OF REGISTRATION WITH STPI. IT WAS FURTHER FOUND BY THE LEARNED CIT THAT THE ASPECT WITH REGARD TO THE ASSE SSEES CLAIM OF DEDUCTION 3 U/S 10B OF THE ACT, WAS NOT EXAMINED BY THE AO WHIL E FRAMING THE ASSESSMENT. THE LEARNED CIT FURTHER NOTED THAT NO ENQUIRY/INVESTIGATION SEEMS TO HAVE BEEN CARRIED OUT BY THE AO WITH REGAR D TO THE ASPECT OF THE ASSESSEES CLAIM U/S 10B OF THE ACT. THE LEARNED C IT THEREFORE, STATED THAT ON THE LACK OF ENQUIRY/INVESTIGATION APART FROM NOT CONSIDERING THE ISSUE WITH REGARD TO THE ASSESSEES CLAIM OF DEDUCTION U/S 10B PROPERLY, AN ASSESSMENT ORDER MADE BY THE AO WAS ERRONEOUS AS WELL PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. THE LEARNED CIT THEREFORE, ISSUED A N OTICE UNDER SEC. 263 ON 4.02.2011 GIVING AN OPPORTUNITY TO THE ASSESSEE TO FILE ANY REPLY OR OBJECTION AGAINST THE LEARNED CITS PROPOSAL TO WITHDRAW THE DEDUCTION ALLOWED U/S 10B OF THE ACT. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEES AUTHORIZED REPRESENTATIVE, SHRI AKASH DEEPAK, APPEARED BEFORE THE LEARNED CIT AND FILED REPLY DATED 21.02.2011 AND 28.02.2011. IN TH E REPLY, IT WAS BASICALLY STATED BY THE ASSESSEE THAT THE ASSESSEE HAD MADE A CLAIM OF DEDUCTION U/S 10B OF THE ACT BUT THE ASSESSEE SATISFIED ALL THE C ONDITIONS RELATING TO ELIGIBILITY OF DEDUCTION U/S 10A OF THE ACT BUT DUE TO SOME MISUNDERSTANDING AND MISINTERPRETATION, THE ASSESSEE CLAIMED DEDUCTI ON U/S 10B INSTEAD OF SEC.10A OF THE ACT. 4. AFTER CONSIDERING THE ASSESSEES OBJECTION AND P ERUSING THE RECORD, THE LEARNED CIT PASSED THE ORDER U/S. 263 OF THE ACT ON 8.03.2011, WHEREBY HE 4 MODIFIED THE ASSESSMENT ORDER MADE BY THE ASSESSING OFFICER U/S 143(3) BY WITHDRAWING THE DEDUCTION ALLOWED U/S 10B FOR THE R EASONS GIVEN BY HIM AS UNDER:- THE ASSESSEES OBJECTIONS HAVE BEEN DULY CONSIDERE D. THE ITATS JUDGEMENT CITED ABOVE HAS DISCUSSED THE SCHEME OF DEDUCTION U/S. 10A AND U/S. 10B IN A DETAILED MANNE R AND HAS DISTINGUISHED THE TWO. IN THAT CASE ALSO, THE ASSE SSEE HAD NOT TAKEN THE APPROVAL OF THE COMPETENT AUTHORITY MENTI ONED IN CLAUSE (IV) OF EXPLANATION 2 BELOW SECTION 10B(8). THE TRIBUNAL IN THE ABOVE CASE AT PARA 18 OF ITS ORDER WENT TO EXTENT OF SAYING OBVIOUSLY, THE ASSESSEE HAS NOT APPROACH ED THE BOARD FOR APPROVAL AS EOU OR IT HAD FAILED IN ITS A TTEMPTS AND DID NOT DISCLOSE BEFORE US THE CORRECT SITUATION. THE FACTS IN THE INSTANT CASE ARE EXACTLY IDENTICAL. IT IS NOT KNOWN WHY THE ASSESSEE DID NOT APPROACH THE BOARD BUT WHAT IS A F ACT IS THAT IT HAD NOT. IT MAY BE THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S. 10A BUT AT THIS STAGE THAT CANNOT BE SAID WITH ANY CERTAINTY BECAUSE THAT WAS NEVER THE CLAIM BEFORE THE AO. RE GARDING THE ALTERNATIVE PLEA OF ADMISSION OF THE CLAIM U/S. 10B U/S. 154 OR OTHERWISE, THE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323 HAS HELD THAT THERE WAS NO PROV ISION UNDER THE I.T. ACT TO MAKE AMENDMENT IN THE RETURN OF INC OME BY MODIFYING AN APPLICATION AT THE ASSESSMENT STAGE WI THOUT REVISING THE RETURN. THIS BEING THE CASE, IT IS NO T POSSIBLE TO ENTERTAIN THE ALTERNATIVE CLAIM OF THE ASSESSEE TO TREAT THE CLAIM MADE IN THE RETURN U/S. 10B AS A CLAIM U/S. 10A. KEEPING ALL THE FACTS MENTIONED ABOVE, IT IS SENT H AT THE AO HAS NOT PROPERLY UNDERSTOOD THE PROVISIONS OF SE CTION 10B AND HAS NOT EXAMINED THE QUESTION WHETHER THE ASSES SEE HAD TAKEN THE APPROVAL OF THE BOARD MENTIONED IN SECTIO N 10B. NO ENQUIRY/INVESTIGATION WAS MADE IN THIS RESPECT. TH EREFORE, THE ASSESSMENT ORDER PASSED ON 24.12.2008 WAS BOTH ERRO NEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AS A DEDUCTION HAD BEEN ALLOWED WITHOUT LEGAL MERITS. 5 I, THEREFORE, HOLD THE ORDER U/S 143(3) BE MODIFIED BY WITHDRAWING THE DEDUCTION ALLOWED U/S 10B FOR THE A BOVE CITED REASONS. 5. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE COURSE OF HEARING OF THI S APPEAL, IT HAS BEEN FAIRLY ADMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE TH AT THE ASSESSEES CLAIM U/S 10B IS NOT MAINTAINABLE, BUT DEDUCTION U/S 10A IS A VAILABLE TO THE ASSESSEE IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE ASS ESSEES CASE. IT WAS FURTHER CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT THE LEARNED CIT OUGHT TO HAVE DIRECTED THE AO TO EXAMINE AND VERIFY THE A SSESSEES CLAIM U/S 10A BUT THE LEARNED CIT HAS ERRED IN NOT DIRECTING THE AO TO CONSIDER THE ASSESSEES CLAIM OF DEDUCTION U/S 10A INSTEAD OF SE C. 10B. IN THIS RESPECT, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPO N VARIOUS DECISIONS, COPIES OF WHICH ARE PLACED IN THE COMPILATION FILED BEFORE US. 7. THE LEARNED DR ON THE OTHER HAND, SUBMITTED THAT THE LEARNED CIT WAS VERY MUCH JUSTIFIED IN WITHDRAWING THE CLAIM OF DED UCTION U/S 10B OF THE ACT AND, THEREFORE, HIS ORDER U/S 263 IS LIABLE TO BE UPHELD. 8. IT IS AN ADMITTED POSITION THAT THE ASSESSEES C LAIM OF DEDUCTION U/S 10B HAS BEEN WRONGLY ALLOWED BY THE AO WITHOUT MAKI NG ANY DUE ENQUIRY AND INVESTIGATION. THEREFORE, THE AOS ORDER U/S 1 43(3) DATED 24.12.2008 IN 6 RESPECT OF THE ASSESSEES CLAIM OF DEDUCTION ALLOWE D U/S 10B OF THE ACT, IS UNDOUBTEDLY ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HOWEVER, IN THE COURSE OF PROCEEDINGS U/S 263 OF TH E ACT BEFORE THE LEARNED CIT, THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS W RONGLY CLAIMED DEDUCTION U/S 10B INSTEAD OF SEC. 10A OF THE ACT. IT WAS THU S, SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED CIT THAT THE ASSESSEES CLAIM OF DEDUCTION DESERVES TO BE CONSIDERED U/S 10A OF THE ACT. IN T HE ORDER PASSED BY THE LEARNED CIT, IT HAS BEEN STATED BY THE CIT HIMSELF THAT IT MAY BE THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 10A BUT AT THIS STAGE THAT CANNOT BE SAID WITH ANY CERTAINTY BECAUSE THAT WAS NEVER THE CLAIM BEFORE THE AO. IN OTHER WORDS, THE ASSESSEES CLAIM OF DEDUCTION U/S 10A WAS NEITHER EXAMINED BY THE AO NOR BY THE LEARNED CIT. HOWEVER , THE CIT IS RIGHT IN HOLDING THAT THE ORDER U/S 143(3) IS ERRONEOUS AS W ELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND IN WITHDRAWING THE ASS ESSEES CLAIM OF DEDUCTION UNDER SEC. 10B OF THE ACT. BUT, THE LEARNED CIT WAS NOT JUSTIFIED IN NOT RESTORING THE ISSUE WITH REGARD TO THE ASSESSEES C LAIM OF DEDUCTION U/S 10A TO THE FILE OF THE AO FOR HIS EXAMINATION AND ADJUD ICATION. THE PRESENT CASE IS A CASE WHERE NO ENQUIRY OR INVESTIGATION WAS ADM ITTEDLY MADE BY THE AO WITH REGARD TO THE ASSESSEES CLAIM OF DEDUCTION EI THER U/S 10B OR UNDER SEC. 10A. WE, THEREFORE, HOLD THAT THE LEARNED CIT WAS JUSTIFIED IN WITHDRAWING 7 THE DEDUCTION ALLOWED UNDER SEC. 10B OF THE ACT, BU T AT THE SAME TIME, WE FIND THAT THE LEARNED CIT SHOULD HAVE RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE AND CONSIDER THE A SSESSEES CLAIM OF DEDUCTION U/S 10A OF THE ACT. WE, THEREFORE, MODIF Y THE LEARNED CITS ORDER TO THAT EXTENT AND RESTORE THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ASSESSEE CLAIM OF DEDUCTION MADE U/S 10A OF THE ACT AS PER LAW AND AFTER PROVIDING REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE PRESENT APPEAL FILED BY THE A SSESSEE IS PARTLY ALLOWED FOR A STATISTICAL PURPOSE IN THE MANNER AS INDICATE D ABOVE. 10. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2011. SD/- SD/- (SHAMIM YAHYA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH OCTOBER, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.