DCIT Corporate Circle i(2), CHENNAI V. Wayne Burt Petrochemicals (P) Ltd., Sriperumbudur

ITA 1661/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9198 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITHA IRS JCIT
• Assessee Lawyers: PUSHYA SITTARAMAN
• Keywords: Transfer pricing; Set aside
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NO.1661/CHNY/2019 ! / ASSESSMENT YEAR : 2009-2010. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(2) CHENNAI. VS. M/S. WAYNE BURT PETROCHEMICAL PVT. LTD, A-10, SIPCOT INDUSTRIAL PARK, IRUNGATTUKOTTAI, SRIPERUMBUDUR 602 105. [PAN AABCB 1804F] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : MS. R. ANITHA, IRS, JCIT. &' '# $ % /RESPONDENT BY : MS. PUSHYA SITTARAMAN, ADV ( ) $ * /DATE OF HEARING : 19-12-2019 +,! $ * /DATE OF PRONOUNCEMENT : 01-01-2020 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7 , CHENNAI (CIT(A) FOR SHORT) DATED 14.03.2019 FOR THE ASSE SSMENT YEAR (AY) 2009-2010. ITA NO.1661/2019 :- 2 -: 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY RELYING ON THE JURISDICTIONAL HIGH COURT ORDER IN T HE CASE OF CIT VS. HEARTLAND KG INFORMATION LTD., WITHOUT APPRECIA TING THE FACT THAT THE DECISION WAS REGARDING MISQUOTATION OF SEC TION FOR CLAIMING DEDUCTION WHERE THE CONDITIONS FOR CLAIM U NDER CORRECT SECTION ARE SATISFIED, WHEREAS IN THE ASSESSEES CA SE, THE CONDITIONS SPECIFIED IN SECTION 1OA/ 10B HAVE NOT B EEN SATISFIED AT ALL. 2.2. THE CIT(A) FAILED TO APPRECIATE THAT ON AN APP EAL FILED BY THE ASSESSEE AGAINST THE ORIGINAL ORDER, THE THEN C IT(A) HAD DECIDED THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAI MING DEDUCTION U/S 10B SINCE THE GREEN CARD ISSUED BY JDC, MEPZ-SE Z WITH EFFECT FROM 23.03.20 10, PRODUCED AS APPROVAL FOR 1 00% EOU WAS NOT APPLICABLE FOR THE A.Y.2009-10. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE RESPONDENT- ASSESSEE NAMELY M/S. WAYNE BURT PETROCHEMICAL PVT. LTD, IS A COMPANY INCORPORATED U NDER THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF HYDRAULIC CYLINDERS AND ITS COMPONENTS. THE RETURN OF INCOME FOR THE AY 2009-1 0 WAS FILED ON 28.09.2009 DISCLOSING LOSS OF RS. 5,84,60,278/-. AG AINST THE SAID RETURN ITA NO.1661/2019 :- 3 -: OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE ASSE SSING OFFICER VIDE ORDER DATED 22.01.2014 PASSED U/S.143(3) R/W S . 92CA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DENYING EXEMPTION U/S.10B OF THE ACT ON THE GROUND THAT ASSESSEE HAD NOT OBTA INED NECESSARY APPROVAL FROM THE PRESCRIBED BOARD U/S.14 OF THE IN DUSTRIES (DEVELOPMENT REGULATION) ACT, 1951. BEING AGGRIEVED BY THE DENIAL OF EXEMPTION U/S.10B OF THE ACT, AN APPEAL WAS PREFE RRED BEFORE THE LD. CIT(A), WHO CONFIRMED THE ACTION OF THE ASSESS ING OFFICER. THE MATTER WAS CARRIED FURTHER BEFORE THIS TRIBUNAL, TH E TRIBUNAL IN ITA NOS. 2603 & 2604/MDS/2014 FOR ASSESSMENT YEARS 2008 -09 AND 2009- 2010, VIDE ORDER DATED 16.09.2015 WAS PLEASED TO R EMIT BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERA TION, OF ALTERNATIVE CLAIM FOR DEDUCTION U/S.10A OF THE ACT KEEPING IN VIEW THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASES OF REGENCY CREATIONS LTD, 27 TAXMANN.COM 322 AND CIT VS.TEHNOVATE E SOLUTIONS P. LTD 354 ITR 110. FURTHER, THE TRIBUNAL HAD CATEGORICALLY HELD THAT ASSESSEE COMPANY WAS NOT ENTITLED FOR DEDUCTION U/S.10B OF THE ACT. 4. PURSUANT TO THE ORDER OF THIS TRIBUNAL, FRESH ASSE SSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER VIDE ORDE R DATED 07.12.2016 U/S.143(3) R.W.S. 254 OF THE ACT DENYING EXEMPTION U/S.10B OF THE ACT AS WELL AS 10A OF THE ACT. THE ASSESSING OFFICER DE NIED THE CLAIM ITA NO.1661/2019 :- 4 -: U/S.10A OF THE ACT ON THE GROUND THAT PRESCRIBED FO RM NO.56FF AS PER RULE 16DD WAS NOT FILED. 5. BEING AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER ALLOWED THE CLAIM F OR DEDUCTION U/S.10B OF THE ACT PLACING RELIANCE ON THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HEARTLAND K.G. INFORMATION LTD (2013) 359 ITR 0001. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E REVENUE IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LD. CIT(A) HAD S ERIOUSLY FELL IN ERROR IN APPLYING THE RATIO DECISION OF JURISDICTIONAL HI GH COURT IN THE CASE OF HEARTLAND K.G. INFORMATION LTD (SUPRA), TO THE FAC TS OF THE PRESENT CASE, IN AS MUCH AS, THE ELIGIBILITY OF DEDUCTION U /S.10B OF THE ACT WAS NOT CALLED IN QUESTION. IT IS FURTHER SUBMITTED THAT THE ISSUE OF ALLOWABILITY OF CLAIM U/S.10B OF THE ACT WAS NOT AL IVE, AS IN THE EARLIER PROCEEDINGS, THE TRIBUNAL HAD CATEGORICALLY HELD T HAT ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.10B OF THE ACT. THE ONL Y ISSUE ALIVE BEFORE THE ASSESSING OFFICER IS WITH REGARD TO THE ELIGIB ILITY OF CLAIM U/S.10A OF THE ACT. IT IS FURTHER CONTENDED THAT THERE WAS NO POSITIVE PROFITS ITA NO.1661/2019 :- 5 -: AVAILABLE BEFORE MAKING AN ADDITION U/S.92CA (3) OF THE ACT WHICH CAN BE CLAIMED AS DEDUCTION U/S.10A OR 10B OF THE ACT. 7. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIV E PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. IN THE EARLIER ROUND OF PROCEEDINGS, THE T RIBUNAL HAD REMANDED THE MATTER BACK TO THE FILE OF THE ASSESS ING OFFICER FOR THE PURPOSE OF VERIFICATION, WHETHER OR NOT ASSESSEE IS ENTITLED FOR DEDUCTION U/S.10A OF THE ACT. NO OTHER ISSUE WAS ALIVE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD CATEG ORICALLY HELD THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/ S.10A OF THE ACT AS THE ASSESSEE HAD NOT COMPLIED WITH THE CONDITIONS S TIPULATED SUCH AS FILING FORM NO.56FF. HOWEVER, THE LD. CIT(A) PLAC ING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF HEARTLAND K.G. INFORMATION LTD (SUPRA) HAD DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S.10B OF THE ACT. TH E ISSUE OF ALLOWABILITY OF CLAIM U/S.10B OF THE ACT IS NEITHER ALIVE NOR IT IS PERMISSIBLE, AS IT AMOUNTS TO OVERRULING THE DECIS ION OF THE TRIBUNAL, BY CIT(APPEALS). THUS, THE LD. CIT(A) HAD SERIOUSL Y FELL IN ERROR IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM FOR DEDUCTION OF PROVISION U/S.10B OF THE ACT. FURTHER, IT IS AN ADMITTED POSITION THAT ITA NO.1661/2019 :- 6 -: BEFORE MAKING ADDITION ON ACCOUNT OF ARMS LENGTH PRICE ADJUSTMENT U/S.92CA(3), THERE WAS BE NO PROFIT AVAILABLE WHI CH CAN BE CLAIMED AS DEDUCTION U/S.10B OR 10A OF THE ACT. THE PROVISI ONS OF SUB SECTION (4) OF SECTION 92CA OF THE ACT SPECIFICALLY PROVID ES THAT ADDITION MADE U/S.92CA(3) OF THE ACT IS NOT ELIGIBLE PROFITS FOR DEDUCTION NEITHER U/S.10A NOR U/S.10B OF THE ACT. THE LD. CIT(A) IN THE FLAGRANT IGNORANCE OF THE PLAIN PROVISIONS OF THE ACT ALLOW ED THE CLAIM FOR DEDUCTION U/S.10B OF THE ACT. THEREFORE, WE REVERSE THE ORDER OF THE LD. CIT(A) AND ALLOW THE APPEAL FILED BY THE REVENU E. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS ALLOWED. ORDER PRONOUNCED ON 1ST DAY OF JANUARY, 2020, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED:1ST JANUARY, 2020. KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF