M/s Barton Firtop Engineering (India) Private Limited., Goa V. The Assistant Commissioner of Income Tax, Circle-1, Margao., Margao

ITA 171/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1199 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 16-08-2016
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER & SHRI RAMIT KOCHAR HONBLE ACCOUNTANT MEMBER ITA NO. 1 7 1 /P A N/201 6 (ASST. YEAR : 20 07 - 08 ) M/S. BARTON FIRTOP ENGINEERING (INDIA) PRIVATE LTD., PLOT NO. L - 74, PHASE - II - D, VERNA INDUSTRIAL ESTATE, VERNA, GOA. VS. A CIT, CIRCLE - 1, MARGAO GOA. PAN NO. AAACB 7464 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MIHIR NANIWADEKAR ADV. DEPARTMENT BY : SHRI RAVIRAJ Y.V. - DR DATE OF HEARING : 2 3 / 11 /201 6 . DATE OF PRONOUNCEMENT : 23 / 11 /201 6 . O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , PANAJI IN APPEAL NO. 161/MRG/09 - 10 , DATED 24 /0 5 /201 6 FOR THE ASSESSMENT YEAR 2007 - 08 . 2. SHRI MIHIR NANIWADE KAR , ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAVIRAJ Y.V., DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE. 3 . IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE GROUNDS NO. 1 TO 4 ARE GENERAL IN NATURE. IT WAS ALSO AGREED BY BOTH THE SIDES THAT GROUND NO.2 , WHIC H IS AGAINST THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ACTION 2 ITA NO. 171 /P A N/201 6 OF THE ASSESSING OFFICER IN HOLDING THAT THE PROCEEDS RECEIVED ON SALE OF IMPORT LICENCE UNDER DEPB SCHEME WAS NOT THE INCOME DERIVED FROM THE EXPORT BUSINESS ELIG IBLE FOR DEDUCTION UNDER SECTION 80IB IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (317 ITR 218). CONSEQUENTLY, GROUND NO.2 OF THE ASSESSEES APPEAL STANDS DISMISSED. 4 . IN RESPECT OF GROUND NO.3, IT WAS SUBMIT T ED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE ISSUE WAS AGAINST THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN NOT CONSIDERING THE PROCEEDS RECEIVED IN THE NATURE OF DEVELOPMENT CHARGES FOR DEDUCTION UNDER SECTION 80IB . IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE ISSUE HAD BEEN CONSIDERED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 IN ITA NO. 31/PNJ/2009 & C.O.NO. 01/PAJ/2009 , DATED 03/12/2009 , WHEREIN THE COORDINATE BENCH OF THIS T RIBUNAL HAS HELD AS FOLLOWS: - 9 . AS REGARDS CROSS OBJECTIONS FILED BY THE ASSE SSES, THE CASE OF THE LEARNED COUNSEL IS THAT THE DEVELOPMENT CHARGES ARE DIRECTLY CONNECTED TO THE EXPORTS. THESE CHARGES ARE 'BILLED TO THE FOREIGN CUSTOMERS IN ORDER TO CARRY OU T 'EXTRA' QUALITY CHECK IN THE FACTORY AS FOREIGN COUNTRIES AR E INSISTING ON SUCH TESTS AS SAFETY PRECAUTIONS. THIS IS A NECESSARY ADJUNCT TO THE BUSINESS CARRIED ON BY THE ASSES - SEE AND HENCE, A N Y INCOME RECEIVED THEREON SHOULD HAVE TO BE TREATED AS HAVING FIRST DEGREE CONNECTION WITH THE BUSINESS CARRIED ON BY THE ASSESSEE . SINCE THE LEARNED CIT (A) HAS NOT CONSIDERED THIS ISSUE IN PROPER PERSPECTIVE. IN OUR OPINION, THE ISSUE DESERVES TO BE CONSIDERED IN THE LIGHT OF DECISION OF THE A PEX COURT IN THE CASE OF LIBE RTY INDIA (SUPRA). WE DIRECT TH E. ASSESSING OFFICER TO VERIFY THE FACTS AND IF HE IS SATISFIED THAT EXTRA QUALITY CHECK AND CONSEQUENT RECEIPTS IN THE FORM OF - DEVELOPMENT CHARGES ARE NECESSARY FOR THE PURPOSE OF CARRYING ON THE MAIN BUSINESS AND T O BE TREATED AS A NECESSARY ADJUNCT TO THE MAIN BUSINESS, THE SAME HAS TO BE CONSIDERED AS HAVING FIRST DEGREE CONNECTION SINCE, PARLIAMENT INTENDED TO COVER SOURCES FALLING IN THE FIRST DEGREE. NEEDLESS TO OBSERVE THAT ANY RECEIPT HAVING, FI RST DEGREE NEXUS HAS TO BE TREATED AS PR OFITS AND GAINS DERIVED FR O M THE ELIGIB L E BUSINESS. WE , THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RE - CONSIDERATION IN ACCORDANCE WITH LAW. 3 ITA NO. 171 /P A N/201 6 IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER ON IDENTICAL DIRECTIONS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THIS ISSUE HAS ALREADY BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJU DICATION WITH CERTAIN DIRECTION S IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06, THE ISSUE FOR THIS YEAR IS ALSO RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH IDENTICAL DIRECTION S AS IN ASSESSMENT YEAR 2005 - 06. CONSEQUENTLY, GROUND NO.3 I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 2 3 RD DAY OF NOVEMBER , 201 6 AT GOA . S D / - S D / - ( RAMIT KOCHAR ) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 3 RD NOVEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. M/S. BARTON FIRTOP ENGINEERING (INDIA) PRIVATE LTD., PLOT NO. L - 74, PHASE - II - D, VERNA INDUSTRIAL ESTATE, VERNA, GOA. 2 . THE REVENUE. ACIT, CIRCLE - 1, MARGAO GOA. 3 . THE PR. CIT , PANAJI 4 . THE CIT(A) - 2, PANAJI. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI