M/s.Chariot International (P) Ltd., Bangalore V. Deputy Commissioner of Income-Tax, Bangalore

ITA 1722/BANG/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8243 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M VIJAY KUMAR
• Assessee Lawyers: BHARATH KUMAR
• Keywords: Opportunity of being heard
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO . 1722 / BANG/201 6 ASSESSMENT YEAR : 201 1 - 12 M/S. CHARIOT INTERNATIONAL (P) LTD., # 107, AGRAHARA TOWN, NEXT TO INTERNATIONAL TECH PARK, WHITEFIELD ROAD, BANGALORE 560 066. PAN: AAACC5718N VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI BHARATH KUMAR, ADVOCATE RESPONDENT BY : SHRI M. VIJAY KUMAR, ADDL. CIT (DR) DATE OF HEARING : 31 . 1 2 .2018 DATE OF PRONOUNCEMENT : 31. 1 2 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT (A)-2, BANGALORE DATED 05.07.2016 FOR ASSES SMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEEARE AS UNDER. 1. THE ORDER OF THE LEARNED AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES AND THE FACTS AND CIRCUMSTANCES IN TH E APPELLANT'S CASE. 2. THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE A O EX PARTE WITHOUT MENTIONING ANY REASON FOR CONFIRMING THE SAME. UNDE R SECTION 250(6) OF THE I.T. ACT, THE ORDER OF THE LEARNED COMMISSIO NER (APPEALS) DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHA LL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REA SON FOR THE DECISION. BUT WE FIND FROM THE ORDER OF THE LEARNED CIT(A) THAT HE HAS CONFIRMED THE ORDER OF THE AO WITHOUT DECIDING THE SAME ON MERITS. MOREOVER, THE LEARNED CIT (A) SHOULD HAVE GIVEN ANO THER OPPORTUNITY TO THE ASSESSEE TO APPEAR BEFORE HIM. 3. THE LEARNED AO & CIT(A) HAS ERRED IN DISALLOWING THE EXEMPTION U/S.10B - RS.90,89,680/- WITHOUT APPRECIATING THAT 'AS PER EXPLANATION 4 TO SECTION 10B SAYS 'FOR THE PURPOSES OF THE SECT ION 'MANUFACTURE OR PRODUCE' SHALL INCLUDE THE CUTTING AND POLISHING OF PRECIOUS AND SEMI- PRECIOUS STONE'. THIS CLARIFIES THAT STONES PRECIOU S - EVEN IF ONLY CUT AND POLISHED, CAN BE SAID TO BE HAVE UNDERGONE MANU FACTURING PROCESS. THUS, THE ACT ITSELF RECOGNIZES SUCH ACTIV ITIES AS MANUFACTURE. ITA NO. 1722/BANG/2016 PAGE 2 OF 3 4. THE LEARNED AO & CIT (A) FAILED TO APPRECIATE TH E FACTS OF THE CASE ARE SIMILAR TO THE ACTIVITIES UNDERTAKEN IN THE CAS E OF ITO VS. ARIHANT TILES AND MARBLES P. LTD (320 ITR 79), WHEREIN THE HON'BLE SUPREME COURT, AFTER ELABORATELY CONSIDERING ALL THE PRECED ENTS ON THE SUBJECTS, HELD THAT 'SAWING OF MARBLE BLOCKS INTO SLABS AND T ILES AND POLISHING AMOUNT TO MANUFACTURE OR PRODUCTION AND THE ASSESSE E IS ENTITLED TO DEDUCTION U/S.80-IA OF THE ACT'. 5. THE LEARNED AO & CIT (A) HAS FAILED TO APPRECIAT E THAT IN OUR OWN CASE FOR THE A.Y. 2007-08 PASSED BY THE HON'BLE ITA T, BANGALORE ON 03/06/2011 VIDE ITA NO.116/BANG/10 WHEREIN THE CLAI M OF DEDUCTION U/S.10B OF THE ACT, WAS ALLOWED. 6. THE LEARNED AO & CIT (A) HAS ERRED IN DISALLOWIN G THE EXPORT SALES COMMISSION PAYMENT MADE TO FOREIGN NATIONALS OF RS.14,33,037/- HOLDING THAT, TDS WAS NOT DEDUCTED U /S.195 OF THE ACT AND THEREFORE, DISALLOWED U/S.40(A)(IA) OF THE INCO ME TAX ACT, 1961. 7. THE LEARNED AO & CIT (A) OUGHT TO HAVE FOLLOWED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. TOS HOKU LTD (1980) 125 ITR 525, WHEREIN HELD THAT, THE COMMISSION AMOU NT WHICH WERE EARNED BY THE NON-RESIDENT ASSESSEE FOR THE SERVICE S RENDERED OUTSIDE INDIA CANNOT, THEREFORE BE DEEMED TO BE INCOME WHIC H HAVE EITHER ACCRUED OR ARISEN IN INDIA U/S.9 (1) OF THE INCOME TAX ACT, 1961. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBSTI TUTE, AMEND OR DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGED ABOVE. 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT THE IMPUGNED ORDER OF CIT (A) IS EX-PARTE QUA THE ASSESSEE. HE FURTHER SUBMITTED THAT ALTHOUGH FIVE DATES WERE FIXED FOR HEARING BY CIT ( A) AS NOTED BY HIM IN PARA 3 OF HIS ORDER AND THE ASSESSEE COULD NOT APPE AR ON ANY OF THESE DATES BUT STILL THE REQUEST OF THE ASSESSEE IS THIS THAT IN THE INTEREST OF JUSTICE, THE MATTER MAY BE RESTORED BACK TO THE FIL E OF CIT (A) FOR FRESH DECISION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A) . 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS IS TRUE THAT LD. CIT (A) HAS FIXED THE APPEAL FOR HEARING ON 07.01.2 015, 03.07.2015, 07.08.2015, 23.12.2015 AND 28.01.2016 AND ON ALL TH ESE DATES, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREAFTER, THE CIT (A) HAS DECIDED THE ISSUE EX-PARTE QUA THE ASSESSEE. BUT WE FIND T HAT IN GROUND NO. 4 RAISED BEFORE CIT (A), RELIANCE WAS PLACED BY THE ASSESSEE ON A JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ITO VS. ARIHANT TILES AND ITA NO. 1722/BANG/2016 PAGE 3 OF 3 MARBLES PVT. LTD. (2010) 320 ITR 79(SC) AND ALSO ON THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE SAME CASE AS RE PORTED IN (2007) 295 ITR 148. IN GROUND NO. 5 RAISED BY ASSESSEE BEFORE CIT(A), RELIANCE WAS PLACED BY THE ASSESSEE ON A JUDGMENT OF HONBLE BOM BAY HIGH COURT RENDERED IN THE CASE OF FATEH GRANITES (P) LTD. (20 09) 222 CTR 638. BUT IN THE IMPUGNED ORDER OF CIT (A), HE HAS NOT EXAMINED THE APPLICABILITY OF THESE JUDGMENTS ALSO AND HENCE, WE FEEL IT PROPER T O RESTORE THE MATTER BACK TO THE FILE OF CIT (A) FOR FRESH DECISION AFTER PRO VIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES AND AFTER CONSIDERING VARIOUS JUDGEMENTS WHICH ARE CITED BEFORE CIT (A). WE ORDER ACCORDINGLY. I N VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR REGARDING THE MERIT OF T HE CASE AT THE PRESENT STAGE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE OF H EARING ON CONCLUSION OF THE HEARING. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODI A) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST DECEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.