DCIT, Jaipur V. M/S GADS FASHION, Jaipur

ITA 177/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99559 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business income; Opportunity of being heard
• Section: 143(3); 80IB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 177/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR CUKE VS. M/S GADS FASHION, G-152, RIICO INDUSTRIAL AREA, MANSAROVAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFG 0977 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 176/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR CUKE VS. M/S GAD FASHIONS (INDIA) PVT. LTD., B-102, (CDE), RIICO INDUSTRIAL AREA, MANSAROVAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFG 0977 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/10/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/12/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. BOTH ARE THE APPEALS FILED BY THE REVENUE AGAINST THE TWO SEPARATE ORDERS DATED 16/12/2013 OF THE LEARNED C.I.T.(A)-III , JAIPUR FOR A.Y. 2006- 2 ITA NO. 177 & 176/JP/2014 DCIT VS. M/S GADS FASHION 07. THE COMMON SOLE GROUND OF APPEALS IS AGAINST DE LETING THE PENALTY OF RS. 4,28,350/- AND RS. 4,78,020/- IMPOSED ON WRONG C LAIM OF DEDUCTION U/S 80IB AGAINST INCOME DERIVED FROM EXPORT INCENTIVES. 2. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF M ANUFACTURING AND EXPORTING OF HOME TEXTILE MADE-UPS. THE ASSESSEE F ILED RETURNS FOR A.Y. 2006-07 ON 30/10/2006 AND 30/11/2006 DECLARING TOTA L INCOME OF 1,08,97,341/- AND 1,06,46,100/-. THE CASE WAS SCRUTIN IZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE AC T). THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT ON EXPORT INC ENTIVES RECEIVED AMOUNTING TO RS. 50,40,746/- AND 66,06,782/- WHICH HAD BEEN TREATED AS BUSINESS INCOME BY CONSIDERING THE HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT VS. STERLING FOODS (1999) 237 ITR 579 (SC ). THE LD ASSESSING OFFICER DISALLOWED SUBSIDY RECEIVED BY THE ASSESSEE FROM THE DEDUCTION AND HAS NOT TREATED AS BUSINESS INCOME. THE PENALTY PRO CEEDING U/S 271(1)(C) OF THE ACT HAS BEEN INITIATED FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME. BEFORE IMPOSING PENALTY U/S 271(1)(C), THE LD ASSES SING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSEE HAS FURNISHED REPLY VIDE LETTER DATED 17/3/2011. IT WAS SUBMITTED THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF READYMADE GARMENTS. DURING THE 3 ITA NO. 177 & 176/JP/2014 DCIT VS. M/S GADS FASHION YEAR, IT RECEIVED EXPORT INCENTIVES OF RS. 66,06,78 2/- ON WHICH DEDUCTION U/S 80IB HAD BEEN CLAIMED. THE LD ASSESSING OFFICER DISA LLOWED THE DEDUCTION BY CONSIDERING THE HON'BLE SUPREME COURT DECISION IN T HE CASE OF LIBERTY INDIA VS. CIT (2009) 317 ITR 218 (SC). IT IS FURTHER SUBMIT TED THAT DUTY DRAW BACK SCHEME IS TO BE REIMBURSE EXPORTERS FOR TARIFFS PAI D ON THE IMPORTED RAW MATERIAL AND INTERMEDIATES AND EXCISE DUTIES AND EX CISE DUTIES ON INPUTS RAISE THE COST OF PRODUCTION IN THE INDUSTRIES AND THEREBY AFFECT THE COMPETITIVENESS OF EXPORTERS. THEREFORE, IT WAS PAID PURELY AS AN EXPORT PROMOTION TO THE EXPORTER TO REDUCE THE COST OF PRO DUCTION. THE ASSESSEE HAD TREATED THESE RECEIPTS DERIVED FROM INDUSTRIAL UNDERTAKING. THE ASSESSEES SUBMISSION WAS CONSIDERED BY THE LD ASSES SING OFFICER, WHICH WAS NOT FOUND CONVINCING TO HIM AND HELD THAT EXPORT IN CENTIVES ARE IN NO WAY INCOME DERIVED FROM BUSINESS BUT AT BEST THEY CAN B E SAID TO BE ATTRIBUTABLE TO THE BUSINESS OF THE ASSESSEE . THE DUTY DRAW BACK AND EXPORT SUBSIDY ARE RECEIVED BY THE ASSESSEE UNDER THE SCHEME OF THE CE NTRAL GOVERNMENT AND CANNOT BE CONSIDERED AS PROFIT DERIVED FROM THE EXP ORT BUSINESS. THE ASSESSEE HAS CONCEALED THE INCOME BY WAY OF FOLLOWING THE INACCURATE PARTICULARS OF INCOME AND CLAIMED DEDUCTION U/S 80I B, THEREFORE, THE LD ASSESSING OFFICER IMPOSED PENALTY AT RS. 4,28,350/- AND 4,78,020, WHICH ARE MORE THAN 100% OF TAX SOUGHT TO BE EVADED OF INCOME CONCEALED. 4 ITA NO. 177 & 176/JP/2014 DCIT VS. M/S GADS FASHION 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALL OWED THE APPEAL BY OBSERVING THAT THE ASSESSEE HAS CLAIMED 80IB DEDUCT ION OF RS. 23,55,068/- ON EXPORT INCENTIVES RECEIVED BY THE ASSESSEE. HE P RIMA FACIE WAS NOT FOUND FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF ANY PARTICULARS OF INCOME, INASMUCH AS COMPLETE DETAILS IN RESPECT OF CLAIM MADE U/S 80IB HAS BEEN MADE. THE CLAIM U/S 80IB ON EXPORT INCENTIVE/DEPB WAS ALLOWED BY THE HONBLE ITAT IN A.Y. 2005-06. THE APPEL LANT WAS IN BONAFIDE BELIEVE THAT HE IS ENTITLED TO CLAIM A DEDUCTION U/ S 80IB OF THE ACT ON EXPORT INCENTIVE/DEPB. THEREFORE, IT CANNOT BE SAID THAT SU CH CLAIM WAS FALSE OR INCORRECT. SUBSEQUENTLY, THE HON'BLE SUPREME COURT HAS HELD THAT RECEIPT OF ACCOUNT OF DUTY DRAW BACK/EXPORT INCENTIVE IS NOT PA RT OF DERIVED INCOME FROM THE INDUSTRIAL UNDERTAKING. HE FURTHER RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT PVT. LTD. 322 ITR 158, ACCORDINGLY HE DELETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 4. NOW REVENUE IS IN APPEAL BEFORE US. THE LD DR VEHE MENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE HON'BLE SUPREME COURT HAS ALREADY HELD ON EXPORT INCENTIVE AND DUTY DRAW BACK THAT THESE 5 ITA NO. 177 & 176/JP/2014 DCIT VS. M/S GADS FASHION RECEIPTS ARE NOT FROM THE EXPORT BUSINESS BUT ARE R ECEIVED BY THE ASSESSEE UNDER THE SCHEME OF CENTRAL GOVERNMENT AND CANNOT B E CONSIDERED AS PROFIT DERIVED FROM EXPORT BUSINESS. HE FURTHER RELIED UPO N THE RECENT DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE NARESH KUMAR V ERMA VS. CIT (2012) 89 CCH 0155 (DELHI) WHEREIN IDENTICAL ISSUE HAS BEEN CO NSIDERED BY THE HONBLE COURT, IN WHICH THE HON'BLE SUPREME COURT DECISION I N THE CASE OF CIT VS. RELIANCE PETRO PRODUCT PVT. LTD. (SUPRA) HAS BEEN C ONSIDERED AND HELD THAT PARTICULARS INCLUDES DETAIL SUPPLIED IN THE RETURN, THEREFORE, HE PRAYED TO REVERSE THE ORDER OF THE LD CIT(A). 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REI TERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND ARGUED THAT THE HONBL E ITAT HAD ALLOWED 80IB DEDUCTION ON EXPORT INCENTIVE/DUTY DRAW BACK IN ITA NO. 1152/JP/2008 FOR A.Y. 2005-06 IN APPELLANTS OWN CASE VIDE ORDER DATED 19/09/2008, THEREFORE, THE ASSESSEE HAS BONAFIDE BELIEVE THAT T HESE RECEIPTS ARE DERIVED FROM THE INDUSTRIAL ACTIVITIES AND PART OF DEDUCTIB LE AMOUNT U/S 80IB OF THE ACT. THE ISSUE IS DEBATABLE, THEREFORE, HE PRAYED TO UPHOLD THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT THERE WERE 6 ITA NO. 177 & 176/JP/2014 DCIT VS. M/S GADS FASHION FAVOURBLE OPINION ON EXPORT INCENTIVE/DUTY DRAWBACK OF THE VARIOUS COURTS THAT IT IS DERIVED FROM EXPORT BUSINESS AND IS PART OF 80IB DEDUCTION. THE COORDINATE BENCH IN ASSESSEES OWN CASE HAS ALLOWED THE DEDUCTION IN A.Y. 2005-06 U/S 80IB ON THESE RECEIPTS VIDE ORDER DATED 19/09/2008. THE ASSESSEE HAD FILED ITS RETURN ON 30/10/2006, THE PA RTICULARS OF INCOME HAS BEEN FILED BY THE ASSESSEE AND IT ALSO DISCLOSED TH E RECEIPTS OF EXPORT INCENTIVE AND DUTY DRAWBACK IN THE RETURN. BEING DEB ATABLE ISSUE, THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB ON THESE RE CEIPTS. THEREFORE BY FOLLOWING THE HON'BLE RAJASTHAN HIGH COURT DECISION IN THE CASE OF SHIV LAL TAK VS. CIT (2001) 251 ITR 373 (RAJ), WE UPHOLD THE O RDERS OF THE LD CIT(A) FOR BOTH THE ASSESSMENT YEARS. ACCORDINGLY, REVENUE S APPEALS ARE DISMISSED. 7. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/12/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04 TH DECEMBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-7, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S GADS FASHION/M/S GAD FASHIONS (I NDIA) PVT. LTD., JAIPUR. 7 ITA NO. 177 & 176/JP/2014 DCIT VS. M/S GADS FASHION 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 177& 176/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR