Wellshine Granites P Ltd., Thiruvallur V. ACIT, CHENNAI

ITA 1834/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7699 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 26-06-2014
• Court: TRIBUNAL
• Assessee Lawyers: N V BALAJI
• Section: 10B; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1834/MDS/2014 / ASSESSMENT YEAR : 2006-07 M/S WELLSHINE GRANITES P. LTD SHOLAVARAM VILLAGE NEAR SHOLAVARAM POLICE STATION PONNERI TALUK THIRUVALLUR 600 067 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(3) CHENNAI [PAN AAACW 1021 G] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI N.V. BALAJI, ADVOCATE /RESPONDENT BY : SHRI SASIKUMAR, JCIT / DATE OF HEARING : 25 - 02 - 2016 ! / DATE OF PRONOUNCEMENT : 18 - 0 3 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, CHEN NAI, DATED 24.2.2014 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DISALL OWANCE OF LIC PENSION AND GRATUITY. ITA NO. 1834/14 :- 2 -: 3. SHRI N.V.BALAJI, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE-COMPANY ENGAGED ITSELF IN PROCESSING A ND EXPORTING OF GRANITES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED REIMBURSEMENT OF PENSION AND GRATUITY FROM LIC. FO R THE ASSESSMENT YEAR 2004-05 ON IDENTICAL SET OF FACTS, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. EVEN THOUGH THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2004-05 WAS BROUGHT TO THE NOTICE OF THE CIT(A ), HE SIMPLY REJECTED THE CLAIM OF THE ASSESSEE. 4. ON THE CONTRARY, SHRI SASIKUMAR, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS CLAI MING DEDUCTION U/S 10B OF THE ACT IN RESPECT OF THE AMOUNTS SAID TO BE REIMBURSED BY LIC TOWARDS PENSION AND GRATUITY. REFERRING TO SEC. 10 B OF THE ACT, THE LD. DR SUBMITTED THAT DEDUCTION U/S 10B CAN BE ALLOWED ONLY IN RESPECT OF THE INCOME EARNED IN FOREIGN CURRENCY. THEREFOR E, THE REIMBURSEMENT FROM LIC CANNOT FORM PART OF THE ELIG IBLE PROFIT FOR DEDUCTION U/S 10B OF THE ACT. THEREFORE, THE CIT( A) HAS RIGHTLY CONFIRMED THE ADDITION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ASSESSEE IS A 100% EXPORT ORIENTED UNIT AND CLAIMING DEDUCTION U /S 10B OF THE ACT. AS RIGHTLY SUBMITTED BY THE LD. DR, DEDUCTION U/S 10B CAN BE ALLOWED ITA NO. 1834/14 :- 3 -: ONLY IN RESPECT OF THE INCOME EARNED IN FOREIGN EXC HANGE. THE REIMBURSEMENT FROM LIC TOWARDS PENSION AND GRATUITY CANNOT BE CONSIDERED TO BE AN INCOME EARNED IN FOREIGN CURREN CY ON EXPORT OF GOODS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE CIT(A) HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASS ESSEE. ACCORDINGLY, THE SAME IS CONFIRMED. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF INSURANCE CLAIM RECEIVED BY THE ASSESSEE TO THE EX TENT OF ` 1,64,757/-. 7. SHRI N.V.BALAJI, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE IS CLAIMING DEDUCTION U/S 10B OF THE ACT IN RESPECT OF THE INSURANCE CLAIM REIMBURSED BY THE INSURANCE COM PANY TO THE EXTENT OF ` 1,64,757/-. ACCORDING TO THE LD. COUNSEL, THE AS SESSEE RECEIVED INSURANCE CLAIM FROM UNITED INDIA INSURANC E COMPANY LTD. ON ACCOUNT OF DAMAGE OF FINISHED GRANITES DURING TRANS IT. ACCORDING TO THE LD. COUNSEL, INSURANCE CLAIM FOR DAMAGE OF FINI SHED GOODS HAS TO BE CONSIDERED AS INCOME OF THE ASSESSEE AND THEREF ORE, ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. 8. ON THE CONTRARY, SHRI SASIKUMAR, LD. DR SUBMITTED T HAT THE SALE PROCEEDS RECEIVED IN INDIA IN FOREIGN CURRENCY ALONE IS ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. IN THIS CASE, THE ASSESSEE RECEIVED REIMBURSEMENT OF INSURANCE CLAIM IN INDIAN CURRENCY FOR DAMAGE OF ITA NO. 1834/14 :- 4 -: GOODS IN TRANSIT. THEREFORE, ACCORDING TO THE LD. DR, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS DEDUCTION U/S 10B OF THE ACT IN RESPECT OF INSURAN CE CLAIM RECEIVED FROM UNITED INDIA INSURANCE COMPANY FOR DAMAGE OF F INISHED GRANITES. IT IS NOT THE CASE OF THE ASSESSEE THAT THE DAMAGE TO THE FINISHED GOODS HAPPENED IN THE FOREIGN COUNTRY. FINISHED GO ODS WERE DAMAGED IN INDIA AND THE UNITED INDIA INSURANCE COMPANY LTD . REIMBURSED THE COST OF THE FINISHED GOODS. THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THIS CANNOT BE CONSIDERED TO BE AN EXPORT, THE REFORE, WHATEVER RECEIVED IN INDIAN CURRENCY CANNOT BE CONSIDERED TO BE ELIGIBLE PROFIT FOR DEDUCTION U/S 10B OF THE ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ). ACCORDINGLY, THE SAME IS CONFIRMED. 10. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF ` 21,70,960/- RECEIVED IN FOREIGN CURRENCY FROM FOREI GN BUYER AS PART OF THE SALE PRICE. 11. SHRI N.V.BALAJI, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAS RECEIVED PAYMENT IN FOREIGN CURRE NCY FROM FOREIGN BUYERS FOR EXPORT OF GOODS. HOWEVER, THE CIT(A) FOU ND THAT WHAT WAS ITA NO. 1834/14 :- 5 -: RECEIVED BY THE ASSESSEE IS NOT DERIVED FROM EXPOR T ACTIVITY FOR THE REASON THAT THE AMOUNT WAS RECEIVED DURING ASSESSME NT YEARS 1999- 2000 AND 2000-01. REFERRING TO THE FIRC COPY DATED 4.4.1998, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE RECEIVED THE S UM IN ADVANCE FOR EXPORT OF GOODS. THE ASSESSEE IS ELIGIBLE FOR DED UCTION U/S 10B ONLY AFTER THE EXPORT OF GOODS, THEREFORE, THE MONEY REC EIVED IN ADVANCE IS ALSO ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. 12. ON THE CONTRARY, SHRI SASIKUMAR, LD. DR SUBMITTED T HAT THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT WHAT WAS RECEIVED IN FOREIGN CURRENCY IS FOR TEMPLATE DEVELOPING, DES IGNING ETC. WHAT WAS RECEIVED BY THE ASSESSEE IN FOREIGN CURRENCY I S NOT FOR EXPORT OF GOODS OR SALE PROCEEDS OF ANY GOODS. IT IS FOR TEM PLATE DEVELOPING AND DESIGNING. ACCORDING TO THE LD. DR, SEC. 10B I S APPLICABLE ONLY IN RESPECT OF EXPORT OF GOODS FROM INDIA. THEREFORE, A CCORDING TO THE LD. DR, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/ S 10B OF THE ACT. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 10B OF THE ACT. SEC. 10B PROVIDES FOR DEDUCTION OF PROFIT DERIVED BY 100% EXPORT ORIE NTED UNIT FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE. IN THIS CASE, THE ASSESSEE CLAIMS BEFORE THE LOWER AUTHORITIES THAT T HE MONEY WAS ITA NO. 1834/14 :- 6 -: RECEIVED FOR TEMPLATE DEVELOPING AND DESIGNING. T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT TEMPLATE DEVELOPING AND DESIGNING CANNOT BE CONSIDERED TO BE AN EXPORT OF ARTICLE OR THINGS OR COMPUTER SOFTWARE, THEREFORE, WHATEVER SAID TO BE RECEIVED I N FOREIGN CURRENCY FOR TEMPLATE DEVELOPING AND DESIGNING CANNOT BE CON SIDERED TO BE AN ELIGIBLE PROFIT FOR DEDUCTION U/S 10B OF THE ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. 14. THE NEXT GROUND OF APPEAL IS WITH REGARD TO SALE OF OLD TRANSFORMER. 15. SHRI N.V.BALAJI, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAS SOLD AN OLD TRANSFORMER AND CLAIM ED THE SAME AS SCRAP DERIVED FROM BUSINESS OF THE ASSESSEE FOR DE DUCTION U/S 10B OF THE ACT. HOWEVER, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE OLD TRANSFORMER CANNOT BE CONSI DERED TO BE SCRAP. 16. ON THE CONTRARY, SHRI SASIKUMAR, LD. DR SUBMITTED T HAT WHAT WAS SOLD BY THE ASSESSEE IS AN OLD TRANSFORMER. T HE OLD TRANSFORMER IS NOT A BY-PRODUCT OF THE ASSESSEE IN THE MANUFAC TURING ACTIVITY, THEREFORE, IT IS NOT ELIGIBLE FOR DEDUCTION U/S 10 B OF THE ACT. ITA NO. 1834/14 :- 7 -: 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE RECEIVED ` 94,059/- ON SALE OF AN OLD TRANSFORMER. OLD TRAN SFORMER CANNOT BE CONSIDERED TO BE A SCRAP DERIVED FROM THE BUSINESS OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. IN VIEW OF THE ABOVE, THE ORDER OF THE CIT(A) IS CONFIRMED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 18 TH MARCH, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF