Inox India Ltd., Baroda V. The Dy.CIT.,Circle-1(2), Baroda

ITA 2029/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89262 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 234B; 10B; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 2029/AHD/2011 % ) *)/ ASSESSMENT YEAR: 2009-2010 INOX INDIA LTD. ABS TOWERS, 4 TH FLOOR OLD PADRA ROAD BARODA 390 007. PAN : AAACI 4416 P VS DCIT, CIR.1(2) VADODARA. +, / (APPELLANT) -. +, / (RESPONDENT) ASSESSEE(S) BY : WRITTEN SUBMISSIONS REVENUE BY : SHRI NIMESH YADAV, SR.DR / DATE OF HEARING : 27/03/2015 / DATE OF PRONOUNCEMENT: 10 /04/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, BARODA DATED 23.6.2011. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACT AND IN LAW IN REDUCING THE CLAIM OF DEDUCTION U/S 10B IN RESPECT OF EOU INCOME FROM RS.5,88,41,558/- TO RS.6 7,94,294/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN FACT AND IN LAW IN APPLYING THE AMENDED PROVISIO N OF SECTION 10B OF THE ACT, DESPITE THE FACT THAT THE APPELLANT WAS ENTITLED TO ITA NO.2029/AHD/2011 2 EXEMPTION U/S 10B FOR AY 2000-01, THE AY IN WHICH T HE AMENDED PROVISIONS WERE MADE EFFECTIVE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN FACT AND IN LAW IN REJECTING THE CLAIM OF 100% E OU U/S 10B OF THE ACT, ON THE GROUND THAT NO EXEMPTION U/S 10B IS AVAILABLE TO THE APPELLANT AS THE ENTIRE SALES ARE IN DOMESTIC M ARKET AND ALSO THE APPELLANT HAS NOT RECEIVED ANY SALE PROCEEDS IN CONVERTIBLE FOREIGN EXCHANGE. 3. THE ASSESSEES COUNSEL HAS FILED A LETTER DATED 23.3.2015, WHICH READS AS UNDER: TO, THE ASSISTANT REGISTRAR/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL 4 TH FLOOR ABHINAV ARCADE PRITAMNAGAR, ELLISBRIDGE AHMEDABAD REF: IN THE CASE OF M/S.INOX INDIA LTD. ITA NO.2029/A/2011 AY.2009-10 ASSESSEES APPEAL BEFORE C BENCH, ITAT AHMEDABAD. SUB: COVERED MATTER WRITTEN SUBMISSION 1. THE HEARING OF THE ABOVE MATTER IS FIXED ON 27-3-20 15. 2. VIDE GROUNDS NO. 1, 2 AND 3, THE APPELLANT HAS CHALLENGED THE ACTION OF AO / CIT(A) IN NOT ALLOWING / CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S. 10B ON THE GROUND THAT SALE PROCE EDS WERE RECEIVED IN INDIA RUPEES. 3. IT MAY BE MENTIONED THAT THE SIMILAR ISSUE WAS INVOLVED IN AY 2000-01 TO 2007-08. THE HON'BLE ITAT, AHD VIDE ORDE R DATED 13- 08-2010 HAD DECIDED THE ISSUE AGAINST THE ASSESSEE (REFER PARA 14 TO 16 OF THE ORDER). THE ORDER OF ITAT FOR AY 20 00-01 TO 2007- 08 IS ATTACHED AS ANNEXURE -1. 4. SINCE THE ISSUE IS COVERED BY THE ORDER OF HON 'BLE ITAT, AHD FOR AY 2000-01 TO 2007-08, WE ARE NOT MAKING ANY FU RTHER SUBMISSION. HOWEVER, WE RESERVE OUR RIGHT TO CONTES T THE MATTER IN FURTHER APPEAL. ITA NO.2029/AHD/2011 3 5. SHOULD THE HON'BLE BENCH REQUIRE ANY OTHER INF ORMATION OR EXPLANATION WE SHALL BE PLEASED TO SUBMIT THE SAME ON HEARING FROM THE HON'BLE BENCH. THANKING YOU, YOURS FAITHFULLY, SD/- BHAVAIN MARFATIA CHARTERED ACCOUNTANT BARODA, 23 RD MARCH, 2015 4. WE FIND THAT IN THE ASSESSMENT YEARS 2000-01 TO 2007-08 IN ITA NO.2765/AHD/2006 AND OTHERS, THE TRIBUNAL VIDE CONS OLIDATED ORDER DATED 13.8.2010 HAS DECIDED THE ISSUE IN THE CASE O F THE ASSESSEE ITSELF AND HAS HELD AGAINST THE ASSESSEE BY OBSERVING AS U NDER: 14. GROUND NO.4 RELATES TO REJECTION OF CLAIM OF 1 00% EOU U/S 10B OF THE ACT ON THE GROUND THAT NO EXEMPTION U/S 10B IS AVAILABLE TO THE ASSESSEE AS THE ENTIRE SALES ARE I N DOMESTIC MARKET AND ALSO THE ASSESSEE HAS NOT RECEIVED ANY S ALE PROCEEDS IN CONVERTIBLE FOREIGN EXCHANGE. THE LD. AR HAS HEAVILY RELIED ON THE PROVISO CONTAI NED IN SECTION 10B(1). THIS PROVISO READS AS UNDER :- PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME O F THE UNDERTAKING FOR ANY ASSESSMENT YEAR ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF T HIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FI NANCE ACT, 2000 THE UNDERTAKING SHALL BE ENTITLED TO THE DEDUCTION REFERRED TO IN THIS SUBSECTION ONLY FOR THE UNEXPIRED PERIOD OF AF ORESAID TEN CONSECUTIVE ASSESSMENT YEARS. 15. ACCORDING TO THE LD. AR THIS PROVISO MEANS THAT IF ASSESSEE IS ALLOWED EXEMPTION UNDER SECTION 10B(1) IN ASST. YEA R 2000-01 BY VIRTUE OF PROVISIONS AS EXISTING PRIOR TO ITS AMEND MENT BY FINANCE ACT, 2000 THEN SUCH UNDERTAKING WOULD BE ENTITLED T O EXEMPTION CONSECUTIVELY FOR NEXT NINE UNEXPIRED PERIOD. IN OT HER WORDS, ACCORDING TO THE LD. AR IF ASSESSEE SATISFIES THE C ONDITIONS OF SECTION 10B(1) IN ASST. YEAR 2001-02 THEN NOTWITHST ANDING WHETHER IT SATISFIES FURTHER CONDITIONS IN SUBSEQUE NT YEARS, THE ASSESSEE WOULD BE ENTITLED TO EXEMPTION. FURTHER, I N OTHER WORDS, THE ONUS ON THE ASSESSEE THAT IT SATISFIES THE COND ITIONS AS LAID DOWN IN SECTION 10B AS STOOD FOR ASST. YEAR 2001-02 IS DISCHARGED IN THAT YEAR THEN ASSESSEE WOULD BE ENTITLED TO SUC H EXEMPTION IN ITA NO.2029/AHD/2011 4 ALL SUBSEQUENT UNEXPIRED YEARS NOTWITHSTANDING THAT IT SATISFIES THE CONDITIONS IN THOSE SUBSEQUENT YEARS, OR NOT. T HUS IF AO ALLOWS EXEMPTION TO THE ASSESSEE IN ONE INITIAL YEA R YEAR THEN ASSESSEE WILL BE CONTINUED TO BE GRANTED SUCH EXEMP TION FOR NEXT UNEXPIRED PERIOD WITHOUT LOOKING INTO WHETHER IT SA TISFIES SUCH CONDITIONS IN SUCH SUBSEQUENT YEARS. THE LD. DR ON THE OTHER HAND OPPOSED THIS CONTENTION PUT FORWARD BY THE LD. AR A ND SUPPORTED THE ORDER OF CIT(A). 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE INTERPRETATIO N ADVANCED BY LD. A.R. IS NOT CORRECT. INCOME OF EVERY ASST. YEAR HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE A CT AS EXISTING FOR THAT ASST. YEAR. THE APPLICABILITY OF THE AMEND ED PROVISIONS HAS TO BE LOOKED INTO AND IS TO BE SEEN WHETHER ASS ESSEE SATISFIES THOSE CONDITIONS OR NOT AND WHETHER IT FALLS INTO C HARGING SECTION RELEVANT TO THAT ASST. YEAR. IN OUR CONSIDERED VIEW THE AO IS DUTY BOUND TO SEE WHETHER ASSESSEE IS SATISFYING THE CON DITIONS LAID DOWN IN THE RELEVANT PROVISIONS OF THE ACT FOR THAT PARTICULAR ASST. YEAR BEFORE ALLOWING DEDUCTIONS OF THE EXEMPTION OR THE ALLOWANCE CLAIMED BY THE ASSESSEE. THE ONLY MEANING THAT CAN BE ATTACHED TO THE PROVISO TO SECTION 10B(1) AS SUBSTITUTED BY FINANCE ACT 2000 IS THAT ASSESSEE WILL BE ENTITLED TO EXEMPTION ONLY FOR THE UNEXPIRED PERIOD AND THAT ITS INNING CANNOT BE STAR TED AFRESH FROM SUBSEQUENT YEAR/YEARS IF THERE IS AN AMENDMENT IN T HE ACT. THUS IN RESPECT OF THOSE ASSESSEES WHO ARE GIVEN EXEMPTI ON FOR CERTAIN NUMBER OF YEARS PRIOR TO AMENDMENT IN SECTION 10B B Y FINANCE ACT, 2000 THEN SUCH ASSESSEES WILL BE ENTITLED TO E XEMPTION AFTER THE AMENDMENT BY FINANCE ACT 2000 IN RESPECT OF THO SE YEARS ONLY WHICH ARE STILL LEFT UNEXPIRED AS BALANCE OUT OF 10 YEARS. THUS THIS PROVISO IN FACT RESTRICTS THE ALLOWABILITY OF EXEMPTION FOR ONLY UNEXPIRED PERIOD OUT OF 10 YEARS AND THUS DISABLES THE ASSESSEE TO START A FRESH INNING OF 10 YEARS AFTER THIS AMEN DMENT BY FINANCE ACT 2000. BUT THAT DOES NOT MEAN THAT CONDI TIONS LAID DOWN IN SECTION 10B AS BROUGHT IN BY FINANCE ACT 20 00 OR BY SUBSEQUENT AMENDMENT IN THAT SECTION ARE NOT REQUIR ED TO BE SATISFIED BY THE ASSESSEE. THE RESTRICTION IMPOSED BY THE 12 PROVISO IS ONLY ON NUMBER OF YEARS FOR WHICH EXEMPT ION IS ALLOWABLE AND DOES NOT PROVIDE EXEMPTION FROM CONDI TION IMPOSED FOR ALLOWANCE OF EXEMPTION IN SUBSEQUENT YEARS BY S UBSEQUENT AMENDMENTS IN THE LAW. IN OTHER WORDS ASSESSEE HAS TO SATISFY THAT IT FULFILLS THE CONDITIONS LAID DOWN IN THE RE LEVANT ASST. YEAR BEFORE IT CLAIMS EXEMPTION UNDER SECTION 10B. WE RE JECT THIS ARGUMENT OF ASSESSEE THAT CONDITIONS IMPOSED BY SUB SEQUENT AMENDMENT ARE NOT REQUIRED TO BE EXAMINED BY THE AO AND ASSESSEE HAS TO BE ALLOWED EXEMPTION IN SUBSEQUENT YEARS ONLY ON THE BASIS OF ITS SATISFYING CONDITIONS LAID DOWN PRIOR TO ITA NO.2029/AHD/2011 5 AMENDMENT BY FINANCE ACT 2000. NOW COMING TO THE QU ESTION AS TO WHAT CONDITION ASSESSEE HAS TO SATISFY, IN SUBSE QUENT YEARS. WE NOTE THAT SUB-SECTION (3) OF SECTION 10B AS AMEN DED BY FINANCE ACT, 2000 HAS BROUGHT IN FOLLOWING NEW COND ITIONS:- (3) THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OU T OF INDIA ARE RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE I N CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SIX MONTHS FRO M THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. EXPLANATION -1 FOR THE PURPOSES OF THIS SUB-SECTIO N THE EXPRESSION COMPETENT AUTHORITY MEANS THE RESERVE BANK OF INDIA OR SUCH OTHER AUTHORITY AS IS AUTHORISED UNDE R ANY LAW FOR THE TIME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE. EXPLANATION -2 THE SALE PROCEEDS REFERRED TO IN T HIS SUB-SECTION SHALL BE DEEMED TO HAVE BEEN RECEIVED IN INDIA WHER E SUCH SALE PROCEEDS ARE CREDITED TO A SEPARATE ACCOUNT MAINTAI NED FOR THE PURPOSE BY THE ASSESSEE WITH ANY BANK OUTSIDE INDIA WITH THE APPROVAL OF THE RESERVE BANK OF INDIA. THUS IT HAS TO BE SEEN THAT ASSESSEE IS BRINGING FO REIGN EXCHANGE INTO INDIA AS A RESULT OF ITS EXPORT. THE ARGUMENT OF THE ASSESSEE IS THAT OTHER CONCERNS TO WHOM ASSESSEE HAS SOLD IT S PRODUCT IN INDIA ARE BRINGING CONVERTIBLE FOREIGN EXCHANGE IN INDIA THROUGH EXPORT OF THEIR PRODUCT CONTAINED IN THE CONTAINERS MANUFACTURED BY THE ASSESSEE. THUS PRODUCTS OF THE ASSESSEE IN F ACT ARE EXPORTED BY THE OTHER CONCERNS AND CONVERTIBLE FORE IGN EXCHANGES ARE BROUGHT BY THEM INTO INDIA. WE ARE UNABLE TO SU BSCRIBE TO THIS VIEW. IT IS BECAUSE PHRASE MENTIONED IN SUB-SECTION (3) IS ..ARE RECEIVED IN., OR BROUGHT INTO INDIA BY THE ASSESS EE IN CONVERTIBLE FOREIGN EXCHANGE THUS IT IS THE ASSES SEE WHO HAS TO BRING CONVERTIBLE FOREIGN EXCHANGE IN INDIA OUT OF ITS OWN EXPORT. IF OTHER PARTIES ARE BRINGING CONVERTIBLE FOREIGN E XCHANGE IN INDIA THEN IT WILL NOT BE THE FULFILLMENT OF THE CONDITIO NS IMPOSED BY SUB-SECTION (3). IT IS ADMITTED POSITION OF FACTS T HAT ASSESSEE IS NOT IN FACT BRINGING CONVERTIBLE FOREIGN EXCHANGE A ND ENTIRE OF ITS PRODUCTS ARE SOLD IN INDIA IN INDIAN RUPEES. THEREF ORE, THE ASSESSEE WILL NOT BE ENTITLED TO EXEMPTION UNDER SE CTION 10B. ACCORDINGLY THIS GROUND OF ASSESSEE IS REJECTED. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION AS Q UOTED ABOVE, WE DISMISS THE GROUND NO.1 TO 3 RAISED IN THIS APPEAL. ITA NO.2029/AHD/2011 6 5. THE GROUND NO.4 OF THE APPEAL READS AS UNDER: 4. THE LD.CIT(A) ERRED IN FACT AND IN LAW IN CHARG ING INTEREST U/S.234B OF THE INCOME TAX ACT, 1961. 6. IN THE LETTER QUOTED ABOVE, FILED BY THE ASSESSE ES COUNSEL, THE ASSESSEE HAS NOT MADE ANY SUBMISSION ON THIS GROUND OF APPEAL. 7. IN VIEW OF THE ABOVE, WE HOLD THAT CHARGING OF I NTEREST UNDER SECTION 234B OF THE ACT IS CONSEQUENTIAL, AND ACCOR DINGLY WE DISPOSE OF THIS GROUND OF THE APPEAL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 10 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 10 /04/2015